Restaurant profitability comes down to a small set of numbers: how much you spend on food, how much you spend on labor, how efficiently you use your seats, and what’s left over after everything else. This guide is the map. Each metric below links to a full guide with the formula, sourced benchmarks, and specific ways to improve it.
The core economics metrics
| Metric | What it measures | 2024 benchmark | Full guide |
|---|---|---|---|
| Food cost percentage | Ingredient cost as a share of food sales | 32.0% full-service / 32.4% limited-service | Formula, worked examples, how to lower it |
| Restaurant labor cost percentage | Wages, taxes, and benefits as a share of sales | 36.5% full-service / 31.7% limited-service | Benchmarks by service type, how to cut safely |
| Prime cost | Food cost plus labor cost combined | Typically 55-65% of revenue | Definition and calculation |
| Restaurant profit margin | What’s left after all expenses | 2.8% full-service / 4.0% limited-service | Five levers that move it |
| RevPASH | Revenue per available seat hour | Varies by concept | How to calculate and improve it |
| Menu engineering | Which menu items earn their place | N/A (per-restaurant analysis) | The four-box matrix |
Food cost, labor cost, and profit margin benchmarks come from the National Restaurant Association’s 2025 Restaurant Operations Data Abstract, based on financial data from more than 900 operators nationwide. Every number in that row links to the full guide with the exact source and calculation.
How these metrics connect
Food cost and labor cost together make up your prime cost, typically the largest chunk of every revenue dollar. Get prime cost right, and profit margin becomes achievable. Get it wrong, and no amount of extra covers fixes it.
RevPASH and table turnover rate measure the revenue side of the equation: how efficiently you’re using the seats you already have. A restaurant with excellent cost control but half-empty tables during dinner still struggles to hit a healthy profit margin.
Menu engineering sits between the two. It uses your average check size and per-item cover data to decide which dishes to promote, reprice, or cut, directly influencing both your food cost and your revenue per seat.
Where to start
If you’ve never tracked any of these numbers, start with food cost percentage and restaurant labor cost percentage. Together they make up prime cost, and prime cost is the single clearest signal of whether your operation is fundamentally sound. From there, restaurant profit margin shows the full picture, and menu engineering gives you a concrete way to act on what the numbers reveal.
For the revenue side of the equation, see RevPASH and covers per hour, which measure how well you’re using the capacity you already have.
Frequently Asked Questions
What are the most important restaurant KPIs?
What is the difference between prime cost and profit margin?
How often should I review restaurant KPIs?
Do these KPIs apply to any type of restaurant?
Related guides: Food cost percentage | Restaurant labor cost percentage | Restaurant profit margin | Menu engineering | RevPASH | Table turnover rate