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Let’s talk about the vibrant universe of restaurants. As guests, we see just a few key components of this ecosystem, like menu items and customer service. But behind the curtain, there’s an entire business that relies on key metrics such as growth, revenue, and profit to keep the doors open. So, how much money can restaurants make?
When it comes to exact figures, keep in mind that numbers vary based on numerous factors—like the type of restaurant, business model, size, location, time of day, and more. Let’s unpack how much money a restaurant can make.
How Much Can the Average Restaurant Make Per Day, Per Month, and Per Year?
When figuring out how much any business makes, revenue is the place to start. In general, revenue means sales, and restaurant revenue can include multiple income streams—like food and beverage sales, online orders, consumer goods, and even merchandise.
It’s important to remember that revenue calculations are only the beginning; the most important figure is profit—net profit to be specific—which is calculated after deducting expenses from that revenue number.
On average, restaurants less than 12 months old make $111,860.70 in monthly revenue, though that can vary significantly based on restaurant type. For example, a Toast survey found that on average, fast-food restaurants make $5,000 to $10,000 a day in revenue, whereas fine dining restaurants make $1,000 to $3,000 a day. That might sound like a lot, but restaurants also cost a lot to operate, so only a small percentage of that is profit.
Restaurants on average cost hundreds of thousands to open, so at first the establishment might not be profitable. But once a restaurant takes off, according to the NYU Stern School of Business, the average net profit margins are around 10.62%
It’s important for restaurant owners and managers to keep on top of their operating figures.
How Do Restaurants Make Money?
At the most basic level, restaurants make money by applying the straightforward business concept of selling more than they spend. But there’s a lot that goes into achieving that. It begins with a solid business plan and continues with consistent monitoring of revenues and expenses.
The profitability of the restaurant depends on how well the restaurant owner or manager keeps track of specific expenses, such as wages and cost of goods sold (COGS). Establishing a dependable inventory management system to keep track of ingredients can also impact profitability. Keeping track of these metrics is a detailed, highly analytical job, but with the proper training, it’s certainly possible.
An Example of Restaurant Operating Costs by % of revenue:
- Labor: 28% to 30%
- Food costs: 25% to 40%
- Rent & utilities: 5% to 10%
- Marketing: varies
- Miscellaneous: varies
Here’s a look at some of the factors that play into the profitability and success of any restaurant.
*Information may not reflect every student’s experience. Results and outcomes may be based on several factors, such as geographical region or previous experience.
Location
If a restaurant is on a bustling street with high traffic, this can definitely impact your revenue. Believe it or not, the location itself is almost a “marketing catalyst” for your business. Chances are, restaurants in more urban settings next to shopping malls and hotels will attract more guests, too.
Also, ask yourself—is your restaurant easily commutable? Can guests grab an Uber to your location or are there plenty of nearby parking spaces? All of these factors related to the location most likely matter in your profitability. Try to find a location for your restaurant that provides exposure and accessibility.
Capacity and Layout
How many guests can your restaurant serve, and how is your restaurant laid out? In a fast-casual establishment, can guests quickly order at the counter and leave, or are you running a fine dining restaurant with a more prolonged sit-down experience? These factors, as well as the actual size of your restaurant, may impact how much money your restaurant makes. The best solution for keeping a constant flow of customers is to utilize reservation software to plan ahead and have the right amount of staff members on board.
Play with the layout of your restaurant until you’ve found a sweet spot, maximizing capacity and flow.
Menu
While menu design calls for a chef’s artistry, it can also impact the bottom line. The goal is to keep ingredient costs low while maintaining an excellent customer experience. This can be managed through a fine balance of purchasing items in bulk and also selecting slightly higher-priced seasonal items that could add some “stand-out” appeal to your menu.
A restaurant’s menu is typically a combination of items with high and low margins. This is where it’s important, again, to keep on top of your numbers so you know the return on investment on everything you serve. You’ll also want to know your market, meaning you should understand the habits and demographics of your guests so you can marry your menu to their wants and needs.
Labor
Different types of restaurants have different labor needs, and it’s important to calculate whether the revenue will offset those expenses. A fine dining establishment will typically call for more staff as well as employees with specialized skills, while a fast casual restaurant might be able to automate more roles.
For example, many fast food and takeout restaurants are experimenting with using AI at takeout windows and to process payments. Other businesses are automating their reservation systems or using robots to bring food out. All of this will affect, though not eliminate, labor costs.
Takeout and Delivery
Takeout and delivery play ever more important roles in many restaurants’ success and can add significant revenue to the bottom line. Customers’ preferences are changing, and recent years have sped up a trend that was already in the works—more and more people prefer to order out or have their food delivered.
In fact, 65% of restaurants said delivery was a higher percentage of their sales in 2023 than it was in 2019. Third-party delivery apps have facilitated the trend and helped make it easier for restaurants to add this service to their revenue repertoire.
Types of Restaurants That Can Make the Most Money
There are specific types of restaurants that are generally more profitable than others, due to geographics, menu design, size, and more. For aspiring food entrepreneurs, here are a few restaurant categories to consider when vetting your business idea.
When planning a restaurant, it’s important to understand the profit margins of different types of establishments.
Bars
Of all the restaurant sectors, bars yield the highest profit margins because they can generally mark up alcohol higher than other foods and beverages. Consider how you might buy a bottle of wine at your favorite liquor store for $15 and find that same bottle listed at twice that price in a restaurant. Or selling for $9 a glass. And no matter the economy or world events, it seems that people will always head to their local watering hole.
The average bar may have the potential to bring in approximately $330,000 a year in gross revenue, with average gross profit margins as high as 80%.
The most profitable bars find ways to decrease pour costs (inventory usage ÷ sales) and might focus more on profitable drinks on the menu, such as wine. It’s also critical for bar owners to maintain complete control over the numbers and constantly monitor key reports, such as daily sales and menu item reports, to optimize profitability.
If becoming a bar owner is part of your career roadmap, consider Escoffier’s Hospitality & Restaurant Operations Management program. Along with understanding cost control, purchasing, and leadership, students can also grasp fundamental skills in menu design, beverage service operations, and more.
Fast Food
Another profitable restaurant sector is the rapid-fire land of fast food. High demand usually equates to more desirable profit margins, and fast food has become an everyday stop for many consumers.
Take McDonald’s, for example. According to TitleMax, over the past five years, McDonald’s has generated more than $35 billion in sales across all of its franchises. According to the Roosevelt Institute, fast-food profit margins are expanding beyond growth in other sectors. Between 2014 and 2023, fast-food restaurants have increased prices by 46.8% compared to a 28.7% average increase for all prices.
However, current trends suggest that fast casual restaurants (think: Chipotle, Qdoba, Shake Shack, etc.) are performing better than other quick-service chains. Fast-casual establishments are reporting average net profit margins around 17%, higher than the estimated 6-9% average net margins at fast food joints and 5-10% at full-service establishments.
Food Trucks
Whenever you don’t have to pay monthly rent, you can most likely expect strong profit margins—and starting a food truck is no exception. Although there are startup costs involved—such as the truck itself, equipment, licenses, food costs, and marketing—the average food truck revenue lands between $20,000-$42,000 monthly in total sales before expenses.
Although operating expenses aren’t completely nominal, food truck owners can find clever ways to highlight more profitable menu items through social media to optimize sales.
*Information may not reflect every student’s experience. Results and outcomes may be based on several factors, such as geographical region or previous experience.
Breakfast Diners
According to Mintel, there’s been a notable surge in breakfast interest, mostly thanks to Gen Z and millennials. Many restaurants are likely increasing breakfast menu items since a lot of the ingredients are relatively low cost.
The good news is that for future culinarians, starting a diner is a great idea since expenses aren’t as astronomical as a full-service restaurant. Profit margins might also be higher.
Pizzeria
Pizza is one of America’s longtime comfort foods, and it continues to perform fairly well. Overall, U.S. pizzeria revenue has fallen at a compound annual growth rate (CAGR) of 2.4% since 2021. However, it’s still big business with $50.1 billion in 2024 revenue.
Although expenses like equipment and rental fees can add up, if you stick with basic pizza ingredients, your profit might fare well at the end of the day.
How Much Can Restaurant Owners Make?
Salary ranges for restaurant owners could vary widely since they’re directly tied to the success of the restaurants.
In time, this number might grow as the restaurant increases in profitability. Usually, on top of a reliable salary, restaurant owners can also get dividends from business profit, or they may opt for a pay scale salary that raises as the restaurant matures and profit margins grow. Their salary will usually fluctuate depending on restaurant expenses too. If owner salary is paid out through profits, The Restaurant HQ recommends limiting it to a maximum of 50% of average net profit.
Start With Training in Food Entrepreneurship
One of the best ways to potentially ensure your restaurant reaches a comfortable profit margin is to do your research and get the proper training under your belt.
Escoffier’s Food Entrepreneurship programs can equip students with progressive culinary, business, and marketing curriculum to help launch a food startup. The goal is to vet your idea, pitch investors, devise a business plan, and go to market.
Don’t start your restaurant unprepared. Contact our admissions team to begin your entrepreneurship journey.
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*Information may not reflect every student’s experience. Results and outcomes may be based on several factors, such as geographical region or previous experience.
**Figures included in this article are for informational purposes only and are estimates based on industry trends or a range of costs/expenses. Please research costs for your geographic location and individual situation.
This article was originally published Jan. 16, 2023, and has been updated.
