Restaurant Profit Margin Calculator

Net profit margin is what remains of sales after you pay for food, labour, rent, utilities, and other operating costs in a period (often a month). Gross margin here is sales minus food and beverage cost only — useful to see purchasing pressure separate from payroll.

Prime cost combines food/beverage and labour. Many operators watch prime cost as a early warning before fixed costs are applied. General guidance: prime cost is often targeted roughly in the 55–65% of sales range for full-service venues, but your model may differ.

All figures are for the same month:

Example: Revenue 80,000; food & beverage 24,000; labour 22,000; rent 8,000; utilities 2,500; other 3,500. Gross margin is 56,000 (70% of revenue). Prime cost is 46,000 (57.5%). Total costs are 60,000, so net profit is 20,000 and net margin is 25%.

Mixing cash and accrual — align revenue with the same period’s invoices.

Leaving owner draws or one-off equipment out of “other” so months look artificially strong.

Comparing net margin to a competitor without knowing whether they include central marketing or franchise fees.