Net Profit meaning in hospitality

Net profit is the money left over after you’ve subtracted all your expenses from your total revenue. It's called the 'bottom line' because it’s at the bottom of your income statement. To calculate net profit you subtract costs like food and beverage, staff wages, rent, utilities and taxes from your total sales. This is how much money your business is actually making after all the bills are paid.

For hospitality people, understanding net profit is key to measuring the health of your business. It helps you make decisions on pricing, staffing and investment. By tracking net profit over time you can see trends, identify areas to improve and measure the success of new initiatives. For example if you’ve just launched a new marketing campaign or introduced a new menu item you can see how it’s impacting your net profit.

Let’s say you’re the manager of a busy city centre restaurant. Your monthly sales are £100,000 but your costs (food, staff wages, rent and utilities) are £85,000. Your net profit is £15,000. You notice your net profit has been decreasing over the past few months. By digging into your costs you see that food costs have gone up. Armed with this information you can take action - maybe adjust your menu prices, find new suppliers or reduce portion sizes to get your net profit back up to where it should be.'