A restaurant's revenue divides into fixed proportions: food and beverage costs (28-35%), labour (25-35%), rent (5-10%), and a long tail of utilities, marketing, repairs, POS fees, and miscellaneous. What remains — the net margin — is healthy at 5-10% and invisible to most owners until it is gone. The margin map shows exactly where each dollar goes, which lines leak most often (food through supplier creep and waste, labour through scheduling, rent through over-ambitious space), and the priority order for repairs: food cost first, because it is the largest controllable line and the only one with a detection system that pays for itself.
| Line item | Healthy range | Leak mode |
|---|---|---|
| Food & beverage cost | 28–35% | Supplier creep, waste, portion drift, theft |
| Labour | 25–35% | Over-scheduling, overtime, turnover cost |
| Rent | 5–10% | Over-ambitious space, renegotiation missed |
| Utilities | 3–6% | Equipment age, cold-chain inefficiency |
| Marketing | 2–5% | Unmeasured spend, dead channels |
| Repairs & maintenance | 1–3% | Deferred maintenance becomes emergency cost |
| POS & payment fees | 1.5–3% | Unaudited interchange rates |
| Miscellaneous | 2–5% | The category where small leaks hide |
| Net margin | 5–10% | — |
The structure explains why restaurants fail so quietly: no single line looks catastrophic; the damage is 1–2 points across five lines simultaneously. Owners who manage the biggest controllable lines first — food, then labour — protect the margin before the small leaks ever matter.
Food is the largest controllable line in most restaurants, and it is the only one with a detection system that pays for itself: weekly counts, recipe costing, waste logs, and supplier price tracking converge into food cost percentage and variance — numbers that reveal theft, waste, and creep within days. The restaurants that fix food cost first typically recover 3-6 points (worth 3-6% of revenue) before touching anything else — because the detection layer exists, the fix is visible, and the habit compounds.
Worked example: a $40,000/month restaurant at 36% food cost spends $14,400 monthly on food. At 31%: $12,400. Recovered: $2,000/month — before labour discipline, before rent renegotiation, before anything else.
Labour follows food because it is the second largest line and responds to schedule discipline: forecasting next week's sales from last week's patterns plus bookings, scheduling to the forecast rather than to habit, and tracking labour cost as a weekly percentage against the 30% line. Overtime and last-minute agency staffing are the expensive symptoms of forecasting failure; the fix is the forecast.
Utilities reward cold-chain discipline (full loads, fewer openings, maintenance schedules); POS fees reward an annual interchange-rate audit (rates creep like supplier prices do); marketing rewards measuring cost per acquired customer per channel and cutting the dead ones; repairs reward scheduled maintenance over emergency repairs. None of these lines deserves a spreadsheet of its own — but each deserves to appear, with a number, on the owner's weekly dashboard.
The professional owner's week ends with five numbers: food cost %, labour %, variance total, waste %, and net margin trend. Five numbers, fifteen minutes, weekly — and every material decision in the restaurant traces back to one of them. This is not sophisticated finance; it is the minimum viable control set, and it is exactly what RestoIQ's dashboard is built around: food cost computed from your counts and purchases, variance flagged per item, waste rolled up by cause, and the margin trend visible before the month ends instead of after the accountant reports it.
Restaurant profitability is not one big decision; it is the margin map managed line by line, in priority order, with numbers watched weekly. The owners who survive — in Nairobi, Dubai, São Paulo, or anywhere — are not the ones with better food or luck; they are the ones who know where every dollar went before the month ended. The map is available to every restaurant; the free trial shows yours within the first week.
5–10% for full-service restaurants. The margin disappears silently when several lines each leak 1–2 points simultaneously — which is why weekly dashboard discipline matters more than any single decision.
Food cost — it is the largest controllable line and the only one with a detection system (counts, recipes, waste logs, supplier prices) that pays for itself. Fixing food cost typically recovers 3–6 points of revenue.
Food & beverage 28–35%, labour 25–35%, rent 5–10%, utilities 3–6%, marketing 2–5%, repairs 1–3%, POS fees 1.5–3%, miscellaneous 2–5% — leaving a 5–10% net margin when managed.