# How do you calculate operating cost for a restaurant?

Contents

## How do you calculate operating cost for a restaurant?

Restaurant Operating Costs Breakdown

1. Rent and utilities (electricity, water, internet, cable, and phone): 5% – 10% of revenue.
2. Food cost: 25% – 40% of food sales. …
3. Labor cost: Roughly 30% of revenue including management salaries of 10%
4. Insurance varies by provider and type. …
5. Monthly marketing costs.

## What are typical operating costs?

Common operating expenses for a company include rent, payroll, travel, utilities, insurance, maintenance and repairs, property taxes, office supplies, depreciation and advertising.

## What are the two largest operating costs of a restaurant?

The two largest expense categories are labor and food and beverage. Food and beverage expenses are categorized on financial statements as the cost of sales. All other expenses are listed as operating expenses, though they can be further divided into additional categories.

## What is the biggest expense for a restaurant?

Food and labor are the biggest expenses for any restaurant. Rather than looking at hard numbers, focus instead on percentages. For example, instead of saying that the weekly food order won’t be more than \$5000, instead, say it won’t be more than 30% of your weekly sales. The same is true of your labor costs.

## What is the typical profit margin that a restaurant runs on?

The range for restaurant profit margins typically spans anywhere from 0 – 15 percent, but the average restaurant profit margin usually falls between 3 – 5 percent.

## What are monthly operating costs?

Knowing your monthly operating expenses is crucial to managing your cash flow and budget. Operating expenses are costs that happen regularly, such as rent, utilities and payroll. They could also include insurance premiums that may be paid once a year or every quarter.

## How do you calculate operating cost?

The Operating Expense Formula

1. Operating Expense = Salaries & Wages + Rent Expense + Insurance Expense + Repairs & Maintenance Expense + Utilities Expense + Travel Expense + Supplies Expense.
2. Operating Expense = the sum of all operating expenses.
3. Revenue – Cost of Revenue – Operating Expense = Income from Operations.

## What are the two main types of operating costs?

There are two common categories of expenses that businesses have to pay: fixed and variable costs. Both have a very important role in the normal operations of any company.

## How much does a restaurant spend per month?

According to RestaurantOwner.com, average-sized restaurants can expect rent fees to cost around \$5,000 per month with Miami and New York being the most expensive areas. To rent a space in one of these popular cities, 1 in 7 restaurants pay a rent of more than \$12,000 per month.

## What is overhead cost in restaurant?

Overhead costs refer to ongoing expenses that come with running a restaurant such as advertising, utilities, rent, and salaries. The important thing to remember is that this concept applies only to expenses that are not related to the costs of raw materials, food, and other components related to producing goods.

## What are the hard costs for a restaurant?

Graphic design fees for your logo, packaging, menus and additional print or digital marketing materials. Utility deposits, often required from new businesses in addition to monthly bills. Insurance binders, typically a 25% deposit on policies for liability and workers compensation.

## Are restaurant owners rich?

Payscale.com says restaurant owners make anywhere from \$31,000 a year to \$155,000. They also estimate that the national average is around \$65,000 a year. Chron.com estimates a similar range, between \$29,000 and \$153,000 per year.

## What type of restaurant is most profitable?

Most Profitable Types of Restaurants

• Bars. Alcohol has one of the highest markups of any restaurant item. …
• Diners. Breakfast foods have some of the most affordable ingredients around. …
• Food Trucks. …
• Delivery-Only Restaurants. …
• Farm-to-Table Restaurants. …
• Vegetarian Restaurants. …
• Pizzerias. …
• Pasta Restaurants.

## How much does a small restaurant make per year?

To go further, an average restaurant makes \$40,500 per month and \$486,000 annually.