How Much Money Can Restaurants Make?

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 business metrics such as growth, revenue, and profit to keep the doors open. So, how much money do 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?

To keep it simple, if restaurant owners want to evaluate how much the restaurant makes, “revenue” is a good baseline metric review, which does not include operating expenses. Restaurant revenue is comprised of multiple income streams for restaurants–like food and beverage sales, online orders, consumer goods, etc.

On average, restaurants in the US make around $1,350 a day, which rounds out to around $45,000 a month, and over $450,000 a year, according to Eat Pallet. However, 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 Nav, the average profit margins average around 2% to 6%.**

How Do Restaurants Make Money?

Restaurants will usually make money by applying the straightforward business concept of selling more than they spend. 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. It’s a detailed, highly analytical job to keep track of these metrics, but with the proper training, it’s certainly possible.

Escoffier students who complete the online Food Entrepreneurship program can engage in a comprehensive curriculum that covers food business operations—delving into storeroom operations, inventory, portion control, ingredient conversions, and recipe costing. Escoffier’s goal is to help prepare students to step into a restaurant business management position by understanding the technical concepts that may affect a restaurant’s bottom line.

Location

If a restaurant is on a bustling street with high traffic and long lines out the door, 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.

Capacity

How spacious is your restaurant? In a fast-casual establishment, can guests quickly order at the counter and leave, or are they embarking on a more prolonged sit-down experience at a fine dining restaurant? 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.

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.

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.

Bars

Did you know that out of all the restaurant sectors, bars yield the highest profit margins? The average bar may have the potential to bring in over $300,000 a year, with a 78% to 80% average profit margin.

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

To no surprise, one of the most profitable restaurants is in the rapid-fire land of fast food. Why? Well, high demand usually equates to more desirable profit margins. Take, for example, McDonald’s—the empire of all fast-food chains. According to TitleMax, over the past five years, it’s generated over $35 billion in sales across all of its franchises.

Although you might not desire to start the next fast-food empire, fast-food owners can expect to bring in around $10,000 to $12,000 a day, based on EatPallet findings.

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. The typical profit margin is between 3% and 5%.

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.

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 there’s no sign that pizzerias are slowing down production. Annual sales exceeded $46 billion in 2020, with $18.6 billion generated from small independent pizzerias.

One example is Seattle’s MOD Pizza, whose sales continue to climb exponentially, from $390 million in 2018 to $483 million in 2019, via PMQ Pizza Media.

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. In many scenarios, a restaurant owner will take less than 50% of restaurant profits and funnel the rest into the business. Their salary will usually fluctuate depending on restaurant expenses too.

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.

Enjoyed this article? Read these next:

• How to Start a Restaurant with Little to No Money
• How Many Employees Does it Take to Run a Restaurant?
• How Much Do Chefs Make?

*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.