Restaurant profit margin: averages and 7 ways to raise yours

The month was busy, the dining room was full, and the bank balance barely moved. Most owners have had that month, and the industry numbers explain why.

The median US restaurant keeps less than 5 cents of every sales dollar. The National Restaurant Association's 2025 Restaurant Operations Data Abstract reports 2024 median pre-tax income of 2.8% of sales for full-service restaurants and 4.0% for limited-service restaurants, from more than 900 restaurants. Food and labor take about two thirds of sales, so prime cost is where margin is won or lost. By our analysis of BLS data, menu prices have roughly kept pace with unit costs since 2019, so check covers and labor hours before you raise prices again. Last checked: 4 November 2026.

What is the average restaurant profit margin in the US?

The figures above come from the NRA's press release of 20 August 2025. The full report is paywalled, but the NRA has published the main ratios in a series of free articles. All are medians for 2024, as a percentage of sales:

Sources: NRA articles on food cost (10 September 2025), labor (8 October 2025) and occupancy (3 September 2025).

Three things to keep in mind when you compare yourself:

• It is pre-tax income. Not profit after tax, not EBITDA, and not what the owner takes home if the owner is also on payroll.
• A positive median hides losses. The NRA reported on 12 February 2026 that 42% of operators said they were not profitable in 2025. The median can be positive while a large minority loses money.
• Size changes the answer. Full-service restaurants with $2 million or more in sales had a median pre-tax income of 4.3%, against 1.1% below $2 million (NRA, 16 October 2025).

Costs keep climbing. The NRA's analysis of 8 July 2026 found total expenses for an average restaurant rose 36% from 2019 to 2026. Its example restaurant needs 29% more sales than in 2019 just to break even.

Have menu prices kept up with restaurant costs?

Broadly, yes. Since September 2019, full-service menu prices have risen 38.9%, while a cost basket weighted like the median full-service restaurant rose 37.1%. In the past year, menu prices rose 3.8% and the basket 2.5%. That is our analysis of Bureau of Labor Statistics price indexes, pulled from the BLS public data API on 4 November 2026:

How we built the basket. Each cost line moves with one index, weighted by the NRA's 2024 full-service medians: food 32.0% (wholesale food), payroll 36.5% (hourly earnings), occupancy 5.7% (commercial rents) and everything else 23.0% (all consumer prices). Hourly earnings run to August 2026, the latest month published; the rest to September. The same method for limited-service gives +36.5% since 2019 against menu prices of +42.3%.

So per cover, prices have roughly kept pace. Our reading is that the squeeze sits in what price indexes cannot see: fewer covers, more labor hours per cover, benefits, card fees and delivery commissions. The NRA reported on 12 February 2026 that 60% of operators saw softer customer traffic in 2025.

Your stand-still price rise. To keep your margin, prices must rise as fast as your costs, with each cost weighted by its size:

• For each cost line: share of sales x its rise over the year.
• Add them up, then divide by (1 minus your margin).
• At the medians and the past year's indexes: (0.32 x -0.9) + (0.365 x 4.2) + (0.057 x 5.8) + (0.23 x 3.7) = 2.43 points; 2.43 / 0.972 = 2.5%.

Raised less than that? You gave margin away. Raised more and still squeezed? Look at covers and hours, not prices.

Gross margin, prime cost and net margin: what is the difference?

Use sales before sales tax, because sales tax belongs to the state. Labor includes payroll taxes and benefits, not just wages. For the food side, see our guide to the food cost percentage, or run your dishes through the food cost calculator. Restaurants in the UK should read our UK restaurant profit margin guide, which uses VAT-exclusive sales and UK cost lines.

A worked P&L at the median

Here is a full-service restaurant with $1.2 million of sales, built on the NRA medians. Each line is a median, not the result of one real restaurant, so treat it as an illustration.

The useful number here: on $1.2 million of sales, every percentage point of any cost line is $12,000 a year. Cut food cost by one point and pre-tax income goes from $33,600 to $45,600, a 36% rise. That is why small changes in prime cost matter so much more than they look.

7 ways to raise your restaurant profit margin

Each lever below comes with a number, either from public data or from the worked P&L above.

1. Raise prices, and test the volume

Start from your stand-still price rise (above), not from what the restaurant down the road charges. The NRA says part of the drop in full-service food cost (32.0% in 2024, against an average of about 34% in its last three editions) came from operators raising menu prices at rates not seen in more than four decades.

The number: a 1% price rise with no lost covers adds $12,000 of sales at no extra food cost, taking pre-tax income from $33,600 to about $45,200 after the extra card fees. If you lose 1% of covers as well, you still keep about $37,300, because the lost covers take their food and card costs with them. These assume card fees of about 3% of sales. Use the menu price calculator to set each dish.

2. Bring food cost down

The NRA's size data shows how much food cost drives profit: full-service restaurants above $2 million ran 31.0% food cost and 4.3% pre-tax income, against 33.7% and 1.1% below $2 million. A 2.7-point food cost gap came with a 3.2-point profit gap.

The number: each point of food cost is $12,000 on $1.2 million. Check supplier prices monthly, cost every recipe, and count stock on a schedule. Our stock take template is written for the UK, but the counting method is the same.

3. Schedule labor to sales

This is the widest gap between restaurants that make money and those that do not. The NRA's labor analysis found profitable full-service operators had a median labor cost of 34.2% of sales, against 42.9% for those losing money. For limited-service, it was 30.0% against 34.1%.

The number: moving from the 36.5% median to the 34.2% of profitable operators is 2.3 points, or $27,600 a year on $1.2 million. Build the schedule from forecast covers by hour, and adjust shifts the day before rather than the week before, unless a local predictive scheduling law covers you. If you pay tipped staff, check how the tip credit affects your labor line.

4. Cut food waste

A study for Champions 12.3 of 114 restaurant sites in 12 countries (13 February 2019) found an average return of $7 for every $1 invested over three years, a 26% average cut in kitchen food waste within one year, and every site investing less than $20,000. It is not US-only and it is from 2019, but it is the most specific public evidence we found.

The number: measure your own waste for two weeks (what is thrown out, and why), then set a target. Waste shows up in food cost, so each point saved is again $12,000 on $1.2 million.

5. Sell more of your higher-margin dishes

There is no public benchmark for menu mix, so here is the arithmetic. Two mains both sell at $28. Dish A has a 36% food cost ($10.08); dish B has 26% ($7.28).

The number: move 200 sales a month from A to B, through menu placement and staff recommendations, and you save $2.80 each: $560 a month, $6,720 a year, or about 0.6 points of margin on $1.2 million. Your prices stay the same.

6. Check your delivery commissions

Third-party commissions can take a large part of a delivery order. New York City caps them at 15% for delivery, 5% for other services and 3% for payment processing, which gives you a reference point even outside New York.

The number: on $8,000 a month of delivery sales, each point of commission is $80 a month, or $960 a year. Price delivery menus separately if your contract allows it, and push regulars toward ordering directly.

7. Make the rent work harder

Occupancy is a fixed cost, so its share falls as sales grow. The NRA's median is 5.7% of sales for full-service restaurants and 6.0% in urban areas.

The number: if your occupancy is 8% of $1.2 million, you pay $27,600 a year more than a restaurant at the 5.7% median, most of the $33,600 median profit. Grow sales 10% in the same space and the same $96,000 of rent drops to 7.3%. Add a lunch service, private events or takeout before you look for more space.

We found no public US benchmark for average check or table turns, so compare those with your own history rather than an industry figure.

Margin worksheet you can copy

Fill in last month's figures. Column C turns each line into a percentage of sales; column D is the NRA median for comparison.

MARGIN WORKSHEET                 A: Line     B: $ last month   C: % of sales   D: NRA median (FSR / LSR)
Sales (before sales tax)                     [ ]               100%
Food and beverage cost                       [ ]               =B/Sales        32.0% / 32.4%
Payroll, payroll taxes, benefits             [ ]               =B/Sales        36.5% / 31.7%
PRIME COST (food + labor)                    =SUM              =B/Sales        n/a / 65%
Occupancy (rent, CAM, property tax)          [ ]               =B/Sales        5.7% / 5.2%
Card processing fees                         [ ]               =B/Sales
Delivery commissions                         [ ]               =B/Sales
Supplies, utilities, repairs                 [ ]               =B/Sales
Insurance, marketing, admin, software        [ ]               =B/Sales
Depreciation and interest                    [ ]               =B/Sales
PRE-TAX INCOME                               =Sales minus all  =B/Sales        2.8% / 4.0%

One point of sales = Sales x 1% = $[ ]
Biggest gap to median: [line] at [ ] points = $[ ] a month
This month's action: [ ]

STAND-STILL PRICE RISE (once a year)
Line             Share of sales (C)   Rise over 12 months   C x rise
Food             [ ]                  [ ]%                  [ ]
Labor            [ ]                  [ ]%                  [ ]
Occupancy        [ ]                  [ ]%                  [ ]
Everything else  [ ]                  [ ]%                  [ ]
Total cost basket                                           =SUM
Stand-still price rise = total / (1 minus pre-tax margin) = [ ]%
Price rise you actually took: [ ]%

Do it monthly, and look at the trend, not one month. If prime cost moves more than a point, find out why before the next order goes in. For the full startup and lender view, see our restaurant business plan guide.

Can TablePort handle this for you?

TablePort puts the worksheet's main numbers in front of you every day.

1. Daily report. Each day's sales and costs come with an AI-written summary and margin recommendations: items to promote and items to review. A rule-based health score shows how the day went.
2. Labor against sales. The rota (staff schedule) shows wage cost against sales, so you can adjust shifts before the week starts.
3. Food cost. The Stock add-on ($199 a month per location in the US, before sales tax) gives AI demand forecasting and suggested orders.

The honest limit: the recommendations are suggestions. A manager still decides what to change, and TablePort does not compare you with the NRA medians. See restaurant management.