Understanding Gross Profit in Hospitality
What gross profit (GP) means for restaurants and cafés, how it's calculated, and why it matters more than turnover.
What GP means
Gross profit is the money left from a sale after the cost of ingredients has been taken away, before wages, rent and other overheads.
The calculation
GP £ = net selling price − ingredient cost. GP % = GP £ ÷ net selling price × 100.
Cash vs percentage
A high GP percentage on a cheap item can earn less cash than a slightly lower percentage on a premium dish. Look at both.
Setting targets
Many operators set GP targets by category. The right target depends on your business, prices and overheads.
Try the numbers yourself with our free food cost calculator.