How restaurants make money

The National Restaurant Association, the industry's main trade group, asked more than 900 US restaurants about their costs. In its 2024 results, the typical counter-service restaurant, where guests order at a counter, spent 32.4% of its sales on food and non-alcohol drinks and 31.7% on staff pay, including benefits.

Rent and the other costs of the building, which owners call occupancy, took 5.2%. Then come many smaller bills: utilities, repairs, insurance, marketing, card fees and the ordering system. What's left, 4%, is profit before income tax.

These are medians: the restaurant in the middle of the survey for each cost. A real restaurant's numbers move with its city, its menu and how busy it is.

Table service, where servers bring the food, needs more people: servers, hosts and bussers on top of the kitchen. So staff takes a bigger share. In the same survey, table-service restaurants spent a median of 36.5% of sales on staff, against 31.7% at counter service, while food took about the same share, 32%. That's a big reason table service kept less.

Big chains show the same pattern in their annual reports (Form 10‑K). Shake Shack, a burger chain where guests order at the counter, spent 25.9% of its restaurants' sales on labor in 2025. The Cheesecake Factory, a big table-service chain, spent 35%, bakery staff included, and First Watch, a daytime café chain with servers, spent 33.5%.

Chains buy food more cheaply and share one head office across many restaurants, so they don't look exactly like one independent restaurant. But they show how the menu shapes costs: First Watch sells eggs and coffee, which cost little, so food took only 23.1% of its sales.

Owners work out what each dish costs to make, ingredient by ingredient, on a costing sheet. The total is the plate cost. Divide it by the menu price and you get the dish's food cost %, the number owners check for every dish.

Take an example double cheeseburger. Its 6 ounces of beef, at $6.79/lb, the US average grocery price in September 2026, cost about $2.55. Add cheese, a bun, vegetables, sauce and the wrapper, and the plate cost comes to $3.54. On an $11 menu price, that's a food cost of 32.2%. These dish numbers are our example.

Our example numbers here are 6 ounces, $2.55, $3.54, $11 and 32.2%; the others come from the sources below.

Fries cost far less per dollar: our example serving costs $0.61 to make and sells for $4, a food cost of 15.4%. That's why fries come with almost everything. Sold together for $15, the burger and fries cost $4.15 to make, about 27.7%.

These numbers are our example.

The costing sheet shows the ideal. Real kitchens lose some food to trimming, mistakes and waste, so owners compare their sheets with what they really spent on food. The free lesson walks you through costing a burger and pricing a new dish of your own.

A few cents on the dollar sounds like too little. But guests pay on the spot, so money comes in every day, and a small share of a lot of sales adds up. Size matters: table-service restaurants with $2M or more in yearly sales kept a median of 4.3% before taxes, and smaller ones only 1.1%.

Rent, insurance and much of the crew cost about the same on a slow Tuesday as on a busy Saturday. Once those are paid, more of each extra sale is profit. That's why a full dining room matters so much, and why slow weeks hurt.

Thin margins also mean small costs matter. Square, one popular payment company, charges 2.6% plus $0.15 for a tapped card: about $0.54 on a $15 order, close to the $0.60 the typical counter-service restaurant keeps from it. Food prices move too: the average grocery price of ground beef rose 7.4% in the year to September 2026. So owners raise menu prices a little at a time; prices for food away from home rose 3.5% that year.

Our example numbers here are $0.54, $15 and $0.60; the others come from the sources below.

And when the owner also cooks or manages without a salary, the profit is their pay too, and it has to pay back any loan taken out to open.