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A Guide To Average Restaurant Revenue And Profit

Jul 16, 2021 | Weekly Articles

Average Restaurant Revenue

In the year 2019, the average restaurant revenue for a new restaurant in the US was $111,860.70

If you’re thinking about coming to the restaurant industry to open a brand-new restaurant, or you are already running a restaurant business and trying to expand to a second location to make sales that cover some targeted customers and guests, it’s important that before you take the plunge and start spending money on your new business venture, that you calculate how much your new endeavor will be able to bring in every month. It is one of the most vital key performance indicators (KPIs) for any type of establishment with food – which makes sense because without this crucial information there would not be enough revenue coming in from customers each day (or week). Continue reading to learn more about revenues in the restaurant industry as well as calculations for estimating revenues at your particular establishment.

To make the most of restaurants or catering businesses, you’ll need to answer some vital questions and know how much volume the business can generate in sales as monthly revenue, and at any given time. For restaurant owners, a host of factors such as your turnover rate, menu offerings, customer experience, your hours of operation for customer demand (how long your restaurant is open every day, weekdays, or month), the average menu prices, and the size of the space for guests and customers will influence revenue streams and are also what determines whether or not you’re making the right sales volume for profit and cash flow.

As regards restaurant size, for instance, it will affect both food cost percentage (it’s easier to fill up a large area with higher-margin items), as well as occupancy costs since customers in larger spaces spend more money on average than those who dine in smaller dining rooms. A high turnover rate means people come back often enough because they like your menu selection so there is less urgency associated with their visit which results in longer stay times for guests and increased spending per customer. These important business models are what profitable restaurants don’t take lightly.

Because of these factors, two similarly sized full-service restaurants that offer identical menu item sales can end up with different average revenues – especially if they serve different geographic markets. A sushi restaurant in the heart of Manhattan, for example, will likely have higher average revenue than a sushi restaurant with the same level of traffic and business type in rural Pennsylvania. Most average restaurant revenue statistics reflect pre-COVID sales numbers. With lockdowns, social distancing, and economic uncertainty sweeping the country, the average restaurant revenue in 2020 was significantly affected.

What Is Restaurant Revenue?

Revenue is the money that comes in for a restaurant, and it can be earned from many different sources. For example: merchandising at your location or online sales of food items; consumer packaged goods such as dinnerware, cookbooks, aprons; phone orders where you take credit card information on-site to charge later when the delivery arrives.

Profitability is crucial for your company’s financial health, so you should know the difference between revenue and profit. Revenue and profit are generally used interchangeably, but on your company’s income statement, they mean different things. In short, your business’s total revenue is the money your business makes from various activities such as selling goods or providing services. Profit, or gross profit, is what remains after all your expenses (cost of goods and services) and bills have been paid.

When it comes to understanding the difference between revenue and profit, you should be aware of some other terms as well. To some extent, accountants are financial experts. They use finance terms that you may not understand, however. The more familiar you are with accounting terms, the better you will be able to keep up with your accountant. At the end of the day, if you own a business, you must be accountable for your customers’ money. When you are preparing and submitting your tax return, accounting terms are important because inaccurate information will result in fines for your business.

What is the Average Revenue for a New Restaurant?

The restaurant industry can be wild and unpredictable. If you’re starting anew, there’s a lot more estimation to be done when figuring out your potential revenue. You won’t know your customers’ ordering behavior until they get in the door, and you won’t know how quickly your servers can turn tables yet.

Also, the average revenue of one establishment may vary wildly from the next, depending on factors like region, average check price, menu engineering, actual sales, and size as well as a service model or even type of cuisine served (fast-food vs fine dining). To make an educated guess at what you might expect in terms of your own potential earnings, compare yourself to other restaurants with similar concepts that have comparable revenues in similarly sized markets.

For context: the average monthly revenue for a new restaurant is around $111,860.70 ($9062 per week) according to survey data where 43 new restaurateurs reported their best friend’s favorite dish which they made in the 2019 Restaurant Success Report. This means that the average of all respondents was around $118k and this may be slightly less than what you would see at an established brand with lower expenses because it has already found its footing within your community after being open for 12 months or more. There are other contextual factors like a business plan, decreasing costs of running the business, location (a multi-location franchise might have higher revenues), menu selection, customer payments, competitive menu prices, service quality, and faster service, cost control measures such as inventory management software whose metrics can influence these numbers too.

Average Restaurant Revenue for a Second Location

You start with an advantage when you open a second location because you have industry intel to work with. Knowing what your first location brings in, understanding seasonal fluctuation, the ability to attract customers with special offers, and being all too familiar with revenue factors like seasonality, events, or out-of-the-ordinary occurrences, make you an expert on your operations financial performance (like a pandemic). When it comes to getting your new restaurant off the ground, the rule of thumb is investing in new equipment, or just managing your cash flow for the next few months, you should make sure you have a reliable source of funding. Seventy-five percent of capacity is a good prediction of your first-year revenue. Furthermore, you will need to know the volume or number of covers your restaurant serves every day and the average ticket price.

Boosting Revenue in a New Restaurant

If you’re thinking about how to increase restaurant sales and overall revenue, ensuring a healthy profit margin in your new location or brand-new restaurant, there are many things you can try. You could create a promotion where guests of your new business are given discounts on their first visit only or offer a loyalty program to regular customers, this will encourage them to come back again for more. Hosting an epic grand opening is another great idea that has been shown time after time that it’s most effective over several weeks, so make sure not to miss out by planning accordingly. While hosting community events like trivia nights or live music might sound silly at first glance, they have proven successful in past cases as well. Also, it’s important to train your front-of-house staff to upsell effectively with some professional attitude.

It can be tough to predict how much money your restaurant will make. You might find it’s easier if you take a methodical approach that includes the following steps: first, look at existing data from one of your locations and apply all best practices; second, talk with peers about what they’ve done in their own restaurants so you know where things may have gone wrong or right for them; lastly, prepare more than anticipated–it could take time before everything is running smoothly.

How to Calculate Revenue for Your Restaurant Business 

There are several ways to calculate restaurant revenue. The easiest involves doing some back-of-the-envelope math in which you multiply the number of tables times your turnover rate times the average price of each table’s bill. If the ten tables in your restaurant are re-seated ten times per day, with each party paying $100, then your daily average revenue would be $10,000. To get a monthly average, you would multiply that figure by 30.

Although this method can give you a ballpark estimate, it ignores seasonal fluctuations (such as holiday parties or summer tourism). It also lacks precision, since you’re not segmenting dinner from lunch and breakfast – all of which normally use different pricing. Additionally, this method may not be useful for newly established restaurants that don’t have a lot of historical data to reference.

If you are just starting, you may have to survey area restaurants of similar size, fare, and pricing to calculate your ballpark figure. In the past, new restaurant owners were advised to assume 75% capacity for their establishments for the first 12 months. Again, all of this was pre-COVID. With social distancing rules in effect, many restaurants (old and new) have had to dramatically reduce indoor seating in favor of outdoor tables, curbside pickup, and delivery. All of these adjustments have made it even harder to estimate restaurant revenue.

A More Accurate Approach To Restaurant Revenue Calculation 

In the past, calculating restaurant revenues involved collecting all receipts over the previous day, week, or month. This included not only takeout orders but also online and tableside sales that customers would receive on their way out of a booth – which meant they needed to keep track of piles and piles of paper for every transaction! With some new restaurant-specific accounting software available you can now run detailed reports on the go without having to worry about keeping up with your stacks.

All of this is possible with some new restaurant POS solutions and restaurant management software, regardless of your desire to see the most profitable days of the year, the busiest times of the month, or a quick snapshot of last week’s sales. Using these real-time reports, you can make more informed decisions about your operations, even as COVID continually alters the American dining experience from coast to coast.

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