How To Write a Grocery Store Profit and Loss Statement

Between purchase orders, permits, and tax documents, it’s easy to get overwhelmed with paperwork as a small business owner. 

However, there’s one critical report that can’t fall to the bottom of the pile: your grocery store’s profit and loss statement. 

In this blog, we’ll explore what a grocery store profit and loss statement is, why it matters, and how to create one — plus how the right tools can make it a breeze. 

What Is a Grocery Store Profit and Loss Statement? 

A profit and loss (P&L) statement is the key to understanding your grocery store’s financial health. 

This critical report summarizes your store’s overall revenue, inventory expenses, and operating costs — giving you a comprehensive overview of the money flowing into and out of your business during a certain timeframe. 

It also includes a calculation of gross and net profits, which are the main indicators of your grocery store’s financial health. 

Along with indicating whether your store is turning a profit, an accurate P&L statement helps you make informed decisions and plan strategically. For example, it might reveal opportunities to cut your operating costs, improve your inventory forecasting and ordering approach, or adjust your prices to boost profitability. 

What To Include in a Grocery Store Profit and Loss Statement

Now that you know the why behind grocery store P&L statements, let’s dive into the how. These reports have five key components: 

• Revenue
• Cost of goods sold (COGS)
• Gross profit 
• Operating expenses
• Net profit

Let’s take a closer look at these sections and what you should include in each. 

Revenue

The first step to creating a grocery store profit and loss statement is to calculate your grocery store’s overall revenue. This figure should include the total of every sale made in your store during a certain period, plus any extra income from services like delivery or catering. 

Check your point of sale (POS) system’s sales reports to ensure the value of every transaction is accurately reflected in your P&L statement. 

COGS

Next, calculate your grocery store’s COGS. This number represents the total amount of money you spent on inventory during a certain period. 

Along with the wholesale cost of the actual goods, make sure to include any shipping and handling costs, taxes, and custom packaging fees. Don’t forget to calculate the labor costs associated with preparing products like meat and freshly-baked goods for sale. 

To calculate your COGS, you need three numbers: 

• Beginning inventory: This is the value of inventory already on your shelves at the beginning of the period.
• Purchases during the current period: This is how much you spend on inventory during the current period.
• Ending inventory: This is the value of inventory left over at the end of the period. 

Then, plug them into this formula: 

Beginning inventory + Purchases made during the current period - Ending inventory = COGS

Your POS system’s inventory management features should track wholesale costs for each product on your grocery store’s shelves, making it easier to calculate your COGS. 

Gross Profit

Once you know how much you spent on inventory, you’re ready to calculate your gross profit. This calculation compares your sales revenue to your inventory costs. 

Simply subtract COGS from your revenue, and you’ll have your gross profit number to plug into your grocery store profit and loss statement. 

Operating Expenses

Gross profit doesn’t always tell the entire story when it comes to grocery store financial success — which is why your P&L statement should also include your general operating expenses. 

This section should include every dollar you spend to keep your store open, including: 

• Lease or mortgage for your grocery store’s space
• Utility and maintenance costs
• Salaries and wages for your employees
• Business insurance
• Marketing and advertising costs
• Supplies like shopping bags and receipt paper
• License and permit fees to maintain your store’s legal operating status
• POS hardware and software subscription

These are just a few examples of what it costs to run a grocery store, so carefully audit your accounts for a full overview of your expenses. 

Net Profit

Net profit is the final (and possibly most important) part of a grocery store profit and loss statement. This metric represents the total amount of money your business has generated in profit over a certain period. 

To calculate your grocery store’s net profit, simply subtract your operating expenses and COGS from your overall revenue. 

More than other grocery store key performance indicators (KPIs), your net profit gives a decisive answer about how your business is performing overall. If it’s lower than expected, you can take concrete steps to adjust your prices, minimize shrinkage, reduce your operating expenses, or improve your marketing approach. 

How To Create Grocery Store Profit and Loss Statements Effortlessly

While you can create a P&L statement for your grocery store by following these steps, doing the math by hand takes up valuable time and can lead to errors. 

That’s why we recommend relying on a POS system with powerful reporting features. This tool monitors everything happening in your grocery store to give you a real-time overview of your inventory movement, sales transactions, and even expenses. 

To determine your revenue, COGS, and profit margins, you can simply check your POS system’s sales reports and plug the numbers into your P&L statement — saving you time and giving you peace of mind about your grocery store’s financial performance. 

Achieve Higher Grocery Store Profits With IT Retail

Looking for a POS system with powerful reporting capabilities and features to help you make more sales? You’re in the right place. 

IT Retail is an all-in-one POS solution designed specifically for grocers like you. Along with real-time inventory tracking and in-depth sales reporting, our software includes sales-boosting features like a built-in loyalty program, promotion management, and e-commerce integration. 

Discover how IT Retail can boost your grocery store’s profits by scheduling your personalized demo today.