Restaurant Profitability Calculator

Restaurant industry benchmarks

These are widely accepted benchmarks for full-service and quick-service restaurants. Your ideal targets will vary by concept, location, and cuisine type — but these are the numbers every operator should know.

Cost line	Excellent	Acceptable	Warning sign
Food cost %	25–28%	28–35%	35%+
Beverage cost %	18–24%	24–30%	30%+
Labour cost %	25–28%	28–35%	35%+
Prime cost (food + labour)	Under 55%	55–65%	65%+
Occupancy / rent %	Under 6%	6–10%	10%+
Net profit margin	15–20%+	5–15%	Under 5%

What is prime cost and why does it matter?

Prime cost is your food/beverage cost plus your total labour cost combined. It's the single most important number in restaurant finance because these are your two largest and most controllable costs. Most profitable restaurants keep prime cost below 60–65% of revenue. If your prime cost is above 70%, profitability becomes extremely difficult regardless of how well you manage everything else.

Why restaurant profit margins are lower than people think

The average full-service restaurant operates on a net profit margin of 3–9%. Fast casual and quick service typically do better at 6–12%. Fine dining varies enormously. Most people outside the industry assume restaurant margins are much higher — the reality is that food, labour, and rent together typically consume 70–80% of revenue before you've paid a single overhead bill.

This is why the "big three" — food cost, labour, and occupancy — are watched so obsessively by experienced operators. A 2% improvement in food cost on a $1M annual revenue restaurant is $20,000 straight to the bottom line.

The most common profit leaks

Food waste and portion control inconsistency — often 3–5% of revenue in poorly managed kitchens
Overstaffing on slow shifts — labour is the easiest cost to over-spend and the hardest to cut once staff are hired
Rent above 10% of revenue — a structurally difficult position that requires very high volume to overcome
Underpriced menu items — many operators haven't properly costed their dishes since opening
Beverage margins not maximised — drinks typically carry 70–80% gross margins and are often the most profitable revenue line

Frequently asked questions

What is a good net profit margin for a restaurant?

For a full-service restaurant, a net margin of 10–15% is considered strong. 5–10% is acceptable. Under 5% means the business is vulnerable to any cost increases or revenue dips. Fast casual and takeaway concepts can often achieve 12–18% due to lower labour costs.

Should I include my own salary in labour costs?

Yes — always include an owner/operator salary at market rate, even if you're not drawing it. This gives you a true picture of the business's profitability. A restaurant that only "makes money" because the owner is working for free is not a profitable business — it's an expensive job.

What's included in prime cost?

Prime cost = total cost of goods sold (food + beverages) + total labour (including wages, salaries, payroll taxes, and benefits). It's the combined cost of your two biggest variable expenses and the most important single metric in restaurant financial management.

How often should I calculate my restaurant's profitability?

Weekly at minimum for labour and food cost. Monthly for a full P&L review. Many successful operators do a simplified prime cost calculation every single week — it's the fastest early warning system for cost problems before they become serious.

My food cost percentage looks fine but I'm still not making money — why?

The most common culprits are labour (check your hours vs covers ratio), occupancy (rent above 10% is structurally very difficult), and hidden overheads that have crept up over time. Use the detailed P&L mode above to see every cost line as a percentage of revenue — the answer is usually obvious once the numbers are laid out clearly.