Restaurant Profit Margin Calculator

How to Calculate Restaurant Profit Margin

Understanding your restaurant profit margin starts with three core numbers: prime cost, net profit, and break-even sales. If you know these, you know your business.

Prime Cost = Food % + Labor %

Prime cost is the most important metric in restaurant operations. It combines your two largest expenses:

Prime Cost = Food Cost % + Labor Cost %

If your food cost is 30% and your labor cost is 34%, your prime cost is 64%.
For most full-service restaurants, a healthy prime cost typically falls between 55% and 65%.

When prime cost climbs above 70%, margins compress quickly.

Net Profit = Sales – All Costs

Net profit shows what you actually keep after everything is paid.

Net Profit = Total Sales – (Food Costs + Labor Costs + Other Variable Costs + Fixed Costs)

This is your real bottom line — the money left after rent, payroll, credit card fees, and operating expenses.

Most independent restaurants operate between 3% and 8% net profit margins. Anything under 3% leaves very little cushion.

Break-Even Sales Formula

Break-even sales tell you how much revenue you must generate just to cover expenses.

Break-Even Sales = Fixed Costs ÷ Contribution Margin

If you don’t know your break-even number, you’re operating blind. Once you know it, you understand exactly how much room you have before profit turns into loss.

Below this calculator, you’ll also find a simple step-by-step guide to help you calculate each number correctly. If you’re unsure about food cost percentage, labor percentage, or contribution margin, the guide will walk you through it clearly.

Use the calculator to see your snapshot instantly — then use the guide to understand what the numbers mean and how to improve them.