Restaurant Profit Calculator
Calculate restaurant profit and compare food cost, labor, and overhead against industry benchmarks
Industry ideal: 28–35%
Industry ideal: 30–35%
Ideal: <10% of revenue
Ideal: 3–5% of revenue
Ideal: 3–5% of revenue
Insurance, supplies, misc.
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Quick summary
Restaurant profitability hinges on controlling the 'prime cost' — food cost + labor — which should stay below 60–65% of revenue. Most profitable restaurants target 28–35% food cost, 30–35% labor, and under 10% rent, leaving 15–25% for overhead and profit.
Reviewed by Simple Calculators TeamLast reviewed
How to use this calculator
- Enter the inputs requested by the calculator.
- Choose the units or options that match your situation and review the assumptions.
- Run or update the calculation to see the result.
- Review the result, breakdown, and formulas shown on the page.
- Check the inputs, units, dates, and limitations before saving or sharing the result.
Restaurant Profit Formulas
Gross Profit
- Revenue
- Total monthly sales
- Food Cost
- Cost of goods sold as % of revenue (ideal: 28–35%)
Worked example
$50,000 revenue, 30% food cost
- Given
- Revenue = $50,000Food Cost = 30% = $15,000
- Calculation
- Result
- $35,000 gross profit (70% gross margin)
Net Profit
- All Expenses
- Food + labor + rent + utilities + marketing + other
Worked example
$50K revenue: 30% food, 32% labor, $4K rent, $1.5K utilities, $1K marketing, $2K other
- Given
- Food = $15,000Labor = $16,000Fixed Costs = $8,500
- Calculation
- Result
- $10,500 net profit (21% margin)
Frequently asked questions
What is a good profit margin for a restaurant?
Restaurant net profit margins are notoriously slim. Full-service restaurants average 3–9% net margin. Fast food and quick-service restaurants do better at 6–15%. Fine dining can hit 10–15% when execution is excellent. If total costs exceed 75–80% of revenue, profitability becomes very difficult.
What is the ideal food cost percentage?
Industry benchmark is 28–35% for most restaurant types. Fast food can run 25–30%. Fine dining 28–38% (higher food quality). Bars 20–25% (beverages have high margins). If your food cost exceeds 35%, look at portion control, menu pricing, supplier negotiations, and waste reduction.
What is a good labor cost percentage for a restaurant?
Target 30–35% of revenue for labor (including wages, payroll taxes, and benefits). Full-service restaurants tend toward the higher end (35–40%) while fast casual and QSR aim for 25–30%. Labor is often the hardest cost to control — optimize scheduling and cross-train staff.
What is prime cost in restaurants?
Prime cost = food cost + beverage cost + labor cost. This single metric is the most important indicator of restaurant health. Target: prime cost below 60–65% of revenue. Above 70%, the restaurant will struggle to cover occupancy costs and overhead and remain profitable.
How much rent should a restaurant pay?
The 10% rule: rent should not exceed 10% of revenue. If you're paying more, you need higher revenue or lower rent. Before signing a lease, calculate your realistic revenue projection and ensure the rent is under 10% of that figure. Some high-traffic locations can justify up to 12–15% due to volume.
Key terms
- Food Cost Percentage
- Cost of ingredients divided by revenue — the most-watched metric in restaurant operations
- Prime Cost
- Food cost + labor cost combined — should be below 65% of revenue for profitability
- Gross Profit
- Revenue minus food cost — also called contribution margin before labor and overhead
- Net Profit Margin
- Net profit divided by revenue — restaurant industry average is 3–9%
Methodology, sources & limitations
This page shows the formula, assumptions, and limitations used for this estimate. Rates, thresholds, and other time-sensitive inputs can change, so verify them against the relevant official source before relying on a result.
For our review approach and the primary sources we consult, see the methodology and source policy. If you spot an outdated figure or formula, please contact us with a correction.