The average restaurant nets 3% to 5% of sales. National Restaurant Association survey data puts the median at 2.8% for full service and 4.0% for limited service. Quick service and fast casual run 6% to 9%, bars reach 10% to 15%. Gross margin is a different number entirely, around 65% to 70%.
Benchmarks by restaurant type
One average hides a wide spread. A bar and a full service restaurant are different businesses wearing the same word.
| Restaurant type | Net profit margin | Why it lands there |
|---|---|---|
| Bars and pubs | 10% to 15% | Low cost of goods on alcohol, almost no kitchen labour |
| Quick service | 6% to 9% | Simple kitchens, no table service, fast turnover |
| Fast casual | 6% to 9% | Higher food cost than QSR, offset by lower labour than full service |
| Fine dining | 4% to 9% | High prices carry high labour and high ingredient cost |
| Limited service NRA median | 4.0% | Survey median, income before tax as a share of sales |
| Full service | 3% to 5% | Servers, larger kitchen, longer table times |
| Full service NRA median | 2.8% | The typical restaurant sits below the quoted range |
Segment ranges per Toast 2026 industry data. Median figures from National Restaurant Association survey data, measured as income before income taxes as a percentage of sales.
The pattern behind the table is labour. Quick service and fast casual push more of the work onto the customer and onto simpler kitchens, so labour falls and margin rises. Full service carries servers, a larger kitchen brigade and longer table times for the same revenue.
What 3% actually means in money
Percentages hide the scale of this. Here is the same margin at three revenue levels.
- $500,000 revenue: $15,000 at 3%, $25,000 at 5%
- $1,000,000 revenue: $30,000 at 3%, $50,000 at 5%
- $2,000,000 revenue: $60,000 at 3%, $100,000 at 5%
A restaurant turning over a million dollars a year returns about $30,000 to its owner at the industry median. That is less than the manager is paid. It is the reason restaurant people talk about margin constantly while people in most other industries barely think about it.
Gross margin is not the number you think it is
This trips people up more than anything else on this page. When someone says restaurants make 3%, they mean net margin, after everything. The gross margin on the food itself is enormous.
Food costs run 28% to 35% of revenue, with a median near 31%. That leaves a gross margin of roughly 65% to 70%. A plate selling for $20 contains about $6 of ingredients.
So the markup on the food is large and the profit is tiny. Everything in between is labour, rent, utilities, insurance and equipment. Here is where a million dollars goes in a typical full service restaurant, using the published medians.
| Line | On $1,000,000 | Share of sales | Note |
|---|---|---|---|
| Revenue | $1,000,000 | 100% | |
| Food and beverage cost | $313,000 | 31.3% | NRA median, target range 28% to 35% |
| Gross profit | $687,000 | 68.7% | This is the number people mistake for profit |
| Labour cost | $365,000 | 36.5% | NRA median for full service |
| Prime cost food plus labour | $678,000 | 67.8% | Benchmark is 60%. This is 7.8 points over. |
| Rent, utilities, insurance, equipment, everything else | $292,000 | 29.2% | What is left to swallow before profit |
| Net profit | $30,000 | 3.0% | Less than the manager is paid |
A full service restaurant built from published NRA median percentages. Your own split will differ, but the shape is the point.
Run those medians together and prime cost, which is food plus labour, lands at 67.8% of revenue. The industry benchmark for prime cost is 60%. So the median full service restaurant is nearly eight points over the target, and that gap is most of the reason its net margin sits at 2.8% rather than 5%.
That is the single most useful ratio to track, and it is why operators review prime cost weekly rather than waiting for a monthly profit and loss.
What third party delivery does to these numbers
Almost no one writing about restaurant margins quantifies this, usually because they sell to restaurants or take a commission. The arithmetic is not complicated.
DoorDash charges 15% to 30% per order, Uber Eats 15% to 27%, Grubhub 5% to 20% plus advertising. Now set that against a 3% net margin.
| Commission | Taken from a $35 order | Your profit at 3% net | The platform earns |
|---|---|---|---|
| 15% lowest tier | $5.25 | $1.05 | 5x what you do |
| 20% | $7.00 | $1.05 | 7x what you do |
| 25% | $8.75 | $1.05 | 8x what you do |
| 30% top tier | $10.50 | $1.05 | 10x what you do |
Published 2026 commission ranges: DoorDash 15% to 30%, Uber Eats 15% to 27%, Grubhub 5% to 20% plus advertising. Profit column assumes the industry median 3% net margin and no delivery menu price uplift.
On a $35 order at a 3% net margin, the restaurant keeps $1.05. A 20% commission takes $7.00. The platform earns about seven times what the restaurant does on its own food.
Turn it around and the question becomes how much delivery a restaurant can carry before margin disappears. At a 20% commission:
- A restaurant on a 3% net margin goes to zero once delivery is 15% of sales
- At a 5% net margin, the breaking point is 25% of sales
- At a 9% net margin, it is 45% of sales
This is why restaurants raise delivery menu prices by 15% to 20%, and why a thin margin operator who adds delivery for the volume often finds the extra revenue made things worse. The orders are real, the profit on them is not.
Check your own margin
Benchmarks only matter against your own figure. Put revenue and costs in and the calculator returns gross, operating and net margin separately, which is the distinction most of this confusion comes from.
Free tool
Profit Margin Calculator
Gross, operating and net margin worked out separately from your revenue and costs, so you can see which of the three is actually the problem.
For the general question across all industries rather than restaurants, the tool page covers what counts as a good profit margin and how gross, operating and net differ.
Quick answers
What is a good profit margin for a restaurant?
Anything above 5% net is doing well, and 6% to 9% is strong for quick service or fast casual. The industry average is 3% to 5%. If you are below 3%, prime cost is almost always the cause.
What is the average restaurant profit margin?
3% to 5% net across the industry. National Restaurant Association survey data puts the median at 2.8% for full service and 4.0% for limited service, measured as income before tax as a share of sales.
Why are restaurant profit margins so low?
Not because the food is cheaply marked up. Gross margin is 65% to 70%. The margin disappears into labour at around 36% of sales for full service, plus rent, utilities, insurance and equipment. Food and labour together typically reach 68%, against a 60% target.
What is prime cost in a restaurant?
Food and beverage cost plus total labour cost, expressed as a percentage of sales. The benchmark is 60% or below. It is the number operators track weekly because it is the only one they can still act on before the month closes.
Do bars make more profit than restaurants?
Yes, typically 10% to 15% against 3% to 5%. Alcohol carries a much lower cost of goods than food and needs far less kitchen labour to serve, so both halves of prime cost improve at once.
Is a 10% profit margin good for a restaurant?
It is excellent for a restaurant and roughly double the industry average. It is normal for a bar and achievable for a well run quick service operation. For full service it would put you in the top tier.
How much profit does a restaurant make per year?
About $30,000 on a million dollars of revenue at the 3% median, or $50,000 at 5%. A quick service operation at 9% on the same revenue returns $90,000. Owner compensation is often taken as wages before this line, so the figures are not directly comparable between businesses.
Sources
- National Restaurant Association, Restaurant Operations Report and State of the Industry data, median income before tax, food cost and labour cost percentages
- Toast, Average restaurant profit margin, 2026 segment figures
- Published commission rates for DoorDash, Uber Eats and Grubhub, 2026
The dollar figures and breaking points on this page are calculated from those published percentages using the formulas shown, so you can reproduce any of them. General information, not financial advice.
More short answers like this one: browse all Calcxi answers.
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