Average restaurant revenue describes the total amount of money your establishment generates (on average) every day, week, month, or year. Also known as “average gross profit,” this figure includes all sales earned from food, drinks, merchandise, and other revenue streams – whether those items are purchased tableside or online. This figure differs from “average net profit,” a reflection of total sales minus total expenses – such as wages, rent, inventory, and utilities.
As a restaurant owner, calculating your average revenue is vital for numerous reasons. Many investors and lenders will ask to see detailed feasibility studies before agreeing to finance your business venture. Knowing how to calculate restaurant revenue is also important when setting prices, creating menus, and designing the floor space of your establishment.
Average restaurant revenues vary considerably across the industry. They largely depend on a host of factors, including:
Because of this variability, two similarly sized restaurants that offer identical menus can end up with drastically varying average revenues – especially if they service different geographic markets. A sushi restaurant in the heart of Manhattan, for example, will likely have a higher average revenue than a sushi restaurant with the same level of traffic 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 and beyond may be considerably lower.
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 out, 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.
In the past, calculating restaurant revenues involved collecting all receipts over the previous day, week, or month. This included not only receipts from tableside sales – but also from any online and takeout orders. In addition to leaving room for errors, this method involved keeping track of a lot of paper. With a CloverPOS system, you can take some of the guesswork and paperwork out of the equation by running detailed reports on the fly.
Whether you want to see the most profitable days of the year, busiest times of the month, or a quick snapshot of last week’s sales – all of this is possible with our premium line of restaurant POS solutions. You can make better-informed decisions about your operations with the insights gleaned from these real-time reports – even as COVID continues to alter America’s dining experience from coast to coast.
To discover how our PCI-compliant payment solutions can help make your restaurant, bar, or café more profitable (on average), schedule a free consultation with our merchant services team today.
*“How to Calculate How Much Money a New Restaurant Might Make,” Rewards Network
Destiny Farm Cattle
Understanding restaurant profit margins and their importance
Three questions to ask as you plan for the holidays