Question:
What are the national averages, in percentages, for a successful restaurant concept’s P&L in the 175-seat, casual eatery category?
– Paul M. Lee, Partner, Intrestco, LLC
Answer:
Benchmarks can be useful. Keep in mind, however, that they are tools to help you in analysis and management rather than some sort of preordained standard. You need to keep in mind the unique financial situation of your operation. For example, if you are in a major metropolitan area, rent will be expensive; other restaurants may own their real estate. Minimum wage or tip credit law, your menu mix, deals with suppliers or purchasing groups and your staffing structure will determine your expense ratios.
That said, benchmarks are available from restaurant associations and research and consulting firms. They usually have some differences due to different methods of collecting the data. Baker Tilly’s Restaurant Benchmarks reports, as illustration, gives:
Prime Cost, 65% of Total Sales
Food Cost, 32% of Total Sales
Liquor Cost, 20% of Liquor Sales
Bottled Beer, 25% of Bottled Beer Sales
Draft Beer, 18% of Draft Beer Sales
Wine, 40% of Wine Sales
Soft Drinks, 15% of Soft Drink Sales
Payroll Cost, 30-35% of Total Sales
Management Salaries, 10% max of Total Sales
Hourly Employee Payroll, 20% of Total Sales
Employee Benefits, 20% of Payroll Costs
Rent, 6% or less of Total Sales
Occupancy, 10% or less of Total Sales
On the revenue side, to keep these expense percentages in line, look for at least $200 in sales per square foot to break even, and double that to be profitable, especially where expenses are high for the reasons we discussed.