Average Restaurant Profit Margin
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- Опубліковано 16 вер 2019
- Restaurant Owners... Have you ever wondered what the average profit margins are in restaurants? It's hard to find that information, so I'm going to break it down for you in today’s video. Watch now!
To learn more please either watch the videos above or click the link below to read the transcript or listen to the podcast on my website.
Also, please leave your questions or comments I will answer them all.
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Thank you,
Ryan Gromfin
The Restaurant Boss
TheRestaurantBoss.com
Do you know your prime cost?
4% - you're welcome 5:00
you saved me 5 min
Love this channel!! Just opened a pizza take out 2 months ago..this channel provides valuable content!!
Good luck with your business!
Wow - thanks Jason! You are going to love the series on cost control coming out in October. Good luck with the new business!
Jason Antill are you making a profit?
Good luck for business
Really grateful for your videos. You most definitely provide golden knowledge. We just had to buy a new grease trap and will need those drain locks. I don't want to deal with that type of issue for a while.
Much appreciated 🙏
Did you enter the Giveaway? Last day to enter is TODAY (Monday the 30th) therestaurantboss.com/guardian-drain-lock-giveaway/
Great video, great information
what a stuffs i got from your videos bro so great and helping brother thanks still watching for more
Glad to help.
Great insights!!!
A restaurant owner has to work with a very thin margin. To improve margin you may require single point operation management as well as ways to improve guest retention and attracting new guests that will lower operating costs.
❤ this was very helpful
I am always inspired by your videos. I have operated a diner here in small city with a poor demographic for the past 35 years. I started at age 22. It’s no surprise that the total cost to operate compared to 25 years ago makes me wonder why so many people think it’s a walk in the park to operate an eatery. They open up a new place 4 times a year under cut all others prices and close in a year or less. But meanwhile my guest flock to these places ad then run to FB and tell everyone to try it or not. Most of these people work for the eatery trying to get guests to come in. My biggest Expense is Labor and I do the cooking everyday with my partner as we split the day but have a cooks assistant to help with overflow and clean up. Our weekly gross is $6500 - $7500 and my weekly labor not including me is $2200. That’s 1 part time cook, 1 weekend dishwasher 2 weekday servers and 3 weekend servers. My partner takes over $900 a week for himself. My COG are $1500 - $2000 a week my rent is $2100 a month and utilities are $1000 a month. Cable $200 Insurance $150, CPA $150 a month. $500 for Misc a month. Lately many repair bills and I do spend $300 a month advertising. Does this seem good, bad, average?
May I offer a suggestion? To read the book Profit First, by Mike Michalowicz. It is awesome and it will help you understand if all your numbers are good, bad or otherwise!
I just listened to it on audible. What an eye opener! I hope it helps!
@@harmonywhalan4877 We just did a book report on Profit First - it's one of my favorites!
Wow I must commend you for lasting 35 years in business their is but a handful who can actually say the same it just goes to show that your work ethic is incredible keep it up , also what small city is your business located in ?
I am helping my fiancée open a burger joint in Mexico. These tips are truly helping me establish a better baseline to her business. Thanks @ the restaurant boss
Fantastic! Good luck to you both and let us know if you have further questions. Maybe join in one of our Facebook Live talks...they are every Tuesday at 3:00pm CST (1:00 PST) on my FB page: facebook.com/TheRestaurantBoss/
Hey jay it’s been a year to date since you posted this comment and I was curious to know if your wife ever got to launch her dream burger joint and if so how is it going ?
I learn more about what my financials should look like from you than I have from any accountant I've worked with to date.
Ha! Your accountant probably knows numbers; just not restaurant numbers. LOL!
Thank you for posting this
You're welcome!
Nice content! Could you talk about seating plan and furniture in F&B?
Thank you! In what respect to those items?
Love your videos buddy! I have two quick questions and would be grateful if you could share your views.
1. What'd you recommend as a good franchise to invest in if you are looking to eventually let it run on auto mode through staff and least of your personal time.
2. Would you recommend buying a running franchise store, specifically when you just have 20% of the asking price in account?
Thank you
Hi Kashish! Without knowing any of the details in the scenarios above, my general advice is just say no to franchises/franchising. Here's why: ua-cam.com/video/D385DD3QVBM/v-deo.html
One of the best FB knowledge channel
Thank you!
Thanks for sharing :D
You are welcome!
Quite informative....!!
Glad you think so!
Thanks you sir..
Hello Ryan, it’s been some time since we last communicated, and was hoping you could direct me to a good resource that will give some statistical info on demographics for selecting a location for a pick up carry out pizza specialty shop. Such as average customer visits per month. Population sizes for your average neighborhood/ contiguous towns. That sort of thing. Working on projections/ business plan. Thanks again, and as always…great content.
The key is how you breakdown the OTHER EXPENSES.
How many employees would you need if its a smaller family owned shop?
That's why I cook out of a commercial food trailer. It's paid for and that is critical if you want to make profits. Of course it's family run so no added employee issues.
Thanks
Any examples of resturaunts with profit margins higher than 10%?
????????
I enjoyed this video.
Do you have a Spreadsheet that I can utilize to plug in all my expenses to see where I am each month?
Also in figuring out Prime Cost, do I include Sales Tax Collected?
Hey Daniel! I do not have a spreadsheet for that any longer. Instead, I created a software program that tracks those numbers for you in real time and has a dashboard to give you snapshot pictures as well. Check it out: clickbacon.com
Awesome
Thank u
Very good vedio
you are the best
I am in the fast casual- with a very broad set of products. Would you rather suggest setting a fixen budget for a day. Like buy every day goods for 500, for example. And when it’s Sold it’s sold out. Or would you try to match it really close every day.
Great Stuff btw
I would set a budget for the month based on predicted sales, a day is not enough time. Please watch this workshop video here, I explain this is great detail: clickbacon.com/software-demo/
Nice
Hey buddy
Quick q
In the beginning after open, is it normal for labor to be high for a time until sales start to hammer labor down. It’s been my experience, that this is true. What I need from you is, that time frame, what should it be...or is there a rule of thumb accepted norm.
Tough question, and most answers would start, it depends.
Well, my depend is money put back to survive until sales move up. Just want to make sure I’m in the ballpark. I’ve been around 35 plus years and should know, but in a perfect world.....
Thanks
Tim
In Alabama.
There is no rule of thumb. I just helped open a restaurant last weekend, they hit their sales projections day one, and starting exceeding them on day 2,3 and now 4. I understand it takes time, but you should build demand before you open so you are not "struggling for sales" out of the gate. I guess the rule is get the sales up and labor down as fast as possible.
Dear sir can you tell me more details About p&l I would like learn about it from A to Z
Hi! I actually don't believe in P&Ls. They only give you information that has already occurred and you cannot take action on that information. This is why I created my food, beverage and labor cost control software, clickBACON. It gives you information in real time so you can take action NOW. Check it out: clickBACON.com
I check my labor cost every day and I want to know is I should use net sales total or gross sales total to get my percentage?
Hi Alex! Check this video out and see if it helps: ua-cam.com/video/NK-gVhgEKoo/v-deo.html
Hi Ryan , i just start to recently follow your nice video , i have watch carefully this video and i must say that the profit margin ur are talking about is extremely low. I am a group head chef so i am going through P&L every month and the profit our restaurant does , on avarage are 20 to 22% talking pure EBITDA! I guess if a restaurant is run properly could even make 25 to 35 as in my company we have overhead and hotel expenses that a singol restaurant wouldn’t have , what you think ? By the way nice job by giving all those great info and tips please keep going !
There are always exceptions, but usually 20% to 22% is high. Sounds like you are part of a hotel so likely you are getting a lot of services cheap or free, like maintenance, rent, accounting, legal etc as they are built into the hotel expenses. Also, in a hotel restaurant, you often get re-imbursed from the hotel side for things like free breakfast and employee meals at rates much higher than you would actually get for that same breakfast. I also say, if you are making too much, you are not investing enough. So three or four years at 30%, then you get hit with 100k in upgrades to furniture and repairs then your next year is 5% So it all depends on how people cook the books, but there are always the ones that do great, no question, these are general statements.
I'm currently opening an outdoor venue on 12 acres in San Antonio, TEXAS. I'm not too worried about the profit margin for that will come in time. Luckily I'm funding the venue with another business of mine that generates about $130,000 in profits a month. I don't really feel the burn like most people, but I would imagine how it could definitely be crucial to control your profit margins.
I literally just purchased an $11,000 smoker custom made, ordered $25,000 of limestone blocks, and $17,000 of artificial grass, with the rental of equipment for the month at about $20,000. Spoke with a gentleman yesterday who is putting a package together for a stage and outdoor speakers for $60,000. I haven't even reached the actual kitchen yet. Like I said, I don't feel the burn because of my other successful business. Good luck everyone, I wish all the best.
When figuring your labor cost, do you figure quarterly taxes into that number to? Benefits?
all taxes, benefits, insurance and employer-related expenses are included.
U mix the container price in with the meal
My labor costs are to high finding it to cut it down with out cuting production can you help me
I highly recommend you watch this video on Labor Costs: therestaurantboss.com/important-things-restaurant-labor-cost/.
In my restaurant chain I shoot for 25% Profit. My chain is a lot like a Blaze or Mod Pizza so cost are a lot lower.
That is fantastic.
Jake Griffin what is the name of your chain restaurant?
Dude where is your restaurant chain based out of what state I’m interested in knowing more about it ?
What does one do when they grew up working for their parents restaurant and they’re parents are worried about the transition. Whether it’s passed down to their children or whether it’s best to sell and move on.
If you want it, prove it, prove to them you can do it. And don't tell them all the things you are going to change, just do the job until it is yours.
@@Therestaurantboss I've got two siblings. One has been a server for a decade. One is actually named after the restaurant. and I process all the important payroll, bookkeeping, and bills. We are proving it but there is a very wealthy person threatening the situation. that's all I can say about it. someones trying to buy up our whole neighborhood, them being a multi x5 million. it's sad to think he can just buy us out after all the years we put in.
Hai Man U r absolutely great in presenting the video.
May I ask u a question?
I am running 2 Resturant in about 5 km .
I would like to to make one as a central kitchen,to reduce labour cost,
Gas,purchasing on bulk ,and for reducing electricity costs also.
I do have a proper plan about it, but lacking in proper guidance in term of practicality.
Need ur help bro 😊
Hey Ajmal, your best bet is to book a strategy call with Ryan here:
www.therestaurantboss.com/coaching
Dawn - Team TRB
I've finally got my wife to the point of being open to researching the use of your Bacon Software. She watched this video and visited your website by my side & liked what she saw. She is now willing to give it a try (which is another Bill for me... lol) BUT I have some questions, as follows: 1. Her ultra small cafe/restaurant isn't profitable "at all," (though it is slowly growing in the right direction) as I provide her building, utilities, equipment and cover some other cost using my social security. Thus, she does not have any POS software. I do, have a computer in my office but all she has is a cellphone and/or access to an Android I-pad. Her sales are recorded "old school" via customer sales ticket. Soooo... it's a "no-brainer" that your program needs data to analyze... so can I input data for her (somewhere/somehow) that your Bacon Software can digest/analyze ?? Perhaps said data is input via your cloud based program... I dunno. 2. If we subscribe to your Bacon program... "can we cancel at any time without penalty" ??... or are we locked in somehow/someway ?? 3. Does your Bacon program provide and/or include its own POS service ??... so we don't have to buy some other expensive program ?? 4. Is there a way to change the background color of Bacon "to Dark Mode" as my eyes are shot & white light is very hard on same. Note: My "Dark Reader Program" won't even work on your website in Firefox (don't know about Chrome), which is brutal... for me. Jus' sayin'... and All this said... are you open to a Skype conversation ?? We are located in the Philippines (though I use a VPN for security reasons) and we are 12 to 14 hours ahead of you "time wise" depending on where you are located. That said... I understand the value of Good Tools, as I was a businessman for many years in California until the business climate in same went to hell and I bugged out to retire. I want to leave my wife (a Philippine Citizen) in a strong position financially when I graduate, and I believe a Tool like Bacon... just might help get the job done. Cheers... Kev out...
There are a lot of questions here, let me try my best but I would suggest you email me through our contact us form on therestaurantboss.com. 1) You can manually enter data, 2) you can cancel anytime, 3) we are absolutely not a POS system, 4) no way to change the color. I suggest you watch the workshop video on clickbacon.com/software-demo/
what kind of restaurant did you manage before, and why did you change job?
Hi! I have owned, operated, managed, chefed at everything from 5-Start resorts to food court restaurants to burger joints. I turned to consulting because I realized that my true passion was in teaching and helping other find the success I did.
Hi. regarding 6% profit margin. does that include owners draw
It depends. These are averages and every situation is going to be different. Generally, if the owner is doing a job in the business then they should be paid a salary. If they aren't doing a job then they should be earning their income through profits. The number will fluctuate depending on your circumstance. -Dawn, Team TRB
The restaurant game is a tough one, but like anything when successful it can pay out well.
Absolutely!!!
How do these numbers compare to a cafe or coffeehouse? Still about the same?
Yep, still pretty much the same.
Ryan 😄😄😄😄 . This is faheem and I watched this video in my wife's phone. I already have subscribed years ago and still I get your news letters in my Gmail. You are talented 👍
Hi Faheem! Thank you for the compliment and for being a loyal subscriber!
What percent of sales goes to kitchen, front of house staff, and Managment? 16%, 8%, 5%?
Roughly (and of course this varies) we see about 10% in management, 6% in FOH and 14% in BOH. AGAIN that is very rough and will change dramatically from concept to concept, but your estimates are very similar to what I see in the industry.
Do you have any profit margin information for popcorn shops?
Hi Lee! I am sorry but I do not.
Nice i like my dad hve a restaurant he did more than 5million$ to be honest and it becames a company in 2016 thats what made us alot of money using the name
Hello. I'm a new subscriber. I'm a 50 year old early retiree who just moved to San Cristobal de las casas in Chiapas Mexico. I have leased (was a school) a residence/business on corner near downtown with much foot and vehicle traffic. I've never seriously tried a restaurant. Prior army and 22 years of commercial refrigeration technician in Dallas. Rent and labor is cheap. 60 hour/week experienced cook will cost me 75$. I need any advice you have. This is a tourist town with a population of around a quarter million. I'm thinking of smash onion burgers and Chicago style dogs just to get this off the ground and then over the next few months start to integrate workable items into the menu with a very elegant dinning room. Being here and anticipating the locals as my main customer base...my challenge is keeping menu items affordable and desired. I'm thinking items that are of course flavorful but not prevalent here. Probably no Mexican food from gringo. Please give me any input. I'm pretty challenged on this venture but food is profitable here and I know it's feasible. I also receive an army pensión which allows for a learning curve.
Hey, I actually have a great resource for you that will help to figure out your next steps. The Restaurant Concept Development Workbook! It's available inside the Restaurant Owner's Toolkit (totally free). You can get access to that here: therestaurantboss.com/toolkit
I manage an amazing restaurant. The owner doesn’t see how bad our turnover is bc of the culture he creates. Can you do an in depth video on turnover cost?
I'll add your suggestion to our list to review! Thanks!
Dawn - Team TRB
Can you do something similar on food trucks.
Food trucks follow the same rules as restaurants...they are restaurants on wheels.
Do you include tips in the total sales/profit figure?
Nope, those aren't sales because they're going right back out to your team members.
-Dawn, Team TRB
not sales tax neither?@@Therestaurantboss
How to calculate the sales for the start up?
The best method is to guess what your per person average will be, then guess how many guests you will see each day of the week, based on other restaurants similar and near you. It is very much a guess, but that is one of the best methods that I use.
What's your take on franchising business?
It's not my favorite method for growing, but in some circumstances, it is a good option. I have a video on this: therestaurantboss.com/why-i-hate-restaurant-franchises/
Where discount hit in the p and l....
Good to know. I am about to open a restaurant. The oppourtunity came and I took it. But i really appreciate wise people auch as yourself govong noobs like me great advice and things to think about. Even the bible says to count the cost before you start the project :) thanks.
Glad it's been helpful! Congrats on the new adventure too. Have you grabbed our free Restaurant Owners Toolkit yet? You'll be thankful to have it! Get it here: www.therestaurantboss.com/toolkit
-Dawn, Team TRB
"other expenses" category is definitely very high
What do you include in the prime cost?
Hi! This article should help answer your question: clickbacon.com/restaurant-prime-cost/
Boggles my mind why people shove stuff down drains. The trash can is right there, use it.
Could you break down how much or what percentage should go towards management labor?
Hey Donnie - I have a series of videos coming out in October that talks about this very subject. Be on the look out!
10percent rent in Dubai not possible in Dubai
Tax???
Uh, if the way u said is correct, all restaurant owners will quit and move for other businesses. I need more information about how to make more profit. But tks for info .
I am not sure what you mean by all restaurant owners will quit, these are the average margins we see in restaurants. If you need more help, I have about 150 other free videos on UA-cam, a book you can get for free, a toolkit you can get for free, a low-cost membership and a premium course for owners who ready to scale. If you need help finding any of these resources, please email support@therestaurantboss.com
Your videos are awesome. Stop asking people to subscribe so much just say it once or twice. Get rid of the 2 minute speech at the end begging for subscribers. You will reach your goals. Your gonna have to get more creative with your video titles. Add a little click-bate/interest. For example: How to deal with difficult customers.. this video is for restaurant owners only... customer from hell ruins my day... start to peak interest and begin to see that not only restaurant owners and managers will benefit from your channel. These are questions customers always ask and would appreciate the answers to also. It will be more interesting in many ways to people not in the industry or not yet in the industry. Wait until they find out restaurants don’t profit 99% they won’t be able to resist commenting and sharing the video in disbelief.
Thank you for the tips! We are doing some revamping in January and will take this to heart.
Jump 2:14
What if rent and utilities ade fixed how much should that be?
Hey Ryan whats your view restaurant industry after Corona Pandemic. Actually I am from India & was planning to open a cafe but before starting the business this pandemic affected the entire world. So just share your valuable thoughts on it.
Hi! I have done an entire series on the subject on my Facebook page via Facebook Live videos. You can check those out at facebook.com/TheRestaurantBoss/live_videos/
is opening a bar/restaurant worth it ??
Hi Ankur! That's not a question I can answer on UA-cam and it totally depends on the individual, where you are located, how you will differentiate yourself, etc.
@@Therestaurantboss yes sir I agree & I was thinking of owning a restaurant in future. I hope I will have run a successful restaurant in future. Thank you sir.
I disagree. Not sure what kind of data clickbacon.com is throwing up for your analysis. We www.feetobistro.com run a couple of restaurants in India. Food cost can be maintained at 30-35%with correct production techniques. All fixed cost including rent, utilities and labour 30%and rest of the variable costs including marketing and sales commissions around 20%. Net 18-20% EBIT is what we deliver in our restaurants. Feel free to connect with me if you have questions
Things are always going to vary, this is a very rough estimate and a starting point for new operators. Also, in my experience working with hundreds of brands, when a few have pushed the high teens and low 20's on EBITA, oftentimes there is an unfortunate and rather large expense or issue coming soon because not enough is put into developing a great staff, paying well and making constant improvements to the business model, equipment, technology and marketing. Thanks for sharing your observations in a valuable and polite manner, too many people just leave totally rude comments when they don't agree.
there is no way rent and marketing is 10% of gross sales. Rent cannot be that cheap!
This video was made way before our inflated real estate costs... definitely should be adjusted for the times and for your geographic location.
No wonder alot use restaurant for other money goals.
20% other expenses sounds too much
?
Help
How can we help?
-Dawn, Team TRB
This is really not worth it with all those cost
So not worth it??
Ha Ha, many will agree with you.
hahhaha
I hate this business
I love the passion for the industry but the money not even worth it .
It's a common problem we see with our clients all the time. Loads of passion but when it's not executed correctly - SOOO much overwhelm and stress. How can we help? If you haven't yet, make sure you have access to our free Toolkit -> www.therestaurantboss.com/toolkit -Dawn, Team TRB
More than 50% of the video is just shameless begging and self promotion, I pay for premium to not have to hear adverts and nonsense.
1min half way info 9 min infomercial. dont worry im not coming back to your crap
Hell yeah we do. It's not often that we have paid ads but it happens. We produce SO MUCH free content every week and 99% of it has no paid content in it. A business can't survive only by giving things away so we occasionally accept paid sponsorships so we can continue to produce free content for you.
Would you give everything in your restaurant away for free just because I wanted to sample everything? You'd have some choice names for me if I tried and expected that. Luckily we can forward though any parts of the videos that we don't want to see but we understand if you don't want to learn anything else here because of the ads. Have a great one! -Dawn, Team TRB
dont think you wil keep your success when in an 8:37min video ..you have only 4min of usefull information...the rest is pure bullshit
So my restaurants profiting 33% is not bad. You usually make really good videos. I must say this was useless.
Wow - what makes you say that? Constructive feedback would be appreciated.
What type of restaurants do you own. Thanks
Lol he seems so stupid now
Nah, this was the 1st video I have seen of his and it seems like he is bashing the restaurant industry and not to try to open one because you won’t make much money. Then I see people making a lot of money and restaurants everywhere.
I have money in hand and was researching starting pointers but this guy is actually discouraging for someone like me wanting to open one.