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Average Restaurant Owner Salary

Aug 12, 2021 | Weekly Articles

Average Restaurant Owner Salary

Making a Restaurant Career Profitable 

Choosing restaurant ownership as a future career path can be one of the most fulfilling choices in life. You get to offer delicious food in an inviting atmosphere and enjoy frequent customer interaction; and every day is different. These benefits have made restaurant ownership one of the more common career paths. 

Still, this career choice takes careful planning. As career moves go, restaurant business margins are tight and annual salaries range wildly. It helps to know what to expect financially to be able to budget accordingly and to ensure the future growth you need to maintain a healthy personal income.  

In this article, we reveal the average restaurant owner’s salary and discuss ways to exceed the national average for a healthy paycheck.  

Average Restaurant Owner Salary Per Year  

How much does a restaurant owner make? You will be surprised to know that the owners of restaurants can take home anywhere from $24,000 to $155,000 per year. The average annual pay for those in this field is about $72,600 per year. 

This massive range is due to an equally broad range of factors, such as the type of restaurant, your overall costs, your food and drink pricing, and other expenses. But two of the biggest factors determining salary ranges are (1) the cost of doing business and (2) how much your business sells. 

How Much Profit Does the Average Restaurant Make? 

Restaurant profit margins can be as low as 3% and as high as 10%. The percentage will depend on the area of the restaurant industry you are in. Here’s a look at the average profit margin for different types of restaurants. 

  • Full-Service Restaurants: 3 to 5% 
  • Fast Food / Casual Restaurants: 6 to 9% 
  • Catering: 7 to 8% 
  • Food Trucks: 6 to 9% 

Benefits of Franchise Operation and Restaurant Chains in the Hospitality Industry 

Keep in mind the above percentages are for each restaurant. If you plan to run multiple franchise chains or are a hospitality provider with multiple locations, you benefit from this same profit per restaurant. As a result, franchise owners and hospitality restaurant owners can become quite wealthy. 

How to Determine Your Profit  

To see how you rate compared to the percentages above, use a Profit and Loss calculator. At BNG POS, we can provide one for you. Since your pay will come from the money left over after sales and overhead, be sure to calculate using your net profits and not gross profits. 

How Much Tax Will You Have to Pay as a Restaurant Owner?  

The tax you pay will depend on your business structure (i.e., sole proprietor, partnership, LLC, or S or C corporation, etc.) For example, as a sole proprietor, you are taxed much like an employee. If you are an S-corporation, you have a salary of a regular employee and deduct payroll taxes. The leftover profits to your company can be passed along to you in draws or distributions at a lower tax rate while preventing double taxation (both corporate and individual tax). 

The structure you choose can make a difference to your livable income, so be sure to consult a tax professional for the best option.  

How Do Restaurants Make Money? 

There are a variety of factors that create a successful restaurant, but profit is most important for long-term stability and growth. How do you increase your profit to hit the income you need? 

Track Costs 

Know your exact liquor costs and food costs – including detailed ingredient costs. Also, maintain a clear understanding of not just the most common operating costs like labor costs. Look at all overhead costs, including real estate, insurance, and medical. Even the local cost of living is important. You will find anticipated costs do not often match up with reality.  

Reevaluate Food and Drink Prices Regularly 

Pricing food appropriately is integral. You should achieve as much profit as possible while maintaining a competitive price to maintain demand. This includes alcoholic beverages. Each beer price and wine price contributes greatly to overall profit. 

For a look at food and drink pricing strategies, see our previous article on “How to Make a Restaurant More Profitable.”  

Minimize Expenses 

Reduce overhead expenses and regularly review monthly operating expenses so they do not spiral out of control. Every single expense reduces profit. 

Maintain a Tight Relationship with Customers 

Know your customer base and boost your customer service skills and menu options to increase customer volumes. Your regular customers are your bread and butter. Improve your service, atmosphere, and food quality to avoid disgruntled customers and to increase satisfied customers who will then bring in their friends. 

Other Factors to Keep in Mind 

Develop a Sound Business Plan 

Consider every cost carefully and realistically. The better your plan, the clearer your financial picture will be, increasing your success. 

Reduce Food Waste   

Adopt a first-in, first-out (FIFO) strategy and track inventory tightly. This work ensures perishable products stay fresh and prevents food theft and giveaways, which are heavy hits to profit.  

Do Not Expect Consistent Money 

There are busy times of the year and slow times, and your salary will reflect it. Rather than immediately spending extra money via bonuses, save for slower months. 

Personal time is Expensive 

Every hour you are closed is less money in your pocket, but you also need to maintain a strong work/life balance. Consider closing early during slow months and using seasonal sales data to schedule managing staff economically throughout the year. 

Play the Long Game 

You may find your pay is lower than even your employees, but as your business grows, your income will increase, far surpassing theirs. Keep your eyes on the prize. 

Stay Out of the Red 

Due to low profit and expenses, you want to avoid financial holes as much as possible. 

Your POS Provider can Help 

At BNG POS, we can set up your internal systems with in-depth software to accurately track your food costs, drink costs, and all company expenses month to month – even daily. You also gain additional benefits like improved stock tracking and sales data to plan your meals, hours, and staffing to maximize your profit. And this is just some of the ways we help restaurants. To learn more, contact us here.

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