Food expense is the cost of the food purchased. Some foodservice
operations also include beverages in this category. Labor expense is the
total cost of the labor force that a food service operation employs.
Overhead expense consists of all other expenses except food, labor, and
profit. Examples of overhead expenses are the cost of equipment, uniforms,
laundry service, water, electricity, rent or mortgage, and taxes.
Profit is considered as an accrual expense before any cash flow or sales.
Once a sales transaction has taken place, all expenses have been paid, and there
is money left in the cash register, there is a profit. It is then that profit is no
longer considered to be an expense but rather an asset to the foodservice
operation.