{"id":15189,"date":"2026-09-10T07:30:00","date_gmt":"2026-09-10T07:30:00","guid":{"rendered":"https:\/\/dev.restroworks.com\/blog\/?p=15189"},"modified":"2026-10-01T11:40:50","modified_gmt":"2026-10-01T11:40:50","slug":"restaurant-operating-costs","status":"publish","type":"post","link":"https:\/\/dev.restroworks.com\/blog\/restaurant-operating-costs\/","title":{"rendered":"Restaurant Operating Costs: Complete Guide to Managing Expenses"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"15189\" class=\"elementor elementor-15189\" data-elementor-post-type=\"post\">\n\t\t\t\t<div class=\"elementor-element elementor-element-ef60981 e-flex e-con-boxed e-con e-parent\" data-id=\"ef60981\" data-element_type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-e4f7ba1 elementor-widget elementor-widget-text-editor\" data-id=\"e4f7ba1\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span style=\"font-weight: 400;\">Wouldn&#8217;t it be a lot easier to run a restaurant if your only expenses were food, labor, staff, and rent?<\/span><\/p><p><span style=\"font-weight: 400;\">But of course, you already know that&#8217;s not how it works.<\/span><\/p><p><span style=\"font-weight: 400;\">Once you account for these, then comes the longer list of other small expenses. There\u2019s the electricity bill, payment processing fees, equipment repairs, software subscriptions, delivery commissions, and so much more. It\u2019s never-ending.<\/span><\/p><p><span style=\"font-weight: 400;\">These are your restaurant operating costs, and they play a huge role in determining how much money you actually get to keep. In fact, the average U.S. restaurant retains just 3-5% of its sales as net profit, which means every expense matters.<\/span><\/p><p><span style=\"font-weight: 400;\">The good news? Once you know where your money is going, it&#8217;s much easier to budget, price your menu right, and keep restaurant costs from getting out of hand. Let\u2019s explore the different types of restaurant operating costs, how to calculate them, and a few practical ways to reduce them.<\/span><\/p><h3>What you will learn<\/h3><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The difference between fixed costs and variable costs for a restaurant<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The key operating costs in a restaurant<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Strategies to control restaurant costs for better profitability<\/span><\/li><\/ul><h2>Understanding Restaurant Operating Costs<\/h2><p><img fetchpriority=\"high\" decoding=\"async\" class=\"alignnone size-full wp-image-24975\" src=\"https:\/\/www.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Restaurant-operating-costs.webp\" alt=\"Restaurant operating costs\" width=\"1024\" height=\"768\" srcset=\"https:\/\/dev.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Restaurant-operating-costs.webp 1024w, https:\/\/dev.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Restaurant-operating-costs-300x225.webp 300w, https:\/\/dev.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Restaurant-operating-costs-768x576.webp 768w, https:\/\/dev.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Restaurant-operating-costs-150x113.webp 150w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/p><p><span style=\"font-weight: 400;\">Restaurant operating costs are all the expenses that keep your business running from one day to the next. That includes the obvious ones, like food, labor, rent, and utilities, as well as dozens of smaller expenses like maintenance, delivery platform commissions, tech costs, and so on.<\/span><\/p><p><span style=\"font-weight: 400;\">And those costs add up fast.<\/span><\/p><p><span style=\"font-weight: 400;\">On average, restaurants spend around 85% of their revenue on operating expenses, leaving only a small portion behind as profit. So, when margins are already tight, it&#8217;s important to know exactly where your money is going. The first step is understanding the major categories of restaurant operating costs, which are-<\/span><\/p><h3>A. Fixed Costs<\/h3><p><span style=\"font-weight: 400;\">Fixed costs are the expenses you have to pay, regardless of the revenue. Rent, insurance, licenses, and salaried employee wages fall into this category because they stay mostly the same from month to month.<\/span><\/p><p><span style=\"font-weight: 400;\">The upside is that these costs are predictable. You know what bills are coming and can budget for them in advance. The downside? You\u2019ll still have to pay for them, even when things are slow.<\/span><\/p><p><span style=\"font-weight: 400;\">For example, if you&#8217;re running a fine-dining restaurant in a prime downtown location, your rent stays the same whether you serve 300 guests this week or 150.<\/span><\/p><h3>B. Variable Costs<\/h3><p><span style=\"font-weight: 400;\">Variable costs, on the other hand, fluctuate with your restaurant&#8217;s activity. Basically, the more customers you serve, the more you&#8217;ll spend on ingredients, hourly workers, packaging, and other day-to-day expenses.<\/span><\/p><p><span style=\"font-weight: 400;\">Unlike fixed costs, you have a little more flexibility with these expenses. Say your sales are slow, so you can also cut down on inventory purchasing, staffing hours, or marketing spend based on demand.<\/span><\/p><p><span style=\"font-weight: 400;\">Then there are the semi-variable costs, such as utilities. You&#8217;ll usually pay a minimum monthly charge for services like electricity and water, and the bill will increase as you use more.<\/span><\/p><h3>C. Prime Costs<\/h3><p><span style=\"font-weight: 400;\">If there&#8217;s one number every restaurant owner should keep an eye on, it&#8217;s prime cost.<\/span><\/p><p><span style=\"font-weight: 400;\">Prime cost combines your <\/span><a href=\"https:\/\/business.bofa.com\/en-us\/content\/restaurant-industry-report.html\" target=\"_blank\" rel=\"nofollow noopener\"><span style=\"font-weight: 400;\">two biggest expenses: food costs and labor costs<\/span><\/a><span style=\"font-weight: 400;\">, and accounts for more than half of your total sales. Which makes it worth considering the industry benchmarks and keeping your prime costs within-<\/span><\/p><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">55% and 60% of sales if you have a quick-service restaurant<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">60% to 65% if it\u2019s a full-service restaurant<\/span><\/li><\/ul><p><span style=\"font-weight: 400;\">Why do these benchmarks matter, though? If food and labor consume 75% of your revenue, you&#8217;re left with only 25% to cover rent, utilities, insurance, technology, marketing, maintenance, and everything else.<\/span><\/p><p><span style=\"font-weight: 400;\">Clearly, once the prime costs go above this range, it may get difficult for you to cover the rest of your operating expenses and still generate profits.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">Prime cost is one of the most useful restaurant KPIs to understand performance. With regular tracking, you can identify rising costs early and make better decisions about pricing, staffing, and inventory management to <\/span><a href=\"https:\/\/podcasts.apple.com\/us\/podcast\/5-ways-to-lower-your-restaurants-prime-cost\/id1338969645?i=1000750388229\" target=\"_blank\" rel=\"nofollow noopener\"><span style=\"font-weight: 400;\">cut down on your prime costs<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p><h4>How to Calculate Prime Costs?<\/h4><p><i><span style=\"font-weight: 400;\">Prime Cost = Food Costs + Labor Costs<\/span><\/i><\/p><p><span style=\"font-weight: 400;\">To understand how much of your revenue is being consumed by these expenses, you can also calculate the prime cost percentage-<\/span><\/p><p><i><span style=\"font-weight: 400;\">Prime Cost % = (Food Costs + Labor Costs) \u00f7 Total Sales \u00d7 100<\/span><\/i><\/p><p><span style=\"font-weight: 400;\">Say your monthly food costs are $25,000, labor costs are $35,000, and monthly sales are $100,000; your prime cost would be =<\/span><\/p><p><span style=\"font-weight: 400;\">= ($25,000 + $35,000) \u00f7 100,000 \u00d7 100 = 60%.<\/span><\/p><h2>What are the Key Restaurant Operating Costs?<\/h2><p><img decoding=\"async\" class=\"alignnone size-full wp-image-24976\" src=\"https:\/\/www.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Key-operating-costs.webp\" alt=\"Key operating costs\" width=\"1024\" height=\"768\" srcset=\"https:\/\/dev.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Key-operating-costs.webp 1024w, https:\/\/dev.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Key-operating-costs-300x225.webp 300w, https:\/\/dev.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Key-operating-costs-768x576.webp 768w, https:\/\/dev.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Key-operating-costs-150x113.webp 150w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" loading=\"lazy\" \/><\/p><p><span style=\"font-weight: 400;\">Let\u2019s dive into the restaurant operating costs breakdown for your business-<\/span><\/p><h3>1. Food Costs (28-32% of Revenue)<\/h3><p><span style=\"font-weight: 400;\">Food and beverage costs, also known as Cost of Goods Sold (COGS), include the ingredients, beverages, and other items you purchase to prepare your menu items. For most restaurants, these costs account for <\/span><a href=\"https:\/\/www.usfoods.com\/tools-tips-and-ideas\/articles-and-publications\/articles\/track-your-food-cost-percentage-to-drive-revenue\" target=\"_blank\" rel=\"nofollow noopener\"><span style=\"font-weight: 400;\">28-32% of revenue<\/span><\/a><span style=\"font-weight: 400;\">, making them one of the biggest expenses you&#8217;ll deal with.<\/span><\/p><p><span style=\"font-weight: 400;\">But the exact food cost percentage depends on your concept, menu pricing, supplier costs, and how efficiently your kitchen uses ingredients. For instance, full-service restaurants have <\/span><a href=\"https:\/\/whipplewood.com\/insights\/financial-benchmarks-for-restaurants\/\" target=\"_blank\" rel=\"nofollow noopener\"><span style=\"font-weight: 400;\">average food costs of 32.4%<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p><p><span style=\"font-weight: 400;\">Your food costs include all expenses associated with ingredients and beverages used in service, including-<\/span><\/p><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Raw ingredients\u00a0<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Beverages, including both alcoholic and non-alcoholic offerings.<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Condiments, dressings, and specialty ingredients.<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Waste from spoilage, overproduction, or inconsistent portioning.<\/span><\/li><\/ul><p><span style=\"font-weight: 400;\">To calculate your food costs, use this formula-<\/span><\/p><p><i><span style=\"font-weight: 400;\">Food Cost percentage = (Cost of Goods Sold \u00f7 Food Sales) \u00d7 100<\/span><\/i><\/p><h4>How to Control Food Cost Percentage<\/h4><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Standardize recipes and portions:<\/strong> <span style=\"font-weight: 400;\">Standardize your recipes with accurate ingredient quantities and portion sizes, so you know your inventory usage and costs.<\/span><\/li><\/ul><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Count inventory regularly:<\/strong><span style=\"font-weight: 400;\"> Frequent inventory checks help you identify waste, over-ordering, and stock variances.<\/span><\/li><\/ul><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Menu engineering:<\/strong><span style=\"font-weight: 400;\"> Which menu items bring you the most profit? Regularly review your menu, find out your bestselling items, or re-evaluate your pricing.<\/span><\/li><\/ul><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Reduce food waste:<\/strong><span style=\"font-weight: 400;\"> Track spoilage and overproduction to understand where you\u2019re losing costs on ingredients.<\/span><\/li><\/ul><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Compare supplier pricing:<\/strong><span style=\"font-weight: 400;\"> Ingredient costs change frequently, so it&#8217;s worth reviewing vendor pricing instead of automatically reordering from the same supplier.<\/span><\/li><\/ul><h3>2. Labor Costs (28-35% of Revenue)<\/h3><p><span style=\"font-weight: 400;\">You can cut back on inventory purchases during a slow week. Staffing? Not so much.<\/span><\/p><p><span style=\"font-weight: 400;\">Labor costs include your staff expenses, such as wages, salaries, overtime, payroll taxes, employee benefits, and proper training. In general, total labor costs account for <\/span><a href=\"https:\/\/vantainsights.com\/insights\/restaurant-startup-costs\" target=\"_blank\" rel=\"nofollow noopener\"><span style=\"font-weight: 400;\">28-35% of your revenue<\/span><\/a><span style=\"font-weight: 400;\">, making it the second largest operating expense after food costs.<\/span><\/p><p><span style=\"font-weight: 400;\">Now, the thing about labor costs is that managing them is tricky. It can quickly add up if you\u2019re not managing it smartly, for instance-<\/span><\/p><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Scheduling more staff than you need<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Frequent overtime hours<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">High employee turnover<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Long training periods for new hires<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Last-minute shift changes and call-outs<\/span><\/li><\/ul><p><span style=\"font-weight: 400;\">You can calculate labor cost percentage using the formula-<\/span><\/p><p><i><span style=\"font-weight: 400;\">Labor Cost percentage = (Total Labor Costs \u00f7 Total Revenue) \u00d7 100<\/span><\/i><\/p><p><img decoding=\"async\" class=\"alignnone size-full wp-image-24977\" src=\"https:\/\/www.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Labor-costs.webp\" alt=\"Labor costs\" width=\"741\" height=\"486\" srcset=\"https:\/\/dev.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Labor-costs.webp 741w, https:\/\/dev.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Labor-costs-300x197.webp 300w, https:\/\/dev.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Labor-costs-150x98.webp 150w\" sizes=\"(max-width: 741px) 100vw, 741px\" loading=\"lazy\" \/><\/p><h4>How to Control Labor Cost Percentage<\/h4><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Schedule around demand:<\/strong><span style=\"font-weight: 400;\"> You don\u2019t need to have the same number of employees for every shift. Use historical sales data to align your staffing levels with expected customer traffic.<\/span><\/li><\/ul><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Cross-train employees:<\/strong><span style=\"font-weight: 400;\"> Offer comprehensive training to your employees across multiple roles. This gives you more flexibility during busy and slow periods.<\/span><\/li><\/ul><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Reduce employee turnover:<\/strong><span style=\"font-weight: 400;\"> Hiring and training new employees takes time and money. Build a strong culture of trust and transparency to retain your existing employees.<\/span><\/li><\/ul><p><strong>EXPERT OPINION<\/strong><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t<div class=\"elementor-element elementor-element-5e7903f e-con-full e-flex e-con e-child\" data-id=\"5e7903f\" data-element_type=\"container\">\n\t\t<div class=\"elementor-element elementor-element-9b9d15e e-con-full e-flex e-con e-child\" data-id=\"9b9d15e\" data-element_type=\"container\" data-settings=\"{&quot;background_background&quot;:&quot;gradient&quot;}\">\n\t\t\t\t<div class=\"elementor-element elementor-element-d93446e elementor-widget elementor-widget-text-editor\" data-id=\"d93446e\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><span style=\"font-weight: 400;\">David Burke, a world-renowned chef, says, \u201cThe <\/span><a href=\"https:\/\/www.foxbusiness.com\/economy\/celebrity-chef-says-restaurant-goers-are-still-seeing-high-menu-prices-because-of-this-no-1-problem\" target=\"_blank\" rel=\"nofollow noopener\"><span style=\"font-weight: 400;\">No. 1 problem<\/span><\/a><span style=\"font-weight: 400;\"> for us is controlling labor cost. There are employees out there, so many employees, they&#8217;re commanding top dollar, but not necessarily the top talent.<\/span><\/p><p><span style=\"font-weight: 400;\">There&#8217;s lots of turnover, there&#8217;s lots of benefits that are associated, depending on whether you&#8217;re in the city or the suburbs. So labor becomes an issue, and the training, losing an employee costs a lot of money because of the amount of effort you put into training.&#8221;<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t<div class=\"elementor-element elementor-element-dc44cb9 e-flex e-con-boxed e-con e-parent\" data-id=\"dc44cb9\" data-element_type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-870d557 elementor-widget elementor-widget-text-editor\" data-id=\"870d557\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<h3>3. Occupancy Costs<\/h3><p><span style=\"font-weight: 400;\">Occupancy costs include the expenses related to your restaurant location and everyday operations, such as-<\/span><\/p><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Rent or lease payments<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Utilities like electricity and water<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Property taxes<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Repairs and maintenance<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Waste collection services<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Insurance<\/span><\/li><\/ul><p><span style=\"font-weight: 400;\">The challenge is that most of these expenses are difficult to reduce quickly. If ingredient prices rise, you can adjust portions or negotiate with suppliers. If labor costs increase, you can revisit schedules. But rent doesn&#8217;t work that way.<\/span><\/p><p><span style=\"font-weight: 400;\">That&#8217;s why it\u2019s important to consider your occupancy costs before you sign that lease.<\/span><\/p><h4>How to Control Occupancy Costs<\/h4><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Think carefully before signing a lease:<\/strong><span style=\"font-weight: 400;\"> Rent is one of the few expenses you&#8217;ll be committed to, no matter what happens. So before you sign that lease, make sure you are okay with the terms and costs involved.<\/span><\/li><\/ul><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Negotiate terms:<\/strong><span style=\"font-weight: 400;\"> Talk to your landlord to secure favorable terms, such as fixed rent increases, caps on CAM charges, or rent-free periods for renovations.<\/span><\/li><\/ul><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Monitor utility usage:<\/strong><span style=\"font-weight: 400;\"> Higher-than-usual utility bills can point to operational inefficiencies. It may be due to equipment problems, leaks, or waste, which makes it important to track your usage regularly.<\/span><\/li><\/ul><ul><li aria-level=\"1\"><strong>Invest in efficient equipment:<\/strong><span style=\"font-weight: 400;\"> One of the best ways to save money on utility bills is to invest in energy-saving equipment, LED lighting, and programmable HVAC systems to make the most of your equipment.<\/span><\/li><\/ul><p><span style=\"font-weight: 400;\">While every restaurant operation has its own cost structure, most operators keep a close eye on food, labor, and rent because these three expenses usually consume the largest share of revenue. <\/span><a href=\"https:\/\/www.linkedin.com\/in\/pauline-ibrahim-70809a5a?originalSubdomain=ae\" target=\"_blank\" rel=\"nofollow noopener\"><span style=\"font-weight: 400;\">Pauline Ibrahim<\/span><\/a><span style=\"font-weight: 400;\">, CEO of Global Catering Services, shared a simple benchmark for how these major restaurant costs typically stack up-<\/span><\/p><p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-24978\" src=\"https:\/\/www.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Pauline-Ibrahim-scaled.webp\" alt=\"Pauline Ibrahim\" width=\"2560\" height=\"1280\" srcset=\"https:\/\/dev.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Pauline-Ibrahim-scaled.webp 2560w, https:\/\/dev.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Pauline-Ibrahim-300x150.webp 300w, https:\/\/dev.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Pauline-Ibrahim-1024x512.webp 1024w, https:\/\/dev.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Pauline-Ibrahim-768x384.webp 768w, https:\/\/dev.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Pauline-Ibrahim-1536x768.webp 1536w, https:\/\/dev.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Pauline-Ibrahim-2048x1024.webp 2048w, https:\/\/dev.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Pauline-Ibrahim-150x75.webp 150w\" sizes=\"(max-width: 2560px) 100vw, 2560px\" \/><\/p><h3>4. Third-Party Delivery Platform Fees<\/h3><p><span style=\"font-weight: 400;\">Being on third-party delivery platforms is a great idea for your restaurants.<\/span><\/p><p><span style=\"font-weight: 400;\">It helps you boost your presence, reach more customers, and add another revenue channel, but it also adds another operating cost. All major food apps, Uber Eats, DoorDash, and Grubhub, charge you commissions, order processing fees, marketing fees, and other charges on every order.<\/span><\/p><p><span style=\"font-weight: 400;\">Now, if your delivery sales are high, it may be easy to overlook these costs. But, at the same time, a high volume of delivery orders may not always mean higher profits, as commission rates are high; as <\/span><a href=\"https:\/\/www.linkedin.com\/in\/pauline-ibrahim-70809a5a\/\" target=\"_blank\" rel=\"nofollow noopener\"><span style=\"font-weight: 400;\">Pauline Ibrahim<\/span><\/a><span style=\"font-weight: 400;\"> notes, <\/span><i><span style=\"font-weight: 400;\">\u201cIf you have high dependency on delivery, the delivery costs would be 15 percent or 16 percent of your sales.&#8221;<\/span><\/i><\/p><h4>How to Manage Delivery Platform Fees?<\/h4><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Review commission rates regularly:<\/strong><span style=\"font-weight: 400;\"> As your delivery volume grows, don\u2019t ignore your commission rate. Consider it as a percentage of delivery sales to see how it\u2019s actually impacting profits.<\/span><\/li><\/ul><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Encourage direct ordering:<\/strong><span style=\"font-weight: 400;\"> Sure, third-party delivery apps are perfect for reaching new people, but the costs aren\u2019t always worth it. Instead, focus on building an intuitive website or app with direct ordering services to minimize third-party commissions.<\/span><\/li><\/ul><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Review delivery menu prices:<\/strong><span style=\"font-weight: 400;\"> Like many other restaurants, if you also have separate pricing for delivery apps, review it too.<\/span><\/li><\/ul><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Track profit per order:<\/strong><span style=\"font-weight: 400;\"> Receiving a high number of delivery orders is great, but is it generating enough revenue for you? Determine how much money you&#8217;re actually keeping after commissions, discounts, and other fees.<\/span><\/li><\/ul><h3>5. Technology and Software Costs<\/h3><p><span style=\"font-weight: 400;\">For a restaurant, there\u2019s no doing without technology. And for good reason. It streamlines your operations, simplifies management, and ensures a smooth customer experience.<\/span><\/p><p><span style=\"font-weight: 400;\">But what was once limited to a basic cash register now includes POS systems, online ordering platforms, inventory management software, payroll tools, loyalty programs, and accounting software. You have dozens of subscriptions, and their combined cost can become huge as your technology stack grows.<\/span><\/p><p><span style=\"font-weight: 400;\">The value of these tools comes from saving time, reducing manual work, and improving visibility into restaurant performance. But paying for multiple systems with overlapping features does not make a lot of sense financially.<\/span><\/p><h4>How to Control Technology Costs?<\/h4><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Audit subscriptions regularly:<\/strong><span style=\"font-weight: 400;\"> Once you\u2019ve subscribed to a software tool, don\u2019t forget about it. Vendors may increase base pricing or add costs for additional features you may not know about.<\/span><\/li><\/ul><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Look for overlapping systems:<\/strong><span style=\"font-weight: 400;\"> Surprisingly, many restaurants end up investing in multiple tech tools that perform similar functions. Consolidate your overlapping tools to simplify restaurant operations and reduce operating costs.<\/span><\/li><\/ul><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Measure the return on each tool:<\/strong> <span style=\"font-weight: 400;\">Every subscription should either save time, reduce costs, improve visibility, or generate revenue; if it doesn&#8217;t, review why you have it again.<\/span><\/li><\/ul><h3>6. Marketing and Customer Acquisition Costs<\/h3><p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-24979\" src=\"https:\/\/www.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Marketing-costs.webp\" alt=\"Marketing costs\" width=\"741\" height=\"486\" srcset=\"https:\/\/dev.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Marketing-costs.webp 741w, https:\/\/dev.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Marketing-costs-300x197.webp 300w, https:\/\/dev.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Marketing-costs-150x98.webp 150w\" sizes=\"(max-width: 741px) 100vw, 741px\" \/><\/p><p><span style=\"font-weight: 400;\">Whatever you spend to attract new customers and encourage repeat visits is your marketing expenses. Given how competitive the restaurant industry is today, marketing has become an unavoidable cost to get in front of potential customers.<\/span><\/p><p><span style=\"font-weight: 400;\">The good thing is that, unlike rent or insurance, marketing spend is highly flexible. You can decide to spend more during slower periods, launch seasonal campaigns, or reduce spending when demand is already strong. At the very least, you\u2019ll be spending on-<\/span><\/p><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Digital advertising<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Social media campaigns<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Email marketing<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Loyalty programs<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Influencer partnerships<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Promotional events<\/span><\/li><\/ul><h4>How to Control Marketing Costs<\/h4><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Track metrics:<\/strong><span style=\"font-weight: 400;\"> Likes, views, and clicks on <\/span><a href=\"https:\/\/podcasts.apple.com\/au\/podcast\/your-social-media-is-causing-you-to-lose-customers\/id1829077186?i=1000727100233\" target=\"_blank\" rel=\"nofollow noopener\"><span style=\"font-weight: 400;\">social media<\/span><\/a><span style=\"font-weight: 400;\"> will get your restaurant in front of the right people, but they don&#8217;t pay the bills. The real measure of your marketing success is the channels that actually lead to orders, reservations, or repeat visits.<\/span><\/li><\/ul><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Invest in customer retention:<\/strong><span style=\"font-weight: 400;\"> Acquiring a new customer costs more than keeping an existing one, <\/span><a href=\"https:\/\/churnkey.co\/blog\/customer-acquisition-vs-retention-cost-comparison-guide\/\" target=\"_blank\" rel=\"nofollow noopener\"><span style=\"font-weight: 400;\">about 5-10 times more<\/span><\/a><span style=\"font-weight: 400;\">, to be precise. Strategies like loyalty programs, email campaigns, and personalized offers are useful for engaging your customers and keeping them coming back.<\/span><\/li><\/ul><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><strong>A\/B test ideas before increasing budgets:<\/strong><span style=\"font-weight: 400;\"> Consider starting with a small budget or A\/B testing your campaigns before going big. It\u2019s safer this way for a new restaurant and also allows you to see what will work for your audience.<\/span><\/li><\/ul><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Build channels you own:<\/strong><span style=\"font-weight: 400;\"> Email lists, loyalty programs, and direct communication channels give you a way to reach customers without paying for every interaction.<\/span><\/li><\/ul><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Review marketing performance regularly:<\/strong><span style=\"font-weight: 400;\"> Customer behavior changes, platforms change, and marketing trends change. What worked six months ago may not be the best use of your budget today, so keep reviewing and revising.<\/span><\/li><\/ul><h3>7. Licenses and Insurance<\/h3><p><span style=\"font-weight: 400;\">Before you can serve your first customer, there are a few costs you simply can&#8217;t avoid.<\/span><\/p><p><span style=\"font-weight: 400;\">Licensing is one of them. Depending on your location and restaurant format, you\u2019ll need various licenses, permits, and insurance policies to operate legally and protect the business from financial risk. While these expenses are not as big as food or labor costs, they&#8217;re still an important part of your operating budget. These will include-<\/span><\/p><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Business licenses<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Food safety and health permits<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Liquor licenses<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Fire and safety permits<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">General liability insurance<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Workers&#8217; compensation insurance<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Property insurance<\/span><\/li><\/ul><h4>How to Control License and Insurance Costs<\/h4><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Stay ahead of renewal deadlines:<\/strong><span style=\"font-weight: 400;\"> Missing a permit renewal or insurance payment can create unnecessary penalties and administrative headaches. A simple tracking system can prevent costly oversights.<\/span><\/li><\/ul><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Review insurance policies regularly:<\/strong> <span style=\"font-weight: 400;\">As your restaurant grows, expands, or changes operations, your insurance needs may change as well. Review your insurance coverage periodically to ensure you&#8217;re paying for protection you actually need.\u00a0<\/span><\/li><\/ul><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Compare providers occasionally:<\/strong><span style=\"font-weight: 400;\"> Many operators renew the same policy year after year without checking alternatives. A quick online search comparing the top insurance providers can sometimes help unlock better rates or more suitable coverage for your restaurant.<\/span><\/li><\/ul><h3>8. Maintenance and Repair<\/h3><p><span style=\"font-weight: 400;\">Restaurant equipment works hard every day. Multiple appliances like ovens, refrigerators, dishwashers, HVAC systems, and kitchen appliances keep running all day, every day.<\/span><\/p><p><span style=\"font-weight: 400;\">And then eventually, things wear out.<\/span><\/p><p><span style=\"font-weight: 400;\">This makes maintenance and repair costs another cost center for you, covering expenses required to keep your restaurant operating safely and efficiently. This includes some planned expenses, such as equipment servicing, and other unexpected ones for repair and replacement.<\/span><\/p><p><span style=\"font-weight: 400;\">So your maintenance costs will include-<\/span><\/p><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Equipment servicing<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Emergency repairs<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">HVAC maintenance<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Plumbing and electrical work<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Kitchen equipment replacement parts<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Building repairs<\/span><\/li><\/ul><p><span style=\"font-weight: 400;\">Ignoring maintenance may save money in the short term, but it will most definitely lead to bigger repair bills later.<\/span><\/p><h4>How to Control Maintenance Costs<\/h4><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Don&#8217;t postpone small repairs:<\/strong><span style=\"font-weight: 400;\"> Minor issues won\u2019t stay minor for too long. The moment you see a leaking pipe, the oven making a weird noise, or a faulty refrigerator door, it can turn into a much larger expense if ignored.<\/span><\/li><\/ul><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Follow a preventive maintenance schedule:<\/strong><span style=\"font-weight: 400;\"> Regular servicing keeps equipment running efficiently and reduces the chances of unexpected breakdowns during busy service periods.<\/span><\/li><\/ul><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Train employees on proper equipment use:<\/strong><span style=\"font-weight: 400;\"> A lot of equipment issues often arise from misuse rather than equipment failure. Offer comprehensive training to ensure proper use and extend the life of expensive assets.<\/span><\/li><\/ul><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Set aside funds for emergencies:<\/strong><span style=\"font-weight: 400;\"> Having a maintenance budget in place makes unexpected breakdowns easier to handle without disrupting cash flow.<\/span><\/li><\/ul><h2>Hidden Operating Costs in Restaurants<\/h2><p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-24980\" src=\"https:\/\/www.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Hidden-costs.webp\" alt=\"Hidden costs\" width=\"741\" height=\"486\" srcset=\"https:\/\/dev.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Hidden-costs.webp 741w, https:\/\/dev.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Hidden-costs-300x197.webp 300w, https:\/\/dev.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Hidden-costs-150x98.webp 150w\" sizes=\"(max-width: 741px) 100vw, 741px\" \/><\/p><p><span style=\"font-weight: 400;\">You account for food, labor, marketing, rent, utilities \u2014 you know, the basics. But the story doesn&#8217;t end here. You\u2019re yet to account for various recurring hidden costs that usually catch you by surprise.<\/span><\/p><p><span style=\"font-weight: 400;\">Here are some of the most common <\/span><a href=\"https:\/\/open.spotify.com\/episode\/2fTeksOqjz27ZgDnTLAqHW?si=0AS1FMROQSSl-c--5T4uqQ\" target=\"_blank\" rel=\"nofollow noopener\"><span style=\"font-weight: 400;\">hidden operating costs<\/span><\/a><span style=\"font-weight: 400;\"> restaurants encounter-<\/span><\/p><h3>1. Credit Card Processing Fees<\/h3><p><span style=\"font-weight: 400;\">Every card transaction comes with a fee. When card payments make up the majority of your sales, those charges can add up quickly over the course of a month. The cost becomes even higher for restaurants with high transaction volumes and lower profit margins.<\/span><\/p><h3>2. Pest Control Services<\/h3><p><span style=\"font-weight: 400;\">Regular pest inspections and treatments are part of operating a food business. While these services may not be too expensive on their own, skipping them can lead to health code violations, failed inspections, and far more costly problems later.<\/span><\/p><h3>3. Licenses and Permit Renewals<\/h3><p><span style=\"font-weight: 400;\">Restaurant licensing costs are not limited to one-time approval. Business licenses, health permits, liquor licenses, and other regulatory requirements renew annually. Because they aren&#8217;t monthly expenses, they&#8217;re easy to forget until renewal notices arrive.<\/span><\/p><h3>4. Music Licensing Fees<\/h3><p><span style=\"font-weight: 400;\">Playing music in your dining room, bar, or waiting area also requires licensing agreements, depending on how the music is used. You may not even think about these fees until they appear as part of a compliance review.<\/span><\/p><h3>5. Waste Removal\u00a0<\/h3><p><span style=\"font-weight: 400;\">Everyday trash collection, recycling services, and grease disposal also feature fixed costs that you need to account for in your operating expense budget.<\/span><\/p><h2>Factors Affecting Your Restaurant Operating Costs<\/h2><p><span style=\"font-weight: 400;\">Restaurant operating costs can vary widely from one business to another. Many restaurant owners go into business with a clear understanding of the initial investment required for it.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">But the challenge comes later, when day-to-day operating costs start piling up from different directions. As <\/span><a href=\"https:\/\/www.linkedin.com\/in\/kamrankhan1?originalSubdomain=sa\" target=\"_blank\" rel=\"nofollow noopener\"><span style=\"font-weight: 400;\">Kamran Khan<\/span><\/a><span style=\"font-weight: 400;\">, CEO of Arabian Entertainment Co. Ltd., puts it-<\/span><\/p><p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-24981\" src=\"https:\/\/www.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Kamran-Khan-scaled.webp\" alt=\"Kamran Khan\" width=\"2560\" height=\"1280\" srcset=\"https:\/\/dev.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Kamran-Khan-scaled.webp 2560w, https:\/\/dev.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Kamran-Khan-300x150.webp 300w, https:\/\/dev.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Kamran-Khan-1024x512.webp 1024w, https:\/\/dev.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Kamran-Khan-768x384.webp 768w, https:\/\/dev.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Kamran-Khan-1536x768.webp 1536w, https:\/\/dev.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Kamran-Khan-2048x1024.webp 2048w, https:\/\/dev.restroworks.com\/blog\/wp-content\/uploads\/2026\/10\/Kamran-Khan-150x75.webp 150w\" sizes=\"(max-width: 2560px) 100vw, 2560px\" \/><\/p><p><span style=\"font-weight: 400;\">Here are some of the biggest factors that influence what you&#8217;ll spend each month-<\/span><\/p><h3>A. Location<\/h3><p><span style=\"font-weight: 400;\">Where you open your restaurant affects almost every expense that follows.<\/span><\/p><p><span style=\"font-weight: 400;\">A prime downtown location may bring more foot traffic, but it usually comes with higher rent, higher hourly wages, and of course, higher total operating costs. Plus, it also affects-<\/span><\/p><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Utility costs<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Property taxes<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Insurance premiums<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Delivery costs<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Local labor rates<\/span><\/li><\/ul><p><span style=\"font-weight: 400;\">In other words, the same restaurant concept can have very different operating costs simply because it&#8217;s located in a different area.<\/span><\/p><h3>B. Restaurant Format<\/h3><p><span style=\"font-weight: 400;\">A fine-dining restaurant and a fast-casual restaurant don&#8217;t spend money the same way.<\/span><\/p><p><span style=\"font-weight: 400;\">Fine-dining concepts often need highly skilled chefs, extensive staffing, premium ingredients, and higher d\u00e9cor expenses. Those choices can increase both labor expenses and food cost percentages.<\/span><\/p><p><span style=\"font-weight: 400;\">Fast-casual and quick-service restaurants can operate with smaller teams and simpler menus, helping keep some expenses lower. At the same time, they also rely on serving a higher volume of customers to maintain a profitable restaurant.<\/span><\/p><h3>C. Menu Complexity<\/h3><p><span style=\"font-weight: 400;\">A larger menu will sound good on paper because you can offer more choices to customers that way. But what you may forget is that it also creates more work behind the scenes.<\/span><\/p><p><span style=\"font-weight: 400;\">More menu items just means more ingredients to purchase, store, track, and manage. That can increase food waste, inventory costs, and kitchen complexity.<\/span><\/p><p><span style=\"font-weight: 400;\">While simpler menus are easier to execute consistently because you\u2019re relying on fewer ingredients and less storage space. So, when evaluating your restaurant costs, your menu is one of the first places worth looking.\u00a0<\/span><\/p><h3>D. Supply Chain<\/h3><p><span style=\"font-weight: 400;\">The ingredients on your menu are only part of the equation. Where those ingredients come from matters too.<\/span><\/p><p><span style=\"font-weight: 400;\">If you rely on imported products, you may deal with more shipping delays, supplier shortages, and price fluctuations. If you source locally, you&#8217;ll often get fresher ingredients, but availability and pricing may change throughout the year. As a result, your supply chain can affect-<\/span><\/p><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Ingredient costs<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Inventory levels<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Menu pricing<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Food availability<\/span><\/li><\/ul><p><span style=\"font-weight: 400;\">A good way to overcome this is to work with multiple suppliers instead of relying on a single source to manage your restaurant costs better.<\/span><\/p><p>\u00a0<\/p><p><span style=\"font-weight: 400;\">The only way to ensure long-term profitability and sustainability is to know your restaurant costs inside and out. Once you evaluate every single expense from labor and food to licenses, maintenance, and technology, operators, you\u2019ll know where resources deliver the most value and where you can make adjustments to improve margins.<\/span><\/p><h3>KEY TAKEAWAYS<\/h3>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t<div class=\"elementor-element elementor-element-d718f92 e-con-full e-flex e-con e-child\" data-id=\"d718f92\" data-element_type=\"container\">\n\t\t<div class=\"elementor-element elementor-element-c86ebcc e-con-full e-flex e-con e-child\" data-id=\"c86ebcc\" data-element_type=\"container\" data-settings=\"{&quot;background_background&quot;:&quot;gradient&quot;}\">\n\t\t\t\t<div class=\"elementor-element elementor-element-e0b1dd2 elementor-widget elementor-widget-text-editor\" data-id=\"e0b1dd2\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<ul><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Restaurants operate on thin margins, often retaining only 3-5% of sales as profit.<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Labor and food remain the largest controllable expenses, requiring strict monitoring.<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Fixed costs like rent and insurance impact profitability regardless of sales.<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Technology, marketing, and licenses now form a growing share of operating budgets.<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Efficient maintenance, staffing, and menu design help stabilize costs.<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Understanding restaurant cost drivers ensures better forecasting and stronger financial control.<\/span><\/li><\/ul>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-53cb587 elementor-widget elementor-widget-heading\" data-id=\"53cb587\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Frequently Asked Questions<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t<div class=\"elementor-element elementor-element-56a7b5d e-flex e-con-boxed e-con e-parent\" data-id=\"56a7b5d\" data-element_type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-2969246 elementor-widget elementor-widget-text-editor\" data-id=\"2969246\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<h3>1. What is the 30\/30\/30 rule for restaurants?<\/h3><p><span style=\"font-weight: 400;\">The 30\/30\/30 rule is a budgeting guideline that suggests allocating around 30% of revenue to food costs, 30% to labor costs, and 30% to occupancy and other operating expenses. The remaining 10% is typically left as profit.<\/span><\/p><p><span style=\"font-weight: 400;\">While it&#8217;s a useful benchmark for understanding restaurant finances, it&#8217;s not a strict rule. Cost structures vary by concept, location, and service style, so some restaurants may operate successfully above or below these percentages.<\/span><\/p><h3>2. What is the 60\/40 restaurant rule?<\/h3><p><span style=\"font-weight: 400;\">The 60\/40 rule is commonly used to evaluate a restaurant&#8217;s prime cost. It suggests that your combined food and labor costs should stay at or below 60% of total sales, leaving the remaining 40% to cover rent, utilities, marketing, insurance, and profit.<\/span><\/p><p><span style=\"font-weight: 400;\">Many operators track this metric closely because food and labor are usually the two largest expenses in a restaurant. If prime costs consistently exceed 60%, it can become much harder to maintain healthy profit margins, even when sales are strong.<\/span><\/p><h3>3. What is a good operating cost percentage?<\/h3><p><span style=\"font-weight: 400;\">A successful restaurant typically targets a 3-5% net operating cost percentage of total revenue. But this cost can also vary by concept, size, and location, with quick-service restaurants often achieving higher efficiency compared to fine dining or bars.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>Wouldn&#8217;t it be a lot easier to run a restaurant if your only expenses were food, labor, staff, and rent? But of course, you already know that&#8217;s not how it works. Once you account for these, then comes the longer list of other small expenses. There\u2019s the electricity bill, payment processing fees, equipment repairs, software [&hellip;]<\/p>\n","protected":false},"author":17,"featured_media":15190,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[26],"tags":[],"class_list":["post-15189","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-restaurant-analytics"],"_links":{"self":[{"href":"https:\/\/dev.restroworks.com\/blog\/wp-json\/wp\/v2\/posts\/15189","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dev.restroworks.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dev.restroworks.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dev.restroworks.com\/blog\/wp-json\/wp\/v2\/users\/17"}],"replies":[{"embeddable":true,"href":"https:\/\/dev.restroworks.com\/blog\/wp-json\/wp\/v2\/comments?post=15189"}],"version-history":[{"count":43,"href":"https:\/\/dev.restroworks.com\/blog\/wp-json\/wp\/v2\/posts\/15189\/revisions"}],"predecessor-version":[{"id":24984,"href":"https:\/\/dev.restroworks.com\/blog\/wp-json\/wp\/v2\/posts\/15189\/revisions\/24984"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dev.restroworks.com\/blog\/wp-json\/wp\/v2\/media\/15190"}],"wp:attachment":[{"href":"https:\/\/dev.restroworks.com\/blog\/wp-json\/wp\/v2\/media?parent=15189"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dev.restroworks.com\/blog\/wp-json\/wp\/v2\/categories?post=15189"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dev.restroworks.com\/blog\/wp-json\/wp\/v2\/tags?post=15189"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}