Have you dreamed of opening your own restaurant for years? Maybe you’ve even started crafting a menu or scouting locations.
But is becoming a restaurant owner a good career choice? Will you make enough to live the life you want?
Read on to learn how much restaurant owners make, on average, how they get paid, and some factors that affect the bottom line. We’ll also provide tips for maximizing your earnings.
How much do restaurant owners make, on average?
Restaurant owners’ earnings vary greatly, depending on the success of the restaurant. Numerous factors, including whether they draw a salary and what percentage of the profits they take, also determine their take-home pay.
Zip Recruiter reports that the average earnings for a restaurant owner in the US are $97,173 per year. This breaks down to approximately $47 per hour for a 40-hour workweek.
While this may sound appealing, keep in mind that keeping to a 40-hour week is atypical for this industry.
Compare this figure to Indeed, which reports a yearly US average of $58,119. This average is based on reported salaries from those already in the business, likely better reflecting the longer days or greater number of hours restaurant owners work during the week.
Where your restaurant is located in the US matters, too.
Indeed reports a wide range of earnings by city. In St. Louis, Missouri, the average earnings are about $127,236 per year. Compare this to Hackensack, New Jersey, where the average is around $65,000 annually.
Washington is the highest-paying state for restaurant owners, with an average annual salary of $99,811. Next in line is New York, with a yearly salary of $90,983, and then New Jersey at $90,806.
Remember that these earnings typically don’t start right away, either. Restaurants take an average of two years to start turning a profit, so factor this into your long-term business plan.
How can a restaurant owner get paid for their own business?
Restaurant owners’ earnings look slightly different from those of people who work in traditional careers with set salaries or wages. Here’s how you can expect to get paid:
Restaurant owner salary
Many restaurant owners follow a conventional path and establish a base salary.
Some owners set their salaries based on what their peers are making. This might not be practical until your restaurant gets off the ground.
Another approach is to look at what you can afford to pay yourself right now.
The reality is that you need to pay your staff on time. You also have to use revenue and other funds for inventory and other operational costs, so you might not be able to budget a high salary for yourself in the first few years of running your business.
Percentage of restaurant profits
Another way to earn income as a restaurant owner is through your business’s overall profitability. Your base salary might be lower than the norm in your region, but you receive a supplemental percentage of your restaurant’s profits to bring your income to a higher level.
To sustain this model, base your profit percentage on the previous two to three years of your restaurant earnings. Avoid using a projection model, as factors outside of your control (e.g., inflation) can negatively affect it.
Reinvestment
Think of the long-term rewards you could get by using surplus cash earnings and putting them right back into your restaurant.
Upgrade equipment, add square footage, roll out catering services, or consider a second location to boost your business growth and expansion goals. By foregoing the extra income now, you may be in line for a bigger reward later.
Fill multiple roles
Many restaurant owners pursue other passions or interests by taking on additional roles within their businesses.
Not only will you save money by not hiring extra staff, but you can also draw an income by serving as the head chef, restaurant manager, or HR director.
Now that you know what goes into your annual income, let’s discuss the factors that ultimately affect your bottom line.
5 factors that affect how much a restaurant owner makes
Cost, profit margins, and location are the top factors that influence annual earnings. Let’s examine each of them in detail.
1. Food and ingredient costs
No matter the type of restaurant you own, the costs of meat, vegetables, spices, and other ingredients are a primary factor to consider.
The recent rise in food costs hasn’t helped. The wholesale prices of food and the resulting total demand nationwide increased 2.2% from May 2023 to May 2024.
Depending on where your restaurant is located, you need to account for regional and seasonal food cost variations, too. For example, you may be able to lower costs by sourcing locally and avoiding expensive, out-of-season shipments.
The availability of vendors matters, too. If there’s no competition in your area, you may have to pay higher prices to ensure your restaurant gets what it needs.
2. Labor costs
Staffing costs are another key factor to consider. You need to employ sufficient staff to run your kitchen efficiently, provide customer service, manage restaurant operations, and complete essential HR and payroll tasks.
Keeping your staff on the books matters in the long run. You incur costs each time you recruit, hire, onboard, and train new workers.
Retention rates have improved in the industry, with approximately 4.8% of restaurant workers leaving their jobs recently, compared to 5.8% in 2021 and 2022.
Wages, benefits, and payroll taxes round up your labor costs. Many service workers are paid minimum wage.
Minimum wage rates vary widely by state. While many states adhere to the federal minimum wage of $7.25 per hour, others have established notably higher wage minimums.
For example, the minimum wage in Washington State is $16.28 per hour, compared to Florida at $12 per hour and Michigan at $10.33 per hour.
If you want to be a competitive employer, consider paying your staff more than minimum wage.
Tipped employees receive a lower minimum wage, and then the rest of their income comes from tips. The federal minimum wage for tipped employees is $2.13. Some states require a higher wage for tipped employees.
3. Overhead costs
Let’s move on to the overhead costs you can expect for your restaurant. These costs include, but may not be limited to, the following.
Rent and utilities
Furniture, kitchen equipment, linens, dishes, and cutlery
Building and equipment maintenance
Building and systems inspection fees, including health and safety
Licenses and permits, such as business, food service, and liquor licenses
Marketing tactics, including community-based, online, and email marketing efforts
Payroll, accounting, taxes, and other legal fees
Check out Restaurant Accounting Made Simple in 2024 for some tips to help streamline this process.
4. Profit margins
Profit margins also affect a restaurant owner’s annual earnings.
Your net profit margin is the percentage of net earnings from your total business revenue. Once all other costs are accounted for, this number informs whether your restaurant is making money (and making you money as a result).
Use a free profit margin calculator to see where your business stands.
5. Location, location, location
Your location affects almost every aspect of running a restaurant, from staff wages to food costs to rent.
While you know your city and state play a role, it also comes down to the local market. If there’s a demand for your offering and competition isn’t fierce, you’re more likely to see success.
How can you start increasing how much you make as a restaurant owner?
The good news is that there are several things you can do to support your business growth and augment your take-home pay.
Improve your operations
Start by checking your operational systems for any areas that need improvement.
Use our Daily Restaurant Opening Checklist [+ Bonus Closing Checklist] to start each business day on the right foot.
Ensure you have sufficient staffing for all parts of your business, and adjust when necessary. For example, if you anticipate a seasonal rush, hire extra workers to keep things running smoothly.
Address customer satisfaction with your restaurant’s food and service, as well as the overall dining experience. Create and distribute restaurant surveys to gather feedback and make changes. Manage customer wait times with clear expectations, and balance take-out and pick-up orders with sit-down diners.
Implement automation where possible. For example, use Lark Approvals to approve requests with one simple click.
Check out Lark’s Insider’s Guide to Restaurant Management for even more ideas.
Determine your profit margins
Get a handle on your profit margins and how they fluctuate.
Factors such as seasonal influences, weather-related changes, and market adjustments (such as rising food costs) will impact your restaurant’s profitability.
Increase efficiency (and reduce waste)
The first step to reducing waste is to be aware of it. Invest in proper storage and inventory management systems.
Track your food waste separately from other waste to identify areas for improvement, such as investing in more refrigerators or reducing inventory. You can also employ the “first-in-first-out” method of food and ingredient use in your kitchen to reduce spoilage and storage needs.
Forecast the food and ingredient amounts you’ll need, and take advantage of seasonal offerings and availability. Develop relationships in the community and source locally where possible. Monitor vendor pricing and negotiate to get the most bang for your buck.
Track inventory
Tracking your inventory comes down to more than just food and ingredients. You also need to track:
Liquor and beverages
Kitchen equipment, including large-scale items, pots, and pans
Furniture, dishes, cutlery, menus, and linens
Take-home containers, disposable utensils, and napkins
Employee uniforms
Use Lark’s free Order & Inventory Management template to keep you on track with your stock.
Increase sales
To increase restaurant sales, focus on marketing, technology, and customer satisfaction.
Investing in solid marketing efforts leads to increased visibility and higher sales.
Your online presence is critical. About 62% of potential customers start their search for a restaurant on Google. Not only are they checking out your menu, but they also want positive reviews to guide them.
Use apps to streamline the process for pick-up orders and restaurant reservations.
Invest in customer satisfaction by implementing loyalty and rewards programs. You could also offer promotions or incentives, such as discounts, happy hours, or free member benefits.
Check Lark’s restaurant promotion ideas for more inspiration.
Strategize menu pricing
While you’ve probably spent considerable time developing your menu, you want to make sure you’re devoting sufficient time to its business aspect, too.
The food cost percentage method is one of the most popular ways to set prices. You can calculate this either by total inventory or individual dishes.
Analyze the competition so that your prices aren’t above or below the mark. If prices are too high, you’ll lose business to competitors. Too low, and you’re missing out on profits and could lose money on some dishes.
Hire skilled staff
Once you’ve hired top-notch staff, work to maintain high engagement and satisfaction levels among them to hold onto them for the long term.
Provide a positive work environment with opportunities for collaboration and team-building. Offer competitive wages and benefits packages, even if that means going above the minimum wage requirements for your area.
Invest in accurate and timely payroll processes so that your staff knows when to expect payments and how to request leave.
Look at your area's seasonal trends and staff accordingly to reduce overtime demands and prevent burnout.
How Lark can help you improve your restaurant business operations
If you’re ready to streamline your restaurant operations, why not turn to Lark? This all-in-one platform has everything you need to run an efficient restaurant and keep employees and customers happy.
Lark Base
Lark Base is your go-to platform for streamlining operations, tracking your to-dos, and using data to inform your next move.
Create a customized dashboard to check your numbers at a glance, whether you prefer a list, Kanban, Gantt, or Gallery view.
Free templates
Lark has over 100 free templates to meet various business needs.
Use the Marketing Plan template to define your target market, establish goal and objective timelines, and conduct competitive research.
Download the Weekly Status Report template to review your team’s activities and adjust as you go.
Stay on top of your purchases with the Order & Inventory Management template. Quickly see what’s in stock, what’s needed now, and what’ll be needed in the future.
Attendance tracker
Lark is ideal for businesses looking for easy and accessible attendance tracking.
Restaurant owners can set fixed shifts with certain rules depending on the day.
Lark offers also allows users to set free shifts or big/small shifts.
Supervisors can manage leave and overtime requests and provide quick turnaround with approvals. Employees can clock in or out for their shifts via GPS or WiFi from the convenience of their devices.
Lark Approvals
Create approval forms and a streamlined approval process. Simply head to the Template Library to select the form you need, whether you’re looking to approve a payment request or an employee’s request for overtime.
Maximize your income with Lark
While restaurant owners’ incomes can vary, there are steps you can take to make the most out of your earnings. Carefully track your inventory, hire the best staff, and boost sales where possible.
Why not increase your odds of success with Lark? This one-stop platform has everything you need to streamline your restaurant’s operations, manage staff attendance, and make data-driven decisions.
Start boosting your efficiency and productivity today. Try Lark now.
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