Use a 13-month P&L statement to gain long-term view of your business health

Keeping track of finances is crucial to a successful restaurant. The classic profit and loss statement is essential for monitoring your store’s financial status, showing your revenue costs and net income, where you are and where you’re going.

The classic QuickBooks P&L statement isn’t geared toward you and your team. Quickbooks and general ledgers are for accountants by providing clean monthly figures like 12 months of rent and 12 months of bills. All done this way to describe your fiscal status to a bank or the IRS. There is a better way to describe your restaurant’s health to your team or even for you to base decisions on.

Mike Bausch, owner, Andolini’s Pizzeria

Think about your routine month to month. Tuesday, January 3rd is far from Friday, February 3rd, let alone March 30th, versus the non-existent February 30th. That’s why it’s necessary to operate with a 13-month P&L. The 13-month P&L compares 13 four-week periods. This breeds clarity to know genuinely, what you are doing as a business, comparing apples to apples in each season and giving you a good look at how to prepare for the future based upon past actuals. Monthly totals fluctuate erratically, But the third four-week period of the year will be a lot like the same third four-week period of the following year, i.e., the value of a 13-month P&L.

The 13-month P&L statement is a long-term view of your health, providing a comprehensive look at your actual financial position.

The 13-month P&L statement lets staff know whether they’re performing or not and for you to plan accordingly. A 13-month P&L aids projections in knowing when to tighten for an upcoming slump or prepare for a sales boom. What do you do with certain 12-month expenses?

The easy answer is for the ones that are fixed, divide them across the year, amalgamate them by 12, and then divide by 13 to get an even look or take them out of the mix entirely since they’re set expenses and only look at your KPIs or key performance indicators that you and your staff need to observe on the regular. Calculate all the week’s expenses Sunday night after closing or on Monday. Send the KPIs to staff  THAT MONDAY. Yes, it’s laborious, but it’s also actionable info deciding the most important factor of your business. Waiting until the month’s end is not only lazy, it’s reckless. Every week, a deep dive into where you landed on food cost and labor vs. revenue will keep your team focused, and that which gets measured gets done.

A 13-month P&L statement will help identify your cost drivers. And as an owner, you can compare which month will take its toll on you. Proper forecasting and budgeting are not the most often discussed subject in our industry, but it’s critical to your financial health to ensure you’re here for the next year and the years to come. I’m not saying the classic QuickBooks P&L isn’t viable. It completely is. It still needs to be performed for all your proper due diligence, but you must operate with a 13-month, or you are flying blind.

Mike Bausch is the owner of Andolini’s Pizzeria in Tulsa, Oklahoma.  Instagram: @mikeybausch