How to Understand & Improve Your Restaurant's Gross Profit Margin
Running a restaurant? You need to know two things: how much you’re making (revenue) and how much you’re keeping (profit margin).
What’s the Average Restaurant Revenue?
It’s your total income from food, drinks, takeout, delivery, merch—everything. A quick way to estimate it:
- Tables × Turnover Rate × Avg. Bill
- Example: 10 tables × 10 seatings/day × $100 = $10,000/day
- Multiply that by 30 for a rough monthly total.
Gross Profit Margin 101
- Gross Profit margin = (Total Revenue – Total Expenses) ÷ Total Revenue
- Profit Margin = (300,000 – 270,000) ÷ 300,000
- Profit Margin = 10%
Use a full year of data to account for seasonal swings. No data yet? Use projections and industry benchmarks.
What’s a “Good” Margin?
It depends. Factors like labor, rent, ingredient costs, and table turnover all play a role.
- Quick-service: ~17%
- Full-service: ~5–10%
Why Profit Margin Matters
- Helps you decide if/when to expand
- Guides menu pricing and staffing
- Required by lenders and investors
- Reveals what’s working—and what’s not
How to Improve Profit Margin
Increase Sales:
- Add online ordering & delivery
- Upsell high-margin items
- Run loyalty programs & promotions
- Market smarter
Lower Costs:
- Reduce waste
- Cross-train staff
- Simplify your menu
- Use tech to track everything
Tech Makes It Easier
Modern POS systems (like the ones we help you set up) track sales, expenses, and customer behavior in real-time. You get clearer insights—and better decisions.
Want Help Improving Your Margins?
We make restaurant finances easier to track, understand, and grow.
