Short, citable explanations for food cost, labor, menu pricing, profit margin, break-even sales, prime cost, yield, and menu engineering. Each answer points to the deeper calculator or guide when you need the full workflow.
Profit Benchmarks
A good restaurant net profit margin is usually 3% to 9%. Full-service restaurants often land near 3% to 6%, while quick-service, delivery-light, bar-heavy, or very efficient concepts can reach the high single digits or better.
Read answerFood Cost Formula
Food cost percentage for one item is ingredient cost divided by menu price, multiplied by 100. For a period, use beginning inventory plus purchases minus ending inventory, divided by food sales, then multiply by 100.
Read answerFood Cost Benchmarks
Most full-service restaurants target 28% to 35% food cost. Quick-service and pizza concepts may target lower percentages, while steakhouse, seafood, and premium protein concepts may run higher if contribution margin is still strong.
Read answerMenu Pricing
Price a menu item by calculating plate cost, dividing it by the target food cost percentage, and then checking the result against market position and perceived value. The formula sets the floor; the guest value sets the ceiling.
Read answerRestaurant Finance
Prime cost is food and beverage cost plus labor cost. It is one of the best restaurant health metrics because those costs usually consume the largest share of sales and move fastest when margins deteriorate.
Read answerMenu Pricing
Restaurants should review menu prices at least quarterly and whenever major ingredient costs change. Smaller, more regular price updates are easier for guests to accept than large emergency increases after margins have already fallen.
Read answerMenu Engineering
Menu engineering is the process of ranking menu items by popularity and contribution margin, then classifying them as Stars, Plowhorses, Puzzles, or Dogs so operators know what to promote, reprice, rework, or remove.
Read answerCost Control
Reduce food cost without cutting quality by tightening portions, reducing waste, improving prep levels, cross-utilizing ingredients, renegotiating key purchases, and reworking recipes before switching to cheaper ingredients.
Read answerPlate Cost
Plate cost is the total ingredient cost required to make one menu item. It includes every component on the plate, adjusted for portion size, trim, yield, and cooking loss.
Read answerBreak-Even
Restaurant break-even sales equal fixed costs divided by contribution margin ratio. The result is the sales volume needed to cover fixed costs before the restaurant earns profit.
Read answerMenu Engineering
Contribution margin on a menu item is menu price minus ingredient cost. It shows how many dollars each sale contributes toward labor, rent, overhead, and profit.
Read answerOwner Checklist
Restaurant owners should check sales, food cost, labor cost, prime cost, cash, top item margins, waste, voids and comps, reviews, and the next week of reservations or demand. Weekly review catches margin drift before month end.
Read answerRestaurant Finance
Prime cost percentage equals food and beverage cost plus fully loaded labor cost, divided by total sales, multiplied by 100. Use costs and sales from the same period so the percentage is comparable week to week.
Read answerLabor Cost
Labor cost percentage is total labor expense divided by restaurant sales, multiplied by 100. It shows how much of each sales dollar is used for wages, payroll taxes, benefits, and other included labor costs.
Read answerLabor Cost Formula
Add wages, salaries, overtime, payroll taxes, benefits, and any other labor costs included in your reporting policy. Divide that total by sales for the same period and multiply by 100.
Read answerFood Cost Control
Ideal food cost is what the restaurant should have spent based on recipes and actual menu mix. Actual food cost is beginning inventory plus purchases minus ending inventory. The gap is food cost variance.
Read answerInventory Control
Restaurant inventory turnover equals cost of goods sold divided by average inventory for the period. Average inventory is usually beginning inventory plus ending inventory, divided by two.
Read answerMenu Engineering
Menu mix percentage is the number of units sold for one menu item divided by the total units sold in its menu category, multiplied by 100. It measures popularity, not profitability.
Read answerSales Metrics
Average check equals net sales divided by the number of guest checks for the same period. If you need average spend per guest instead, divide net sales by covers rather than checks.
Read answerBreak-Even
A restaurant variable cost changes with sales volume or activity. Common examples include food and beverage ingredients, some packaging, card processing fees, and marketplace commissions. The exact classification depends on how the cost behaves.
Read answerRecipe Costing
Recipe yield cost starts with the total usable cost of a prepared recipe. Divide that cost by the number of usable portions, or by the final usable weight or volume, to find cost per portion or unit.
Read answerRestaurant Finance
Gross profit is sales minus cost of goods sold. Net profit is what remains after operating expenses, labor, occupancy, fees, interest, taxes, and other applicable expenses are also deducted.
Read answerLabor Productivity
Restaurant overtime percentage equals overtime hours divided by total hours worked, multiplied by 100. Keep hours and overtime from the same team and payroll period.
Read answerSales Mix
Sales by channel percentage equals net sales from one channel divided by total net sales, multiplied by 100. Use the same period and distinguish dine-in, pickup, direct delivery, marketplace delivery, catering, and other material channels.
Read answerCost Control
Choose and label one denominator. For a purchasing-control view, divide recorded waste cost by food purchases; for a sales view, divide waste cost by food sales. Multiply by 100 and never compare reports that use different denominators.
Read answerRevenue Control
Restaurant comp percentage equals the recorded value of complimentary items divided by the documented sales base, multiplied by 100. Report comps, promotions, coupons, employee meals, and voids separately so different causes do not disappear into one number.
Read answerBeverage Cost
Beverage cost percentage equals beginning beverage inventory plus beverage purchases minus ending beverage inventory, divided by beverage sales, multiplied by 100. Match alcohol and non-alcohol categories consistently.
Read answerCash Flow
Projected end-of-week cash equals opening available cash minus committed outflows plus expected net receipts. Use bank cash, dated obligations, realistic settlement timing, and a conservative receipts forecast.
Read answerCash Flow
Profit measures revenue minus recognized expenses for an accounting period. Cash flow measures money actually entering and leaving accounts. A restaurant can report profit while cash falls because of inventory purchases, debt principal, equipment spending, tax timing, receivables, or settlement delays.
Read answerCash Flow
When a restaurant has sustained negative net cash flow, cash runway equals available unrestricted cash divided by average net cash burn per week or month. If cash flow is positive, a burn-based runway is not meaningful.
Read answerLabor Productivity
Restaurant sales per labor hour equals net sales divided by total labor hours for the same period. It measures revenue productivity, not labor cost, profit, service quality, or legal staffing adequacy.
Read answerCapacity Economics
Revenue per available seat hour, or RevPASH, equals dining-room revenue divided by available seat hours. Available seat hours equal seats offered multiplied by hours open in the measured period.
Read answerReviewed by the Restaurant Margin team · Last reviewed .