How Much Do Restaurant Owners Make? - Complete Break Down
Honestly speaking! Dining in different restaurants; complaining and criticizing about the food taste, pricing scale, ambient, and the service is quite an easy job. Anyone can do it!!
However we often forget; how much heart, soul & effort has been invested in planning, structuring, and maintaining that restaurant.
Until and unless, “You”, yourself becomes the owner of a restaurant, you get to understand and face the practical scenario of the inside picture. Only then you can realize how difficult it is being a restaurant owner, how much restaurant owners make, and how much a restaurant makes.
It’s kinda obvious; before you decide to start a restaurant business, you will analyze, calculate the cost, benefit, aspects and stop to a conclusion on which niche to select for your restaurant business.
In this blog; I will break down all the pieces and try to show you a deep analysis so that you can decide precisely.
Brace Yourself To Find Your Million Dollar Answer
How Much Do Restaurant Owners Make!!
We often think the restaurant business is one of the most popular and profitable industries, where anyone can make an easy profit. And there’s another misconception that restaurant owners’ must be earning millions and millions of bucks.
If you are or planning to be a restaurant owner, you have to keep that in mind; unless the restaurant reaches a successful profit margin, you can't earn enough salary.
Because a restaurant owner gets very less than 50% of the annual profit according to NFIB. And if the restaurant fails to reach that profit margin or even the break-even point then it will definitely have a major impact on your salary.
The Break Down: How Much Does a Restaurant Owner Earn?
Being a restaurant owner, you might not even have the salary, and you can just have the month-end or year-end profit. And if I say more precisely, I would say, “as an owner of a restaurant; your ''earning” or ''salary” or even “profit share” typically depends on the success of the restaurant.
Restaurant owners don't have any fixed salary or earnings. The revenue or the break-even profit the restaurant owner is going to earn is the main “amount” that a restaurant owner is going to make. And from that amount, the owner will pay all the maintenance and raw material costs, staff’s wages, etc.
Afterward, the amount that will be left after paying off all the net costs is all yours. And you can name that net amount as your “salary”, “profit” or “re-investment-capital”, whatever you want; totally up to you.
- According to some basic secondary research like ZipRecruiter.com, national average restaurant owners earn about $72600 in a year. This numerical value can be changed time-to-time but there’s a range of $18,500 - $139,500 that restaurant owners make on average according to Payscale.com. Don’t take this number for granted; this number might and for sure fluctuate and totally depends on the sale, success, and revenue.
- According to Payscale.com, restaurant owners earn $33,000 to $145,000 each year. They also estimate that the national average is roughly $73,000 per year.
- According to Simplyhired.com, with an average salary of $44,897 per year, the lowest 10% earning approximately $17,144 and the highest 10% earning around $117,575.
What Are The Responsibilities Of A Restaurant Owner?
It’s quite an important aspect to understand and acknowledge all the responsibilities that a restaurant owner must fulfill. The restaurant owner's responsibility depends on the level; how much he/she is involved in the business.
There Are Two Types Of Restaurant Owner:
- The silent owner: This kind of owner doesn’t involve directly, they hire a subordinate employee to control their restaurant's business. And time-to-time owners will simply manage the monthly/yearly official paperwork, check the revenue, and then take the profit share. No involvement in the operation or management department.
- The active owner: Owner who is enthusiastically active and dedicated to his/her restaurant. Regularly visit the restaurant, delegate all the regular operational tasks to the restaurant staff, continuous monitoring, finding scope to improve the restaurant business, and designing the menu from planning the restaurant marketing plan.
Some mandatory responsibilities that a restaurant owner needs to fulfill:
- Clear out the license for the location from the local-government
- The restaurant owner will choose the right restaurant name
- Design your menu, considering your selected niche and budget
- Budget planning for the restaurant; decide and analysis the overall financial aspects
- Search and fixate your raw material supplier
- Adopt a restaurant billing software for efficiency in your restaurant
- Set the targeted customer and plan the unique promotion ideas for your restaurant
How To Become A Restaurant Owner?
Kinda Complex Question To Answer!!! Right??
No specific, fixed, or mandatory rule book is there, which you can follow to become a successful restaurant owner or to build a restaurant and become popular overnight. It all depends on your strategy; the plan you decide to operate your restaurant business.
Just be on your own, show your 100% dedication and passion, select your niche, research your competitors, and sketch your restaurant business plan.
Suggesting You A General Guideline On How To Become A Restaurant Owner:
- Gather ideas, brainstorm, observe both the successful and unsuccessful players in the market, and establish a blueprint of your restaurant.
- Find a stable source for your budget, calculate the raw material and inventory cost, the staff wage, rental cost, etc.
- Location choosing is a must and also clearance of the location-license from local government.
- Find a supplier for your raw material and set the schedule for regular supply
- Sketch a business plan, set the pricing rate, and set a visionary profit margin
- Menu designing and food test
- Register your restaurant and take all the necessary permits
- Hire a professional chef and other necessary staffs
- If you don't want to run the restaurant business manually, you can adopt an interactive restaurant management system or may follow some strategic way to manage your restaurant.
- Yes!! Ready to launch your restaurant…
Is The Restaurant Business A Profitable Business?
Whether the restaurant business is or will be profitable; that totally depends on the strategy you plan for your restaurant. As I mentioned above, there is no mantra for making a restaurant business profitable.
Besides, there's no guarantee that your restaurant will become successful. But if you have that dedicated passion to understanding the market, competitors, and customers’ taste buds, then come up with some unique set of strategies of yours.
You definitely can achieve something!! People always want something unique, satisfying, exciting, and an easy way to viral yourself.
If you compare restaurant business with other industries, such as hotels, e-commerce, telemedicine, automobiles, etc. You will find out. The restaurant business is an easy yet quick profitable business scheme.
Average Income Done By A Restaurant:
There’s no fixed amount set; on how much average income a restaurant is gonna make every year/month, as it totally depends on the sale.
Based on my secondary research, approximately it would be around $112000 every month. This is an estimated ideal amount; a restaurant business earns every month. Based on the monthly revenue, this amount is not guaranteed and can be higher or lower up to 2%-6%.
Average Profit Achieved By A Restaurant:
Unlike the average income earned by the restaurant, the average profit by a restaurant is also very predictable. Because profit depends on the income you achieve at the end of the year /monthly.
Profits vary from time to time, it’s tough to guarantee that a restaurant is able to achieve profit every month. The restaurant might show some slow growth in the revenue graph or only be able to reach the break-even point, especially at the initial stage.
Average Profit Margin Earn By Restaurant
As we have forecasted based on some secondary sources, an estimated monthly average profit margin earned by a restaurant is 2% to 6%. Some special tricks can guarantee your profit, such as lowering some of the overhead and unnecessary expenses and planning a strategic marketing strategy to viral your restaurant.
Choose your restaurant’s geographic location and concept wisely because your target customers’ consumption habits hugely impact your restaurant’s popularity and sales.
How Do Restaurants Make Money?
Restaurants make money by selling food and service. A customer goes to a restaurant to consume good/delicious food, satisfying their hunger and expecting to enjoy the food in a comfortable and calm environment.
A restaurant owner has to fixate the price of the food items in such a way; which must cover all the fixed and variable costs involved to manufacture that dish. And calculating all kinds of costs helps you decide the price range and figure out the prime cost and targeted profit.
This calculation starts with, calculating how much inventory is needed per day or monthly. Forming an inventory calculation chart may help you to figure out unused raw material, reduce wastage, and maximize profit.
Selecting the most appropriate restaurant concepts is quite a difficult task. It can only be decided; only after you’re done with brainstorming, market research, analyzing the competitor, and selecting the target customers.
Budget, geographical location, food item, and existing competitors are the major factors that will hugely influence your decision of choosing the right restaurant category. Here are some profitable yet popular restaurant categories:
1. Food Truck/Cart
If you have a very limited or low capital budget, then a food truck or cart would be the best restaurant category for you. Because, this kind of transportable restaurant usually offers a very limited menu item, no or low overhead cost such as rent, electric and dine-in maintenance cost, etc. A food truck/cart is a transportable restaurant; therefore, it’s moveable, as a result, you can attract as many customers as you want.
2. Cloud Kitchen
Recently cloud kitchen; the trendiest restaurant niche among the list of restaurant categories. Cloud kitchen is a virtual kitchen, the restaurant admin will receive orders over the internet and the delivery man will reach the order to the customers’ door-step. Cloud kitchens don’t have dine-in facilities, just order, and pick-up, therefore reducing the maximum overhead cost.
3. Coffee Shops
Another great restaurant category for your restaurant business is a coffee shop where people seek comfort, and strong refreshing coffee is complemented with some delicious dessert. A cozy place to hang out with friends yet a formal place to perform business meetings.
4. Bars & Breweries
Choose this restaurant category wisely, because it requires a huge amount of capital budget. The mark-up cost for alcohol and non-alcoholic beverages is quite expensive compared to food. The bar & breweries restaurant niche earns almost 60% to 70% profit margin. If you choose this restaurant concept, the main problem you might face is getting the clearance certificate and alcohol selling permit from the government.
5. Fine Dining
This type of restaurant offers a complete meal facility, such as appetizer, salad, main course, dessert, etc. Fine dining restaurants can be of many types; middle, classy, and upscale. Maintaining an elegant interior with a comfortable atmosphere is mandatory.
6. Burger & Pizzerias
Who doesn’t like fast food!!!, burger and pizzerias restaurant concept is the safest and easy profitable restaurant business idea a restaurant owner can ever choose. The demand for burgers and pizza will never end, it’s the most likable restaurant category by the customers and an average capital budget would be required to start this category of business.
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Open Secret Tips To Raise-Up The ROI Of Your Restaurant
Don’t worry!! Unlike any other business, restaurant business can also fail, but at the same time can be recovered from the loss easily if you follow some special tricks:
1. Resigning The Menu Time To Time
After your restaurant starts doing business, try to observe and gather; which dish customers are liking more and what changes customers demand. You can arrange a “review your food” card for the customers so that you can bring the desired changes to your restaurant.
2. “Chef Special” And “Today’s Special”
You can call this strategy a marketing strategy for your restaurant, as this item will be available for a limited time. Besides having a huge opportunity to explore and experiment with different things, which somehow help chefs to track their taste buds.
3. Customer Is Always Right
Always try to make customers think that they’re always right, hence bringing out their actual genuine demand; as a result, it can improve your menu or any particular dish.
4. Keep Your Menu Simple And Easy
Try to keep the menu easy, simple, and full of visual images of the food item. Too many complicated menus might irritate your customers and lose interest because of ordering the wrong dish.
5. On The Job Training Facilities
A consistent and monotonous on/off the job training is always required for the hotel & restaurant industry, as these both falls under the hospitality industry. Waiters and kitchen staff need continuous improvement and training to improvise and act according to the customers' needs.
6. Contactless, QR Scanner
Since we’re leading in a digital era, maximum people want contactless payment. These days people don’t like to carry liquid cash; hence having these facilities in your restaurant is a must. Besides, you can save the printing and paper cost from the expense chart with a QR scanner.
7. Restructure The Restaurant Marketing Plan
Sometimes your restaurant sales depend on; how you promote and present your restaurant to your targeted customer. Hence; a marketing strategy can both make your restaurant popular overnight or can also degrade/ bring no profitable result for your restaurant.
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Restaurant Owner Can Make Almost 35% to 45%+ Profit Using Software
Both the sales and profit your restaurant is going to make are totally unpredictable. Besides, it’s also hard to forecast or have assurance proof on how much profit your restaurant is able to make. It totally depends on the operation process and the cost budget you set to spend while running the restaurant business.
Besides, through primary sources, we gather some evidence from some restaurant owners that they are able to earn almost 35%-45%+ profit by doing restaurant business.
Ready To Take A Shot With Bhojon-Restaurant Management Software?
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Nowadays, the latest generation demands digital solutions in exchange for every purchase. Therefore a managerial restaurant management software will handle, manage and organize your whole business and give them a dynamic business touch.
This management solution is so easy to use, you don't need coding knowledge to operate this software. In short a cost-effective and profit maximization weapon for your business.
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Conclusion
It's totally unpredictable to forecast and calculate how much a restaurant owner is gonna make, by doing restaurant business. Unlike any other business, a restaurant can also fail. If you can tactfully handle your restaurant business with a brilliant market and budget plan, you can easily catch a strong customer base with maximized profit.
Your revenue, profit, and sales all depend on how much effort, dedication, and how much you have understood your customer well and served them their desired meal.
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