Restaurant Profit Calculator

Restaurants run on two variable costs that dwarf everything else: food, usually called COGS, and labour. Added together they are the prime cost, and operators watch that single number more closely than revenue. The reason is arithmetic rather than tradition. Prime cost is the share of every sale that never reaches the bottom line, so whatever is left of 100% has to cover rent, utilities, insurance and the owner.

Which is why a prime cost figure on its own says very little. A prime cost of 70% leaves 30% of revenue for everything else. Whether that is comfortable or fatal depends entirely on what the fixed costs actually are. At the defaults below they run at 18.75% of revenue, so 70% prime cost would still leave 11.25% as profit. Push fixed costs to 30% of revenue and the same 70% leaves nothing at all.

Variable costs shrink when sales do. Fixed costs do not, and that asymmetry is why a slow stretch hurts out of proportion to its length. It is also what sets the break-even point: at the defaults, 15,000 of fixed costs against a 40% contribution margin needs 37,500 of revenue a month before the restaurant earns anything at all.

Run it with sensible defaults

Using monthly revenue of 80,000, food cost of 30%, labour cost of 30%, fixed costs monthly of 15,000, the calculation works out to 17,000.00. The defaults are meant as a starting point, not a recommendation.

That is a 21.25% net margin on a 60% prime cost, which is a comfortable scenario rather than a representative one.

The levers in this calculation

A 1% change in Monthly Revenue shifts Monthly Net Profit by 1.88%; the same change in Fixed Costs Monthly shifts it 0.88% in the opposite direction.

The two cost percentages hit harder than either. One percentage point on Food Cost %, 30 to 31, costs 800 a month and takes 4.7% of the profit with it, because that point applies to the entire 80,000 of revenue rather than to a slice of it. Labour Cost % behaves identically. A percentage point on each, which is an unremarkable run of supplier and wage increases, removes 1,600 a month between them.

How the math works

Food cost is revenue multiplied by the food percentage. Labour cost is revenue multiplied by the labour percentage. Net profit is revenue minus food, minus labour, minus fixed costs, and net margin is that profit divided by revenue.

Why margin moves faster than revenue

Restaurant margins are dominated by two percentages and one fixed number. At the defaults, 80,000 of monthly revenue at 30% food cost and 30% labour leaves 32,000 after variable costs, which the result card labels Gross Profit, and 17,000 after 15,000 of fixed costs. Because fixed costs do not move with revenue, the margin percentage changes faster than revenue does: a 10% fall in revenue removes 3,200 of contribution margin and cuts profit by nearly a fifth.

What prime cost hides

Prime cost, the food and labour percentages combined, is the figure operators watch most closely, and the calculator makes its effect visible by holding fixed costs separate. What sits outside the model is the split within each percentage. Waste, over-portioning and theft all appear inside food cost without being distinguishable from cost of goods, and scheduled hours are not separated from overtime within labour. Third-party delivery commission has no field of its own and behaves like a rise in food cost, since it scales with sales the same way. Seasonality is not modelled at all, so a single month is a poor guide to an annual position.