The average restaurant profit margin ranges from 3–15%, depending on your restaurant type. Fast casual and delivery-optimized models generally earn the highest margins due to lower overhead.
When planning to open a restaurant, it's easy to get dollar signs in your eyes thinking about the check totals adding up at the end of every service — especially when you factor in mega-profitable alcoholic beverages. But the food service industry is notorious for having very high operational costs, which can lead to thin profit margins.
To track your restaurant’s profit, create a profit and loss (P&L) statement, use a restaurant profit margin calculator, or regularly check the built-in financial reporting page of your POS or accounting system.
How do you know if your restaurant profit margin is good? Here are the profit margin ranges for different types of restaurants to help you benchmark your own restaurant's financial health.
What are common profit margin benchmarks?
As you make projections and try to budget for your restaurant operating expenses, it’s good to have a benchmark for how profitable you might be. Let’s break down some average profit margins for different types of restaurant businesses.
What is the average profit margin for full-service restaurants?
For a full-service restaurant, operators can expect the business to make anywhere between 0 and 15% profit, with the average restaurant profit margin landing around 5% – 10%, depending on your source. This is a recent industry benchmark accounting for rising labor and supply costs, but different types of restaurants can expect to bring in more or less profit.
How to improve profit margins for full-service restaurants?
Do a menu audit and cut unprofitable, unpopular menu items — it boosts profit and may minimize food waste, which also helps reduce costs.
Negotiate with vendors or shop around for better deals.
Train front-of-house staff to gracefully upsell customers. DoorDash also provides built-in upsell features that allow customers to modify or add-on to orders for an extra cost.
Increase prices on your best-sellers — not by a lot, but even small increases will add up with highly ordered items.
For cocktails, train servers to upsell to top-shelf liquor — and reign in over-pouring to optimize beverage profitability.
What is the average profit margin for fine dining restaurants?
Though big-ticket menu items may increase average check size, the higher expenses that come along with fine dining restaurants mean that they tend to sit in the same range as other full-service restaurants: a 5% – 10% profit margin. These restaurants are also often located in trendy areas of major cities, paying enormous rents.
Fine dining businesses provide attentive, hospitable service by employing lots of servers, sommeliers, bussers, and more, and have large kitchens full of cooks working with high-quality, high-cost ingredients. Use the profit-conscious advice above to improve margins at your fine dining restaurant.
What is the average profit margin for fast casual restaurants?
Average fast food restaurant profit margins are around 6-9%. Their simple menus mean that ingredients are often used for multiple menu items, so there’s less waste and orders can be made in bulk. They also staff fewer employees than full-service restaurants, meaning their labor costs are lower.
How to improve profit margins for fast food restaurants:
Reduce hours of operation — if you’re open 24/7, but aren’t getting enough orders between 2–10 am, it’s not worth it to have employees working that shift.
Audit combo pricing and ensure they’re priced to appeal to customers while bringing in maximum profit.
Offer Restaurant Rewards to connect your rewards and loyalty programs under a single platform, so customers can earn and redeem points whether they're ordering in-store, online, or on the DoorDash app.
What is the average profit margin for fast casual restaurants?
Fast casual restaurants, or quick-service restaurants (QSRs) are able to operate more efficiently than fine dining restaurants. The average QSR profit margin is now around 17% — which is higher than full-service restaurants because they generally employ fewer employees, and they may have simpler, more profitable menus with lower ingredient costs. Shake Shack reported 20% profit margins in May 2023 and expects even higher margins for this fiscal year.
How to improve profit margins for fast casual restaurants?
Train counter service staff to upsell, including offering combos, drinks, or dessert items.
Create profitable lunch specials that appeal to nearby office workers — and promote them on social media.
Regularly review vendors and make sure you’re getting the best deal on every ingredient.
What is the average profit margin for food trucks?
Food truck profit margins are 6-9%, on average — also higher than full-service restaurants. The big savings that leads to this higher margin is that they have way lower location costs. Restaurants spend an average of $6,000 a month on rent, so avoiding that huge expense by operating out of a food truck yields higher profits. Food trucks can take the same approaches for improving profit margin as fast-casual restaurants, and consider partnering with other local vendors to expand their reach.
What is the average profit margin for coffee shops?
The average coffee shop brings in only a 2.5% profit margin. Even though the profit margin on coffee beverages is typically extremely high, it’s still very expensive to run a cafe, from paying staff to maintaining equipment and paying rent on a prime foot traffic location. And these expenses are hard to recuperate with a relatively small average check size.
How to improve profit margins for coffee shops?
Boost average check size with snacks like pastries, fruit, chips, and cheese.
If you make drinks in various sizes, train staff to upsell and price larger drinks in a way that’s more profitable to you, but still worth the jump for customers.
What is the average profit margin for catering companies?
High-end caterers charge premium prices for their exceptional food and service, along with their reputation and brand, so they can bring in up to 15% profit margin. However, the average catering business brings in between a 7-8% profit margin, which is still pretty good for the food service industry. Though business can be highly seasonal, caterers have more flexibility in pricing, menu, and costs, making it easier to turn a profit.
What is the average profit margin for pizzerias?
Pizzerias have an average profit margin at the top of the range for all restaurants, hovering around 15%. Pizza, like other carb-forward entrees like pasta or rice bowls, is a high-profit menu item made of very low-cost ingredients. Combine the profit power of pizza with its massive popularity and you have a recipe for a solid business model — especially because they often meet customers where they are and offer takeout, delivery, and dine-in service.
How to improve profit margins for pizzerias:
Create a seamless online ordering experience with DoorDash Commerce Platform — which lets you offer pickup and delivery ordering through your own channels, including your website, native apps, social media, and Google page.
Route all customer call-in orders to live agents who are trained to politely upsell customers, or a customized automated messaging system so you never miss a phone order, with Phone Ordering.
What is the average profit margin for ghost kitchens?
Ghost kitchens, or virtual kitchens, are delivery-only restaurants with no onsite space for dining or takeout. This model allows for a wide range of overhead savings: they need fewer staff members, as there’s no front of house, and they can be located in an area with cheaper rent, as foot traffic isn’t a factor. Virtual kitchens take orders via website ordering or delivery marketplaces like DoorDash, and reach customers all over their area.
That’s why these businesses are on the higher range of profit margin — ghost kitchens operate at an average of 15% profit. They can even operate multiple concepts out of one commercial kitchen, meaning they can cast a wider net and reach more customers.
How to improve profit margins for ghost kitchens?
Invest in branding, social media, and advertising to ensure people know about your kitchen.
Run promotions for popular holidays and local events. Take advantage of DoorDash's built-in marketing tools, such as Sponsored Listings and Promotions.
What is the average profit margin for bakeries?
Bakeries sit in a similar range as restaurants, even though there’s a very big range among different types of bakeries — including commercial bakeries, cake bakeries, coffee shop bakeries, pastry bakeries, and more. However, the average profit for bakeries is 4%, with the most successful bakeries bringing in up to 9%.
What is the average profit margin for bars?
While bars may come with some challenges that restaurants avoid — like regularly dealing with unruly patrons — the profits are often worth the later nights. Bars have an average profit margin of 10-15%, thanks to the high markup on alcoholic beverages and the fact that they often run without a kitchen, which means they can forgo a back-of-house team. Pubs fall in this same 10-15% profit margin range, whereas wine bars are less profitable, ranging from 7-10%, because of the high cost of specialty wines that keep customers coming back. Nightclubs, on the other hand, are even more profitable: clubs have an average profit margin of 15-20%, thanks to high alcohol sales.
What types of restaurants have the highest profit margins?
Ghost kitchens: Ghost kitchens typically have much lower overhead costs, and benefit from built-in advertising on delivery marketplaces which promote their business for them.
Pizzerias: Pizzerias combine a super-popular meal with multiple ordering channels — in-house dining, delivery, and pickup through online ordering and third-party marketplaces — to consistently bring in new customers with different ordering habits.
How to improve profitability for restaurants?
There are two strategies to boost your restaurant profit margin — increase sales and reduce costs:
Increase sales by meeting customers where they are at. With the DoorDash Commerce Platform's product Online Ordering, you can let customers order online directly from your own channels. You can get set up with just a few clicks through your existing DoorDash Marketplace account and start reaching more customers using the same technology that drives millions of DoorDash orders every day.
Reduce costs on ingredients by negotiating with vendors, optimizing your menu, and keeping it small. Review your menu sales regularly and only offer the most profitable and popular dishes. Additionally, pay employees well and provide benefits that retain staff — it’s an upfront cost, but keeping employees happy reduces costly turnover. For more tips, read our blog post on reducing restaurant costs.
How to track metrics and boost profits for restaurants?
Create a P&L sheet with this template and track the success of your restaurant — and if you’re looking for a solution that makes it easy to grow sales across your own channels, try using online ordering via DoorDash Commerce Platform.
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