The Night I Tried To Explain EBITDA To A Chef

The Night I Tried To Explain EBITDA To A Chef

Saturday night. The KDS was filled with orders. Expo rail was packed. Entrees were just selling at 20-minutes instead of 15-minutes. The host stand ran, maybe, a 10-minute wait most of the night.

He was already mad before I opened my mouth. At the end of the night, I walked in from the office with a clipboard, which was my first mistake. I said something about EBITDA. He looked at me like I’d suggested something foolish. He asked if it was a new vendor or a new problem. I started talking about earnings before interest, taxes, depreciation, and amortization. His eyes went back to watching the cook clean the line and finish some prep.

Service ended. He pulled me aside. One sentence: “If this number doesn’t tell me what to cook, who to schedule, or what to stop doing, then I don’t care.”

Fair. That was the night I started explaining EBITDA like a shift.

What EBITDA Actually Is

Wish someone had given me this version before I walked into that kitchen.

Imagine you mow lawns in the summer. You charge $50 a lawn. At the end of the week you made $500. Then you subtract what you spent, including the gas, the trash bags, and transportation. What’s left is yours. That’s the idea.

EBITDA is the restaurant version of that. You take everything the restaurant brought in. Then you subtract the costs you can actually control, such as food, drinks, the hours your team worked, the waste you threw away, and the comps you handed out. What’s left is EBITDA. Earnings Before Interest, Taxes, Depreciation, and Amortization. The letters stand for costs that don’t live in the kitchen. It’s the bank loan on the buildout, the tax bill, the way the oven loses value every year on paper. Those matters most to owners and accountants. They don’t shift based on whether your prep cook showed up or whether you over-ordered salmon on a slow Tuesday.

Food cost. Labor. Waste. Comps. These move every single week based on the decisions made by people in your restaurant. That’s what EBITDA captures.

You track it because it’s the only number that tells you whether the restaurant is actually earning its keep. Sales can appear strong, but EBITDA can still be unattractive if food costs or labor are running high. You can’t see that from the top line. You have to go all the way down to what’s left.

Every week you don’t look at it, you’re flying without instruments.

The First Time I Blew It

That month, sales were down 5%, and costs were sliding in the wrong direction. I brought the managers into the dining room between lunch and dinner. Printed P&L in front of each person. Circled EBITDA in red like it was the answer key.

Told them this was the number ownership watched. Told them it showed whether we were winning. Told them we had to hit a target.

They nodded. Folded the papers. One left hers on the table. The service that night looked exactly like the night before.

I thought I’d explained it clearly enough. I had. That wasn’t the problem. That circled number had nothing to do with the week they’d just run. There was no path from the owner’s bottom line back to the fourteen-hour Saturday they were still feeling in their knees. You can hand someone a target, and they’ll nod and walk out and do exactly what they did yesterday. Took me longer than it should have to understand that.

The Bar Towel

A week later, same dining room, same team, no printed P&L. I brought a big sheet of paper and a Sharpie.

On the table, I wrote three numbers. $200,000. $178,000. $22,000. “That’s last month. $200,000 in sales. $178,000 in costs we control together. $22,000 left. Owners call that EBITDA for this restaurant.”

No one asked what the letters stood for. They asked what was in the $178,000.

We built it in front of them. Food. Beverage. Hourly labor. Salaried managers. Discounts. Comps. Waste. A few things we couldn’t dodge, like rent and utilities, went into a column we called “we have to pay this to be open.” Someone pointed at overtime. Someone else pointed at bar comps on slow nights. A third brought up the Tuesday we ran a full line that never filled. Their choices, their week, written out on a bar towel in the dining room where they worked.

When I showed up with the printed P&L, the number belonged to someone in an office. When we built it on the big sheet of paper with a Sharpie, it belonged to the room. That’s the only thing that changed.

The Line That Works

In a restaurant, the definition of “lands” is simple. “It’s what’s left after we run the restaurant for a month and pay for everything we can actually touch.”

That means food. Labor. The waste bin that’s too full, the prep that ran long, the comps that bought silence instead of loyalty. Interest, taxes, depreciation, and amortization still matter to owners and lenders. Managers and Chefs don’t live there. They live on the floor and on the line.

So I keep the core and drop the rest. Sales minus the costs that everyone on the floor can see and touch. A number only sticks when someone can find their own fingerprints on it.

What Chefs Actually Hear

There’s a moment I’ve felt in every restaurant I’ve managed. You’re about to bring a number into the kitchen, and you can already feel it before you say a word. Shoulders drop a little. Someone checks the board even though nothing has just came in. You haven’t spoken yet, and you’ve already lost half the table.

Say “EBITDA” in your kitchen and most people hear one of three things. The owner wants more money. Someone in corporate is nervous. Someone is about to cut labor. I watched that play out once with a Sous Chef who crossed his arms the second I pulled out a sheet of paper. Didn’t matter what was on it. The paper itself was the message.

The suspicion is earned. I’ve been the person walking in with the clipboard. I’ve also been the person on the line hearing this acronym and wondering what gets taken next. The only way I’ve found to cut through it is to make a specific promise while the word is still in the air. “This number isn’t here to justify cuts you already feel. It’s here to show which of your decisions already saved us.” Then the proof has to follow immediately, or the room closes back up.

Where They Already Protect It

One Chef I worked with was convinced that finance only showed up to reduce his world. We pulled three months of invoices and laid them next to the food cost line. He’d shaved waste on two high-volume items by changing his prep. No one had ever told him what that did to the bottom of the page.

“That change you made on the ribeye trim puts an extra $400 a week into that last line the owners stare at.”

He didn’t care about the acronym. He cared that someone finally put a number on the thing he’d been fighting for with his knife and his scale. Once Chefs and Managers can see their own decisions in the numbers, they start bringing ideas to you instead of waiting for you to show up with another cut.

How I Talk About It In Pre-Shift Now

No slides. No lecture. One target. Two or three direct examples from last week.

“We want this restaurant to keep fifteen cents on every dollar after we pay for what we can control. If food waste runs hot, that fifteen shifts down. If we overschedule Friday because we’re scared and then cut two people early, that fifteen moves again, and those two go home mad. If we keep ticket times tight and protect high-margin items from getting eighty-sixed, that fifteen moves in the direction we like.”

Then I pick three decisions from last week and name them out loud. We ran a full line on a Tuesday that never filled. We eighty-sixed a high-margin item because prep overcut on two others. We comped three checks because the tickets died in the window. Nobody needs a finance class to see what happened. The conversation stops being “hit this target” and turns into “show me which choices last week pulled that eleven down.” Once they start answering that faster than I can ask it, EBITDA isn’t a word from the office anymore. It’s another tool on the line.

Where I Leave It

“You already control this number. I’m just showing you where your work lands. Next week, I want more of the stories where you moved it on purpose and fewer nights where we look at each other in the walk-in and know we left money on the floor.”

Then I put the marker away and go run the shift with them.

I write about what actually happens in restaurants. Follow along for free.

#RestaurantManagement #KitchenCulture #FoodServiceLeadership #HospitalityIndustry #RestaurantOperations #Restaurant101