Understanding Average Restaurant Profit Per Month: A Simple Guide for Restaurant Owners

Running a restaurant can be an exciting and rewarding venture, but it also comes with its own set of challenges—especially when it comes to understanding and managing your restaurant’s finances. One of the most crucial aspects of any restaurant’s financial health is its average restaurant profit per month. But what exactly does this mean, and how can it help you run a successful business? In this blog post, we’ll break down this concept in simple terms, explore how it works, and offer insight into how restaurant owners can benefit from knowing their profit figures. We’ll also look at how to secure funds quickly if your restaurant needs financial support.

What is the Average Restaurant Profit Per Month?

To put it simply, the average restaurant profit per month is the amount of money a restaurant earns after subtracting its expenses from its revenue. Essentially, it’s the “bottom line” — what the restaurant keeps after paying for food, labor, rent, utilities, marketing, and other operational costs. It’s a key indicator of how financially healthy a restaurant is and how efficiently it’s being run.

For example, imagine a restaurant brings in $100,000 in revenue for the month (total sales), and its expenses (including food, wages, rent, utilities, and other costs) total $85,000. The average monthly profit would be $15,000. This $15,000 is the amount that remains after all costs are covered, which can be reinvested into the business, saved, or distributed to the restaurant owners and investors.

Why is This Important?

Understanding your restaurant’s average profit per month is essential for several reasons:

1. Cash Flow Management: Knowing how much profit your restaurant makes each month helps you manage cash flow. With proper knowledge of your average restaurant profit per month, you can plan for slow months, save for growth, or make adjustments when necessary.
2. Business Growth and Expansion: If you’re considering expanding or opening new locations, your restaurant’s monthly profits can help you gauge how much you can afford to invest. It also shows potential investors whether your business is profitable enough to warrant additional funding.
3. Operational Efficiency: Understanding how much profit a restaurant makes per month allows you to see if you’re operating efficiently. If your profits are lower than expected, you can identify areas where costs could be reduced or sales could be increased, such as optimizing your menu, improving customer service, or adjusting your pricing.
4. Loan and Investment Opportunities: Knowing your average restaurant profit per year or per month can be crucial when applying for loans or seeking investors. Financial institutions want to see that your restaurant is a profitable venture before they commit funds to it.

The Role of Revenue in Calculating Profit

Before diving into profit figures, it’s essential to understand the relationship between restaurant revenue and profit.

• Revenue is the total income generated from sales, including food, drinks, catering, delivery, and any other services offered by the restaurant. For example, if a restaurant sells meals worth $50,000 in a month, its revenue would be $50,000.
• Profit, on the other hand, is what remains after all the expenses have been paid. Expenses include food costs (cost of goods sold or COGS), labor (salaries, wages, benefits), rent, utilities, insurance, marketing, and other operational costs.

To put it another way, average revenue for a restaurant is the total amount of money the restaurant makes, but average restaurant profit is what’s left after subtracting the expenses from that revenue.

How Much Does a Restaurant Make on Average?

Now that we’ve covered the basics, let’s take a closer look at average restaurant profit margins and how much restaurants typically make.

Average Restaurant Revenue

The average revenue of a restaurant varies greatly depending on factors like size, location, concept, and customer base. For example:

• Small Restaurants: A small neighborhood restaurant may bring in anywhere from $20,000 to $50,000 per month in revenue.
• Mid-Sized Restaurants: Medium-sized eateries, especially those in busy urban areas or offering upscale dining, might see anywhere from $50,000 to $150,000 per month.
• Large Restaurants or Chains: Big chain restaurants or those with multiple locations could easily make $200,000 or more in revenue each month.

Profit Margin: The Key to Understanding Restaurant Profitability

The profit margin is a crucial factor in determining how much of that revenue turns into actual profit. Restaurants generally have low profit margins compared to other businesses, typically ranging from 3% to 5%. For instance:

• Low Profit Margin: A restaurant with a low margin of 3% means that for every $100 in revenue, only $3 is profit.
• High Profit Margin: A high-margin restaurant may earn $5 for every $100 in revenue.

Real-World Example: How Much Does a Restaurant Make?

Let’s walk through a real-world example to better understand how much does a restaurant make in a year, and how the average monthly profit is calculated:

Example Restaurant: The Green Fork

• Revenue per Month: $120,000
• Expenses per Month:
  • Food Costs: $40,000
  • Labor (salaries, benefits): $30,000
  • Rent and Utilities: $15,000
  • Marketing & Miscellaneous: $10,000
  • Other Operating Costs: $5,000

Total Expenses: $100,000
Monthly Profit: $120,000 (Revenue) – $100,000 (Expenses) = $20,000
Annual Profit: $20,000 x 12 months = $240,000

In this example, the restaurant’s average annual revenue is $1.44 million (12 months x $120,000). However, its annual profit is $240,000, which means the restaurant has a profit margin of about 17%, which is higher than the industry average.

How Much Does the Average Restaurant Owner Make?

Restaurant owners often wonder how much money they can actually take home from their business. The income of a restaurant owner depends on factors like ownership stake, profitability, and how much the owner draws from the business. In many cases, restaurant owners may earn anywhere from $50,000 to $150,000 per year, though this can vary.

For example:

• Owner of a Small Restaurant: An owner of a small, independent restaurant might earn $50,000 to $75,000 per year in salary, assuming the restaurant is moderately profitable.
• Owner of a Chain Restaurant: An owner of a chain or large restaurant might make $100,000 to $200,000 per year, depending on the size and success of the business.

How Can Restaurants Obtain Funds Quickly?

If a restaurant experiences cash flow issues or wants to expand, it may need additional funds. Knowing your average restaurant revenue and profit margins is essential when seeking financing, as lenders or investors will want to see the potential for return on investment.

Options for Quick Financing:

1. Short-Term Loans: Some lenders offer quick, short-term loans for restaurants that need fast cash to cover expenses or seize opportunities. These loans typically have higher interest rates but can be processed quickly.
2. Business Lines of Credit: A business line of credit allows restaurant owners to borrow money as needed, up to a set limit, providing flexibility during slow months or when cash flow is tight.
3. Merchant Cash Advances: If your restaurant has steady credit card sales, a merchant cash advance could provide quick access to capital. This type of financing is based on future credit card sales.
4. SBA Loans: For long-term growth, Small Business Administration (SBA) loans are a great option, although they take longer to process than short-term loans.

How SVP Funding Group Can Help

If you’re looking to secure quick funding for your restaurant, SVP Funding Group can assist. They offer flexible financing options tailored to the needs of restaurant owners. With years of experience helping small businesses, SVP Funding Group understands the unique challenges restaurants face and can provide funding quickly and efficiently.

Conclusion: The Power of Knowing Your Profit

Understanding your average restaurant profit per month is a critical piece of the puzzle for running a successful restaurant. It helps you manage cash flow, make informed decisions, and measure your restaurant’s overall health. By monitoring your average revenue for restaurant and comparing it to your expenses, you can make adjustments to improve your profitability, secure financing, or prepare for growth.

If you’re looking to get a better grasp on your restaurant’s finances or need assistance securing funding, consider working with professionals who can help. SVP Funding Group can provide tailored financial solutions to help your restaurant thrive.

Apply Now to Get Funding from SVP Funding Group

Ready to take your restaurant to the next level? Apply Now and get the financial support you need to grow your business quickly and efficiently.