The Income Statement (DRE) is a financial report used to identify how much the company is bringing in, what its main costs and expenses are, and whether it's making a profit or a loss.
In other words: it's an essential tool in the financial management of any business, including those in the food service sector.
To learn more about why the DRE matters for restaurants and find out how to structure yours, keep reading this article!
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What does DRE mean?
The acronym DRE stands for “Demonstrativo de Resultado do Exercício” (income statement) and refers to a financial report. Its purpose is to show the company's economic performance over a given period of time.
To do that, it lays out — clearly and in an organized way — the revenue, expenses and profits or losses recorded during the period in question.
By listing these indicators, the accountant or the manager can quickly see the main results and, from there, understand the financial situation of the business.
What is the DRE for?
The DRE is used to report on and analyze a company's financial results. In some cases it is mandatory, under Law No. 11.638/07.
With the indicators in the DRE, you can:
- Quickly identify whether the business is turning a profit or a loss, and understand the main causes;
- Understand how the Cost of Goods Sold (COGS) is impacting your Profit margin;
- Compare current performance with previous periods and identify trends;
- Make strategic decisions to improve the business's results.
The DRE is therefore an important tool for running a restaurant. By looking at the results, the manager can, for example, spot the need to change menu pricing, negotiate ingredient costs with suppliers, improve inventory control, among other measures to achieve better performance.
Below, see how the DRE is structured and learn more about why this report matters for restaurants.
How to structure the DRE?
To structure your restaurant's DRE efficiently, it's important to follow a logical, organized order. Check out a suggested DRE structure below.
Gross Revenue
This is the sum of all revenue from your restaurant's core activities, such as food and beverage sales. It can also include earnings from services rendered and other cash inflows.
Deductions and allowances
This covers discounts, returns and sales taxes, such as ICMS, ISS, among others.
Net revenue
This is gross revenue minus deductions and allowances.
CPV or COGS
Cost of products sold (CPV) or Cost of goods sold (COGS). Engloba todos os custos diretamente relacionados à produção dos alimentos e bebidas vendidos, como ingredientes, embalagens, entre outros.
Gross profit or gross result
Gross profit, or gross result, is the difference between net revenue and production costs. If the restaurant's production cost is higher than what it makes in sales, the result will be negative, indicating losses.
Operating Expenses
Selling, administrative and financial expenses. These include every cost needed to keep the restaurant running and to make sales happen, such as rent, salaries, marketing expenses, commissions, electricity, water, among others.
Result before IRPJ/CSLL
This is the result before applying the IRPJ (corporate income tax) and CSLL (social contribution on net profit) taxes.
IR and CSLL taxes
It covers the taxes owed on the faturamento of the company.
Net result for the period
Finally, the net result is obtained by subtracting the tax amount (IR and CSLL) from the pre-tax result.
Following this DRE template, the calculation looks like this:
Gross Revenue
(-) Deductions and allowances
(=) Net Revenue
(-) CPV or COGS
(=) Gross Profit or Result
(-) Operating Expenses
(=) Result before IRPJ CSLL
(-) IRPJ and CSLL tax
(=) Net Result
Keep in mind that this is a basic DRE template, but you can include other indicators for a more detailed report. That's why it's essential to have an accountant in charge of preparing this statement.
You also need a reliable restaurant system that records everything correctly and lets you generate consistent reports.
Why does the DRE matter for restaurants?
The DRE plays a key role in your restaurant's financial management for several reasons. Learn more below!
Decision-making
The DRE lets you pinpoint what is having the biggest impact on your results.
That way, you can make sharper decisions about menu changes, pricing, investments, expense cuts, price adjustments, among others.
The DRE also provides valuable insights for your restaurant's strategic planning, helping you set financial goals and build action plans to reach them.
Financial control
By bringing together your restaurant's main financial indicators, the DRE enables more efficient control of your finances.
You can quickly see your results, understand your profitability and map out waste.
Performance evaluation
By analyzing the DRE, you can evaluate your restaurant's financial performance over time and compare it with that of other businesses in the same segment.
This gives you a clear view of your business's financial health and its competitiveness in the market.
TRANSPARENCY
By keeping the DRE up to date and available for review, you show transparency and professionalism to your partners and investors.
Count on EPOC to manage your restaurant
As we've seen, the Demonstrativo de Resultado do Exercício is an indispensable tool for managing your restaurant's finances efficiently. With it, you'll be better prepared to make strategic decisions that contribute to your restaurant's success.
To get reliable data and put your DRE together faster, count on EPOC!
Our platform helps you optimize customer service and control your sales through a fast POS, and simplifies management with a complete ERP, Dashboard Analytics and much more.
Fale com nossos consultores and find out how we can help your restaurant grow.
