Restaurant ownership has been glorified in recent years, especially as the popularity of celebrity chefs has inspired people in various cooking roles and levels of expertise to consider what it might be like to open a restaurant. But, is running a restaurant really a money-maker?
Here’s a look at the average restaurant owner salary and what factors could affect your ultimate take-home pay.
Restaurant owner salaries can be as high as $333,000 and as low as $19,500 per year. According to ZipRecruiter, the majority of restaurant owner salaries range between $45,500 and $100,000, with the average annual pay just over $97,000, which equates to roughly $47 an hour. However, that hourly figure is based on a 40-hour work week, which is atypical in the hospitality industry.
What causes such a large disparity between top and bottom salaries? There are several factors at play, all of which can influence how much a restaurant owner gets paid.
While we may use the word “salary” to describe a restaurant owner’s earnings, it’s unusual for an owner’s pay to be an inflexible, predetermined amount. It’s more likely that the numbers on each paycheck could change, with the owner’s wages regularly adjusted to account for a number of important factors.
When it comes to estimating a small restaurant owner’s salary, one approach is to pay yourself a percentage of your average restaurant revenue, with some room to account for major fluctuations. If you’re having a good month, your paycheck may be a little healthier. If numbers are lower than expected or you’re having a mid-winter slump, that may be reflected in a less attractive paycheck. Special promotions, tourist season, or a great review from a food critic could help determine how many reservations you get, the amount of revenue generated, and how much you can potentially earn during a given pay period.
Unless you have a successful restaurant empire and tons of employees to whom you can delegate the majority of daily tasks, you’ll need to dedicate time to keeping your restaurant fully operational. Often, spending more time on your business can have a positive correlation to increased income and profitability. The flip side of that coin is that too much time away from the business – for instance taking multiple vacations or simply being distracted by other endeavors – can negatively affect the company’s finances and your salary.
Generally speaking, the longer a restaurant has been in business, the steadier and more predictable its revenue streams. As time passes, you should get better at estimating labor costs and inventory. Generally, you’ll learn how much business you can get from annual music festivals and surges around the holiday season. Combine that with increasing guest loyalty, full reservation books, and an experienced chef who knows how to optimize food costs, and you could see higher profits and a higher salary.
It’s quite possible for a restaurant owner’s salary to fluctuate in order to reallocate funds needed for company expenses. If business is profitable, paying yourself less than 50% of the profits can leave more than half of your monthly revenue to be used for everything from paying debts to funding improvements, such as building a new patio or purchasing a new refrigeration system.
However, sometimes the 50% set aside for expenses isn’t enough. In that case, the extra money needed to make ends meet that month could come from the owner’s paycheck.
Finding ways to make your restaurant more profitable can also help improve your salary. Whether your entire paycheck is based on a percentage of revenue, or you’re working on a combination of base salary plus percentage model, more revenue can equal more pay.
Here are some tips to help increase your profit margin and overall revenue:
In the food and beverage industry, profits and restaurant owner salaries can be correlated. If you’re interested in finding more ways to help your operation run more smoothly with a restaurant POS system (and perhaps increase your annual pay in the process), reach out to a Clover Business Consultant today.GET STARTED
This information is provided for informational purposes only and should not be construed as legal, financial, or tax advice. Readers should contact their attorneys, financial advisors, or tax professionals to obtain advice with respect to any particular matter.
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