Food cost, prime cost, payroll, rent, gross margin: assess the financial health of your venue in 30 seconds, against real industry standards.
Pick your type of venue, enter your figures, and instantly see where you stand against industry standards. The CHR Consulting method, live.
In foodservice, margin is never a matter of luck: it shows in a handful of key ratios. Here is what they measure and where the healthy thresholds lie.
Food cost compares the cost of raw materials (food and beverages) with revenue excluding VAT. It is a restaurant’s first margin item. Depending on the format, it usually sits between 28% and 34%. A drifting food cost often points to issues with recipe costing, purchasing or waste.
Payroll (wages and employer charges) as a share of revenue reflects the weight of your teams. It most often ranges between 30% and 38%. Too high, it erodes profitability; too low, it can weaken service and quality.
Prime cost adds food cost and payroll. It is the key indicator in foodservice, combining the two largest variable cost items. Below 65%-70% of revenue, the structure is healthy; above that, profitability becomes hard to reach.
Rent (including rental charges) as a share of revenue measures the weight of the premises. The usual target is below 10%. Excessive rent can sink a venue that is otherwise well run.
Gross margin — revenue minus cost of goods — shows what is left to cover all other costs. The higher it is, the more room the venue has. It is the mirror image of food cost.
Operating profit as a share of revenue is the final verdict: the real profitability of the business once all operating costs are deducted. It determines whether the model is sustainable.
Beware of averages. These thresholds are benchmarks. The right ratios depend on the format (fast casual, bistro, fine dining, café, hotel F&B), the location and the positioning. A 34% food cost can be excellent in fine dining and alarming in fast casual. That is the whole point of our support: reading your figures in context.
The diagnosis gives you a snapshot. Turning these figures into decisions takes a method. That has been CHR Consulting’s job since 2012, and it is the subject of Florian Poirson’s forthcoming book on managing a restaurant through ratios (in French).
