Table of Contents
- 1 What are the expenses of running a restaurant?
- 2 What is the economic impact of restaurants?
- 3 How do restaurants support the economy?
- 4 What percentage of the economy is restaurants?
- 5 What are the operating costs of a new restaurant?
- 6 What is a restaurant expense?
- 7 What are the financial risks of starting a restaurant business?
What are the expenses of running a restaurant?
Restaurant Operating Costs Breakdown
- Rent and utilities (electricity, water, internet, cable, and phone): 5\% – 10\% of revenue.
- Food cost: 25\% – 40\% of food sales.
- Labor cost: Roughly 30\% of revenue including management salaries of 10\%
- Insurance varies by provider and type.
- Monthly marketing costs.
What is the economic impact of restaurants?
Many restaurants put money into the local economy. From paying rent or property taxes to utilities, restaurants pump a lot of cash into the local economy. More and more, restaurants are taking advantage of local suppliers to create farm-to-table menus, and this is more cash that flows into the local community.
How much do Restaurants profit?
As a general rule, one-third of a restaurant’s revenue is allocated to cost of goods sold, and another third to labor expenses. The remaining revenue must cover overhead expenses like utility bills and rent. Once all expenses are paid, restaurants are typically left with between only 2 and 6\% in net profit.
How do restaurants support the economy?
The restaurant industry fosters regional job growth, supports local agriculture and keeps your hard-earned money in your community. When you choose to shop or dine at a local business or restaurant, you generate almost four times more economic benefits for your local community.
What percentage of the economy is restaurants?
With approximately 11 million jobs and over 4\% of the GDP attributable to the restaurant industry, one could make a very well-founded argument that “as restaurants go, so goes the economy.” It’s not just the direct loss of employment directly related to the shuttering of our favorite watering holes, it’s the delivery …
What profit should you make on food?
The average restaurant needs to keep food cost percentage between 28\% and 35\% in order to run a financially healthy operation. While this number doesn’t directly translate to profit margin, it does give you wiggle room to account for overhead expenses like labor, rent, and utilities.
What are the operating costs of a new restaurant?
Operating costs such as salaries, marketing, inventory, and maintenance are often underestimated, especially with new restaurants. These costs typically make up around 80\% to 90\% of total revenue at profitable establishments.
What is a restaurant expense?
A restaurant expense is a recurring payment that generates revenue like utilities, rent, payroll, or marketing. Restaurant Startup Costs Breakdown Your total restaurant startup cost will vary depending on whether you’re renting or owning the space, which equipment you will need, how much you plan to renovate, and more.
Is it more profitable to buy or franchise a restaurant?
If the restaurant is more profitable, the upfront costs for buying the restaurant are likely to be higher. Whether the cost of franchising is too much or you want to begin fresh with your own ideas, starting from scratch has many fixed and potentially unexpected costs.
What are the financial risks of starting a restaurant business?
The largest financial risk to your restaurant business is underestimating the amount of capital you’ll need to begin operations and continue to bring in a positive cash flow. The initial cost of purchasing or starting up a new restaurant is your most important consideration before making the commitment.