A pizzeria owner recently discovered they'd been tracking their €1,800 monthly loan payment as a food cost for two years. This mistake made their food cost percentage look terrible at 38% when it was actually 32%. Credit costs belong on your P&L, but they need proper placement to show your real operational performance.
Where do credit costs belong on your P&L?
Credit costs go BELOW your operating result (EBITDA), in the 'Financial income and expenses' section. They're not operational costs like ingredients or staff wages.
💡 Example P&L structure:
- Revenue: €50,000
- Food cost: €15,000
- Labor costs: €20,000
- Other costs: €8,000
- Operating result (EBITDA): €7,000
- Depreciation: €2,000
- Interest and credit costs: €1,500
- Net result: €3,500
Different types of credit costs
Your restaurant probably deals with multiple financing forms. Each one affects your P&L differently:
- Business loan: For inventory, renovations, equipment
- Current account: Overdraft for cashflow gaps
- Lease: For kitchen equipment (contains interest component)
- Supplier credit: Payment deferral (sometimes carries interest)
Interest costs vs. repayments
Here's what trips up most owners: only the interest goes on your P&L. Repayments aren't costs—they reduce your debt balance.
💡 Example monthly loan:
Monthly payment: €1,200
- Interest: €400 → goes on P&L
- Repayment: €800 → NOT on P&L
Only that €400 interest represents a real 'cost' for your business.
⚠️ Watch out:
Many entrepreneurs count the entire monthly payment as costs. This makes your business look less profitable than it actually is. For cashflow planning it matters, but not for your P&L accuracy.
Lease and hire purchase
Lease payments can appear on your P&L in two ways, depending on your contract type:
- Operating lease: Entire amount shows as operational costs
- Financial lease: Split into depreciation and interest components
Check your lease agreement or ask your accountant which category applies to you.
Credit costs and your margins
Credit costs don't factor into your food cost or labor ratios, but they directly impact your net margin. A restaurant carrying heavy debt loads will show lower net profit even with strong operations.
💡 Example impact on margins:
Restaurant A and B both achieve €7,000 operating result
- Restaurant A: €500 interest → €6,500 net (13% net margin)
- Restaurant B: €2,000 interest → €5,000 net (10% net margin)
Both restaurants operate equally well, but A carries less debt burden.
Monitor credit costs
Track your credit costs as a revenue percentage. For restaurants, 2-4% of revenue in interest falls within normal ranges. Above 5% starts weighing heavily on your cashflow.
- Healthy: 1-3% of revenue
- Acceptable: 3-5% of revenue
- Problematic: Above 5% of revenue
This is a pattern we see repeatedly in restaurant financials—owners who track these percentages monthly spot debt problems before they become critical.
Cashflow vs. P&L
Your P&L reveals profitability, but credit costs also impact your cashflow differently. The repayment portion that doesn't appear on your P&L still requires cash payment.
⚠️ Watch out:
A profitable restaurant can still face cashflow problems due to high repayment schedules. Monitor both: P&L for profitability, cashflow for liquidity management.
How do you correctly process credit costs on your P&L?
Split interest and repayment
Go through your loan and lease contracts. Note for each monthly payment how much is interest and how much is repayment. Only the interest goes on your P&L as a financial expense.
Place below operating result
Put all interest costs in the 'Financial income and expenses' section, below your operating result. This gives a clear picture of your business performance without financing effects.
Monitor as percentage of revenue
Calculate monthly: total interest costs divided by revenue × 100. Keep this below 5% for a healthy financial structure.
✨ Pro tip
Review your credit cost percentages every 90 days—restaurants above 4% of revenue in interest costs should prioritize debt reduction over expansion plans.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
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Frequently asked questions
Does interest on my current account also count as credit costs?
Yes, overdraft interest is also a financial expense. Add this to your other interest costs below the operating result. Even small amounts add up over 12 months.
What if I don't know how much interest and repayment I'm paying?
Check your annual bank statement or request a breakdown from your lender. With fixed loans, the ratio shifts over time—early payments contain more interest, later payments more principal repayment.
Should I include credit costs in my cost price calculation?
No, credit costs don't belong in your food cost calculations. That calculation only covers direct ingredient costs versus selling price. Mixing them distorts your operational metrics.
📚 Sources consulted
- EU Verordening 852/2004 — Levensmiddelenhygiëne (2004) — Official source
- EU Verordening 853/2004 — Hygiënevoorschriften voor levensmiddelen van dierlijke oorsprong (2004) — Official source
- EU Verordening 1169/2011 — Voedselinformatie aan consumenten (2011) — Official source
- NVWA — Hygiënecode voor de horeca (2024) — Official source
- NVWA — Allergenen in voedsel (2024) — Official source
- Codex Alimentarius — International Food Standards (2024) — Official source
- FSA — Safer food, better business (HACCP) (2024) — Official source
- BVL — Lebensmittelhygiene (HACCP) (2024) — Official source
- Warenwetbesluit Bereiding en behandeling van levensmiddelen (2024) — Official source
- WHO — Foodborne diseases estimates (2024) — Official source
Food Standards Agency (FSA) — https://www.food.gov.uk
The HACCP standards shown in this application are for informational purposes only. KitchenNmbrs does not guarantee that displayed values are current or complete. Always consult the FSA or your local authority for the latest regulations.
Written by
Jeffrey Smit
Founder & CEO of KitchenNmbrs
Jeffrey Smit built KitchenNmbrs from 8 years of hands-on experience as kitchen manager at 1NUL8 Group in Rotterdam. His mission: give every restaurant owner control over food cost.
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