restaurant cost percentages

Bar & Restaurant Industry Standards – Where do You Rank?

restaurant cost percentages

Let me ask you an important question: How intimate are you with your restaurant cost percentages? Or is there no intimacy at all? Do you just ignore them? Neglect them? Do you keep putting off getting to know them, like pulling weeds from your garden? 

Ok, that was five questions, but when you neglect things that are important in your life, your garden, just like your business, soon becomes overrun and buried and swarming with aphids because you didn’t tend to it properly.

bar patrol

Don’t worry your pretty little head. In this post I’m going to lay out for you the bar and restaurant industry standards for alcohol, food, paper products, labor, prime cost and more. That way you can compare and make adjustments, which is the most powerful way to lower your costs and increase your profits.

If reading hurts your brain, you can watch the video of this lesson here:


Before we start, here is a powerful truth you need to know: if you don’t track your costs, you can’t measure them, and if you don’t measure them, you can’t analyze them, and if you can’t analyze the numbers, you can’t improve them, and if you’re not constantly looking to improve the numbers, then what in the hell are you even doing trying to run a business?

Ok, I don’t mean to make you feel bad. I neglect things too. Hell, I can’t even tell you the last time I fed our cat. So let’s call it even and get to the standar

Bar & Restaurant Industry Standards

Although numbers might bore you or even make you want to pull your hair out by the roots at times, they are the key to your success. Like using a road map, by analyzing where you’re at, you are able to adjust your course to get where you need to be.

Not all bars & restaurants are created equal, so these standards are not going to match across the board, but it will give you a ballpark idea where you should be.

And then lastly, each of these cost percentages is based on your total sales for any given time period: weekly, monthly or yearly.

ALCOHOL

  • LIQUOR: 16 - 19%
  • BOTTLED BEER: 22 - 26%
  • DRAFT BEER: 20 - 25%
  • WINE: 22 - 35%

NON-ALCOHOLIC

  • SODAS: 1O - 12%
  • COFFEE: 15 - 18%
  • SPECIALTY COFFEE: 12 - 15%

FOOD

  • FOOD: 28 - 32%

PAPER PRODUCTS

  • FINE DINING: 1 - 2%
  • CASUAL DINING: 3 - 4%

LABOR

  • MANAGEMENT SALARIES: 8 - 10%
  • FOH & BOH HOURLY EMPLOYEES: 18 - 22%
  • BENEFITS: 4 - 6%

PRIME COSTS (COGS + PAYROLL ÷ SALES)

  • PRIME COST: 60 - 65%

AUTHOR INTERRUPTION: If you could only choose one financial indicator, to determine how well your bar/restaurant was doing financially, prime cost would be the one. It factors in the the three major cost factors together (food, alcohol, labor) and gives you the biggest opportunity to determine which areas need the most improvement. Control your food, alcohol and labor, and your profits will rise.

Inside the Restaurant Management Masterclass, we of course cover prime cost in great detail in the financial module of the course. We also provide you with the Weekly Sales & Prime Cost Report template. You just fill in your sales and expenses and it figures everything out for you.

But I digress…

OCCUPANCY

  • RENT 8 - 10%
  • TAXES & MISC: 3 - 4%
  • TOTAL OCCUPANCY: 10% OR LESS

OCCUPANCY COSTS INCLUDE

  • RENT
  • EQUIPMENT RENTALS
  • REAL ESTATE TAXES
  • PERSONAL PROPERTY TAXES
  • MISCELLANEOUS MUNICIPAL TAXES
  • BUILDING INSURANCE
  • MISCELLANEOUS INSURANCE

SALES/SQ. FOOT (ANNUAL SALES ÷ SQ. FOOTAGE)

  • LOW/LOSING MONEY: <$200/SQ. FOOTAGE
  • AVERAGE/BREAK EVEN: $200 - $250/SQ. FOOTAGE
  • MODEST PROFT: $250 - $400/SQ. FOOTAGE
  • HIGH PROFIT: $400+/SQ. FOOTAGE

SALES PER LABOR HOUR

  • $45 PER HOUR PER EMPLOYEE (MEDIAN AVERAGE)

Again, if you don’t have these numbers somewhere, there’s no way for you to determine how successful you are in each category. These numbers should come right from your profit loss template. This is something we also cover inside the masterclass. The profit/loss template we use is included. It’s a 12 month profit/loss template, broken down month by month. All you do again is plug your numbers in and it will tell you your cost %. We also have all of these industry standards right here so you can compare.


Have a great day. Get your numbers in check, and make a million.


See you next time,


Dave

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