Most restaurant owners think tracking purchases equals tracking food cost - that's completely wrong. Inventory changes can shift your food cost percentage by 3-5 points monthly. Here's how to calculate your true P&L using proper inventory adjustments.
Why inventory data is essential for your P&L
Your P&L shows actual profit over a month. But if you only track purchases and sales, the numbers lie to you. What you buy doesn't always sell in the same month.
💡 Example:
Restaurant The Taste in February:
- Ingredient purchases: €8,000
- Revenue: €28,000
- Opening inventory: €3,500
- Closing inventory: €4,200
Without inventory adjustment, food cost appears to be: €8,000 / €28,000 = 28.6%
With inventory adjustment: (€8,000 + €3,500 - €4,200) / €28,000 = 26.1%
That 2.5 percentage point difference equals €700 more profit on paper - or €700 less if inventory drops.
The formula for actual food cost
For accurate P&L calculations, use this formula:
Actual food cost = (Purchases + Opening inventory - Closing inventory) / Revenue × 100
This shows the cost of what you actually sold, not what you bought.
⚠️ Note:
Always calculate with revenue excluding VAT. Restaurant revenue has 9% VAT, so €28,000 incl. becomes €25,688 excl. VAT.
Inventory count: what do you include?
For your P&L, count all ingredients you can sell:
- Fresh products: meat, fish, vegetables, dairy
- Dry goods: rice, pasta, spices, oil
- Frozen: everything you can use
- Beverages: wine, beer, soft drinks for sale
What you skip:
- Cleaning supplies
- Napkins, cutlery
- Spoiled products
Practical inventory counting
Most restaurants count inventory on the last day of each month, after closing. This gives you the clearest picture possible - something most kitchen managers discover too late after months of confusing P&L numbers.
💡 Practical example:
Bistro The Square counts every month on the 31st:
- Refrigeration: 45 minutes (meat, fish, dairy, vegetables)
- Dry storage: 30 minutes (pasta, rice, canned goods)
- Beverages: 20 minutes (wine, beer, soft drinks)
- Freezer: 15 minutes
Total counting time: 1 hour 50 minutes per month
From inventory data to P&L figures
With your inventory numbers, calculate actual costs per category:
Food cost = (Food purchases + Opening food inventory - Closing food inventory) / Food revenue
Beverage cost = (Beverage purchases + Opening beverage inventory - Closing beverage inventory) / Beverage revenue
💡 Complete P&L example:
Restaurant March figures:
- Food revenue: €22,000 (excl. VAT)
- Food purchases: €6,500
- Opening food inventory: €2,800
- Closing food inventory: €3,100
Actual food cost: (€6,500 + €2,800 - €3,100) / €22,000 = 28.6%
Gross margin food: 71.4% = €15,700
Digital tools
Manual counting and calculating eats up time. Many restaurants use tools like KitchenNmbrs to:
- Record inventory counts digitally
- Automatically calculate P&L
- Compare trends month by month
- Flag unusual figures
⚠️ Note:
No app counts your inventory automatically. You still enter the figures - the app just handles calculations and provides overview.
How do you process inventory data in your P&L? (step by step)
Count your inventory on the last day of the month
Go systematically through refrigeration, dry storage, freezer and beverages. Note everything you can sell with the purchase value. Count after closing for the most accurate picture.
Gather your purchase figures from that month
Get all supplier invoices from that month. Split food and beverages. Only include ingredients you sell, not cleaning supplies or other operational costs.
Calculate your actual cost price using the formula
Use: (Purchases + Opening inventory - Closing inventory) / Revenue excl. VAT × 100. This gives you the actual food cost percentage for that month, adjusted for inventory changes.
✨ Pro tip
Count your top 15 highest-cost ingredients weekly (takes 20 minutes) and full inventory monthly on the same date. This catches cost overruns before they destroy your monthly P&L.
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
Do I need to count my inventory every month for the P&L?
Yes, for an accurate P&L count at least monthly. Without inventory adjustment, your food cost can swing 2-5 percentage points from reality.
How do I value my inventory: purchase price or selling price?
Always purchase price. Your inventory reflects what you paid for it, not what you'll sell it for. Use the most recent purchase prices from your supplier.
What if my inventory rises every month?
Then you're buying more than you're selling. Your actual food cost drops, but cash flow suffers. Check if you're overstocking perishables.
Can I automate inventory counting?
No, you must physically count what's there. Apps help you record and calculate, but the counting itself stays manual work.
📚 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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