RESTAURANT / FREE OPERATOR TOOLS
Restaurant Profit Margin Calculator
Find gross and net profit margin from sales, cost of goods, labor and other operating costs.
Default numbers are an example, not industry data.
Formula
Gross profit = sales − COGS; net profit = sales − (COGS + labor + operating expenses). Net margin % = net profit ÷ sales × 100; gross margin % = gross profit ÷ sales × 100; prime cost % = (COGS + labor) ÷ sales × 100.
How it works
Use one period, such as a month, and net sales excluding VAT or sales tax. COGS is food and beverage used, not purchases. Labor should include payroll taxes and benefits.
Other operating costs include rent, utilities, marketing, repairs, card fees, software and insurance. Leave out income tax and loan principal for an operating margin view.
Worked example
50,000 − (15,000 + 15,000 + 15,000) = **5,000 net profit**, a 10% net margin. Gross margin 70%; prime cost 60%.
Benchmark
Full-service restaurant net margins are commonly cited at roughly 3–6%, and quick-service a little higher. Rules of thumb vary widely by concept and location.
Frequently asked questions
What is a good restaurant profit margin?
Net margins of roughly 3–6% are commonly cited for full-service restaurants. Your concept, rent and pricing matter more than the average.
Gross vs net profit margin?
Gross margin only subtracts COGS. Net margin also subtracts labor and all operating costs.
How do I improve profit margin?
Check prime cost first. Food and labor are usually the largest controllable costs.
Are my inputs saved or uploaded?
Calculations run in your browser. Inputs are not uploaded by the calculator. Sharing puts the inputs in a readable URL; anyone with that link can see them.
Related calculators
Calculated free at thehospitalityinsider.com/restaurant-profit-margin-calculator