A restaurant profit margin calculator shows your net margin after all costs — food, labor, rent, and overhead. Industry benchmarks: 3-9% is typical for full-service restaurants; 6-9% for fast casual. This tool color-codes your result against these benchmarks instantly.
Revenue & Costs (Monthly)
All ingredient and beverage costs
All wages, salaries, benefits, payroll taxes
Insurance, supplies, marketing, POS, cleaning
Profit Analysis
Industry Benchmarks
Enter your revenue and costs,
then click Calculate
How to Use the Restaurant Profit Margin Calculator
Restaurant profit margins are razor-thin for a reason: high food costs, high labor requirements, and expensive real estate compress margins even in successful operations. This calculator helps you understand exactly where your margins stand and which cost categories are out of benchmark range.
Step 1: Enter Monthly Revenue
Use total gross revenue before any deductions. Include food, beverages, and any other revenue sources (catering, merchandise, delivery). Monthly figures are most useful for cash flow planning — multiply by 12 for annual projections.
Step 2: Enter COGS (Food and Beverage Costs)
COGS includes all ingredients, beverages, and packaging directly consumed in the products you sell. It does not include labor or overhead. A target of 28-33% of revenue is healthy for most restaurant formats. If your COGS is above 38%, your menu prices may be too low relative to ingredient costs.
Step 3: Enter Total Labor Cost
Include all labor: kitchen staff wages, server wages, manager salaries, owner draws (value your time at market rate), payroll taxes (approximately 15% on top of gross wages), and any employee benefits. Labor at 28-35% of revenue is typical. Above 40% requires either higher revenue per employee or reduced staffing.
Understanding Prime Cost
Prime cost is food + labor combined. This is the single most important metric in restaurant finance. A prime cost below 60% leaves 40% of revenue for rent, utilities, and profit. At 65% prime cost, you have 35% for overhead — tight but manageable. Above 70% prime cost, most restaurants cannot survive unless they have very low rent (under 5% of revenue).
FAQ
What is a good profit margin for a restaurant?
Industry benchmarks: fast casual typically achieves 6-9% net margin. Full-service restaurants average 3-9%. Food trucks and ghost kitchens can achieve 6-12% when well-managed. A net margin below 3% is a warning sign — the business has very little buffer for slow months or unexpected expenses.
What is the prime cost formula for restaurants?
Prime cost = Cost of Goods Sold (COGS/food cost) + Total Labor Cost. Prime cost as a percentage of revenue should stay below 60-65% for a healthy restaurant. Above 70% prime cost leaves almost no room for rent, utilities, and profit.
Why do most restaurants fail?
The most common failure causes are underestimating startup costs, poor location (insufficient foot traffic), inadequate working capital (running out of cash before reaching break-even), poor food cost control, and pricing menu items too low relative to ingredient costs. Most financial failures trace back to prime cost exceeding 70% of revenue.
What should food cost be for a restaurant?
Target 28-32% food cost for full-service restaurants. Fast casual and food trucks typically aim for 30-35%. Fine dining may run 28-35% but at much higher menu prices. Food cost above 38% is very difficult to sustain profitably.
Is this restaurant profit margin calculator free?
Yes, completely free with no signup required. Enter your actual revenue and costs to see exactly where your margins stand against industry benchmarks.
What is COGS in restaurant accounting?
COGS (Cost of Goods Sold) in restaurant accounting includes all direct food and beverage costs: ingredients, produce, proteins, dairy, beverages, and packaging. It does not include labor, rent, utilities, or marketing. COGS ÷ Revenue × 100 = Food Cost Percentage.