Typical Average Restaurant Profit Margins

Guide To Making A Profit

In the restaurant business it’s about making great food, and all about making a great profit as well. What you come to find is that it’s not as easy as it may seem for someone to make a profit.

However, in Joe Bastianiach’s book The Restaurant Man the entire first chapter is dedicated to something the author calls “Restaurant Math”. This is the secret ingredient to making a good profit in the restaurant business.

The divide you’ll find in the restaurant business is pretty simple. Your costs level out to labor, food and wine costs, and miscellaneous costs such as rent or insurance. Therefore, when you charge for food, wine, and more you should be having margins at about three times that, on everything.

All together your gross divide is labor at thirty percent; food and wine at thirty percent, miscellaneous costs at twenty percent, and finally your profit should come out to twenty percent. For example, if you need to gross ten thousand a night you need at least two hundred people spending fifty dollars apiece.

Within that ten thousand that you gross three thousand will go to labor, another three to food and wine, two thousand towards miscellaneous, and finally by the end you’ll have two thousand in profit. On the contrary, sometimes it can be much harder to make that ten thousand than expected.

So another idea you must realize is that some things you will make more money on, while others you will make less. Your cost versus margin should resemble your meats that you sell costing you half of menu price. These meats serve as your main loss leader.

Next on the list, your pastas and salads should be around fifteen percent, your apps and desserts bring down cost which levels out to pure profit, and finally your wine should be about thirty to fifty percent of menu price. Basically everything should level out to about thirty percent. The montra you must keep is you buy it, you fix it, and then you sell if for a profit.

In general most similar New York City restaurants make around ten to twenty percent profit a year. A restaurant you could use for a good example is Babbo in New York. Its monthly rent is twelve thousand dollars, the restaurant has a seat count of one-hundred and ten, and finally it charges around forty to forty-five dollars per person.

Their gross intake comes out to seven thousand per night, fifty thousand a week, and about two point five million to three million a year. All in all the twenty percent of profit is six hundred thousand dollars.

In the end restaurant math is pretty simple. It’s not hard to figure out and the profit that you can make is definitely worth it. So take this advice and take your dreams of owning a restaurant come reality.