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Average restaurant revenues (plus what it means for you)

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The restaurant industry isn’t just like any other business. High competition (there are over 150, 000 single-location restaurants in the US), thin margins, and a penchant for having high turnover in staff—owning a restaurant requires a high degree of awareness and planning ahead.

But all that hard work won’t mean much, unfortunately, unless the revenue is coming in to support the business (and your livelihood). To that end, let’s look at the average revenue for restaurants so you can better determine if your business is up to industry standards.

How much revenue does a restaurant make?

Whether you’re in the industry already or run a restaurant currently, it’s important to keep track of your revenue and its progression from year to year, quarter to quarter, or even month to month.

Your revenue, like all data, tells a story: It tells you what’s working and what’s not in terms of overall restaurant sales.

Revenue equates to the total value generated from all your restaurant sales (including non-food related items like merchandise, should your restaurant sell such items).

Restaurant businesses naturally want to have as high revenue as possible, true, but it’s worth remembering that high revenue does not necessarily mean high profit.

If you have extremely high overhead (property rental, special equipment, expensive ingredients, etc.) and very thin margins, your business could generate immense revenue, only to be a barely profitable restaurant. Gross profit (earnings after expenses) is the true indicator of how much your business actually—when all expenses are paid—takes home.

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But generating a high restaurant revenue—even if gross profit isn’t as high as you’d like—is a good starting point. You can then make investments or cuts that can lower your overhead. As long as these cuts/investments don’t impact your revenue, you will boost your overall take-home profit.

So when answering “how much revenue does a restaurant make?” it’s important to qualify that revenue doesn’t tell the whole story.

Restaurants also tend to perform seasonally. For instance, a bar known for its amazing patio will likely bring in more revenue during summer months vs. winter. While this won’t impact your calculations year-over-year, it will play a factor when comparing month-to-month.

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With all those details out of the way, we can now properly delve into the average revenue of a restaurant.

Restaurant revenue statistics

Below, we’ll compare averages over different time periods. As mentioned above, this is important as it helps to control for things like seasonal changes, or even more significant shifts like pandemic.

Let’s take a look at some quick restaurant revenue statistics:

  • The average restaurant revenue for a business that is less than 12 months old is $111,860.70.
  • Average income for a restaurant owner is $72,600.
  • There are roughly 200,000 quick-service restaurants vs about 34,000 full-service ones, representing a range of dining experiences.
  • About 26% of Americans between the ages of 18 and 29 eat at a fast-food restaurant about three times per week.
  • 12.5 million people were working in the restaurant industry by the end of 2020.

Average revenue for a restaurant per year

The average revenue for restaurant businesses can vary a lot. Starbucks, for instance, generated $24.1 billion in the US in 2020. Conversely, about 17% of restaurants fail in their first year. So you have two extremes that can skew the average numerical value.

That said, a rough estimate puts 12 months yearly revenue for a restaurant—on average—of about $486,000 annually.

Average restaurant revenue per month

Again, regular seasonal fluctuations will naturally impact the average restaurant revenue per month.

Still, compared to the average revenue for a restaurant per year, monthly averages can help measure the effectiveness of specific alterations, deals, changes in staff, etc.

The average revenue for a restaurant on a monthly basis is $40,500.

Average restaurant revenue per day

The same caveats apply here, as comparing a Friday’s to a Tuesday’s average revenues won’t be that informative. But comparing performance on a specific day of the week can be helpful.

The average restaurant revenue per day is $1,350.

Average Restaurant Revenue

Credit: Unsplash

How to value a restaurant based on revenue

A restaurant with few expenses (a fast-food restaurant, for instance, which owns all its equipment and land) would higher profits than. a restaurant that may generate higher revenues but have more overhead.

(For example, a fine dining restaurant in a trendy part of town with high rent, high wage expectations, expensive ingredients, etc.)

It all comes down to your type of restaurant, restaurant size, and your restaurant’s margins vs. sales.

If you have high margins, for instance, then you can afford to make fewer sales. Thinner margins, conversely, will require higher turnover and consumer traffic.

Restaurant revenue management requires a detailed understanding of your restaurant, your clientele, supply chains, staff, menu pricing and menu offerings, and a variety of other key factors that contribute to revenue and profitability.

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For instance, if you notice that a dish with high-cost ingredients simply isn’t being served, leading to revenue loss, it’s important to alter your menu accordingly.

Valuating a business that can have such large swings in revenue each month or year is difficult. But, as mentioned above, high revenue is still a strong indicator that business is good. It’s showing that people are, at the very least, patronizing the restaurant regularly.

So while high revenue isn’t always the chief indicator that the business is healthy, it’s always a good sign. With proper restaurant revenue management, for instance, it’s often possible to reduce the revenue drains and generate an overall higher gross profit.

How to increase revenue in a restaurant

Strong restaurant owners are constantly on the lookout for ways to improve restaurant average revenue. While no two businesses are exactly alike, that doesn’t mean that there aren’t actions you can take to ensure your business is showing steady, healthy revenue growth.

Let’s explore some of the ways that you can boost your restaurant revenue.

Form a business plan

Your business plan can help you keep your business afloat during tougher times and thrive otherwise when properly formulated.

It should take a full inventory of your business, its assets, its projected growth, margins, assess supply chains and determine most efficient providers, etc.

A detailed restaurant business plan will help you ensure that your business is able to make it over that one-year hump that catches almost one-in-five new businesses.

A key step to your business plan is also ensuring you have access to the capital you need to keep the doors open when sales are down and pounce on growth opportunities when they present themselves during boom times.

Make the right investments

Key investments at the right time can help grow revenue and overall profit.

Whether it’s investing in new equipment, staff training, or even growing your business with a second location, these investments can be greatly beneficial to your business when executed correctly and timed well.

Widen margins

Easier said than done, but there are ways to reduce expenses and overhead while increasing revenue.

Tactics like upselling can be a great way to help bolster your sales and generate higher profit margins. Focusing on selling high-margin items (like alcoholic beverages) can often generate higher revenue.

Experiment

Don’t be afraid to try new things!

Promotions, deals, holiday specials, events—all of these can help juice revenue and may be something that your business has never considered before.

Having an open mic night on a weekday that normally doesn’t draw in customers, for instance, can help generate traffic.

Trying different tactics like this can really help boost revenue.

Average Revenue for a Restaurant

Credit: Unsplash

Getting the funding you need to help your business thrive

Most businesses, at one time or another, require funding to help them grow, cover day-to-day expenses, and more. But getting access to these loans can be difficult—especially for owners with bad credit. Big banks are known for rejecting many small businesses when applying for loans.

And that’s where Credibly comes in. We’ve had experience helping restaurants like yours unleash their true potential. Unlike traditional banks, we won’t make you spend hours on paperwork and calls only to reject you—we help you access funding, sometimes in as little as 24 hours.

The Funding You Need, as Soon as You Need It

The right financing at the right time—that’s how we help small businesses like yours grow, not owe.

Talk to a financing expert and find out which options are right for you.

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