Margins in restaurants are razor-thin, often just a few percentage points. Add multiple locations, and every fraction of profit or loss multiplies across your entire business. At scale, a one-point swing in margin can mean the difference between expanding your footprint or cutting costs across the board. That’s why understanding gross profit is so important; it’s the foundation for every decision you make.
This article shows you how to calculate gross and net profit, spot where money slips through the cracks, and make the kind of margin improvements that add up to hundreds of thousands across a multi-unit portfolio.
What Is Gross Profit?
Gross profit is your sales revenue minus the cost of goods sold (COGS). In a restaurant, that’s what you keep after paying for food and beverage ingredients, before labor, rent, or utilities enter the picture.
Formula:
Gross Profit = Total Sales – COGS
Example:
If one of your locations does $100,000 in sales for July and spends $35,000 on food and beverage, your gross profit is $65,000. That’s a 65% gross profit margin.
Now zoom out. If you’re running ten locations at similar volume, a 65% gross profit margin means $650,000 left to cover labor and overhead. If that slips to 62%, you’ve just lost $30,000 in a single month without selling one less meal.
That’s why gross profit matters so much for multi-unit operators:
- Shows whether your menu pricing and food costs hold up at scale.
- Exposes small inefficiencies like waste, theft, or supplier price creep that compound quickly across units.
- Highlights which menu items drive the most profit so you can replicate wins across every store.
What Is Net Profit?
Net profit is what’s left after subtracting all operating expenses from your gross profit. That includes labor, rent, utilities, marketing, insurance, and every other cost of keeping your doors open.
Formula:
Net Profit = (Total Sales + Other Gains) – (COGS + Expenses)
Example:
If your quarterly sales are $1.25M, gains add $50K, and expenses come to $1.2M, your net profit is $100K. That works out to an 8% net profit margin.
That’s why net profit matters for multi-unit operators:
- Shows the clearest picture of overall financial health.
- Exposes when high sales are offset by overhead and expenses.
- Highlights how even a one-point shift in margin can add up to six figures across a portfolio.
- Confirms whether growth is fueled by true earnings or stretched cash flow.
Most restaurants aim for a 5–10% net profit margin. Staying in that range is what separates healthy, sustainable growth from fragile operations that struggle to expand.
Average Profit Margins by Restaurant Type
Profit margins vary widely depending on your concept. Use these benchmarks as a reality check.Full-Service Restaurants: 2–6%
Traditional full-service models carry the slimmest margins. Servers, bartenders, and kitchen staff drive up labor costs, while rent and utilities stay fixed no matter how busy you are. Multi-unit operators in this space need sharp scheduling, menu engineering, and consistent guest traffic to stay profitable.
Quick Service / Fast Food: 6–9%
Quick-service concepts typically run higher margins thanks to faster turnover, limited menus, and lower labor requirements. Ingredients are often less expensive, and higher sales volumes help spread fixed costs. For multi-location growth, QSRs usually offer more breathing room in the P&L.
Cafes: 2.5–15%
Cafes can be surprisingly profitable when beverage sales dominate. Specialty coffee drinks and grab-and-go items deliver strong margins, though location costs and competition can quickly erode them. Operators with multiple cafes often rely on volume, brand loyalty, and upselling food to stabilize profits.
Food Trucks: 6–9%
Food trucks avoid some of the overhead of brick-and-mortar, but they carry variable risks like weather and event-based sales. Margins are often healthy compared to FSRs, but they depend heavily on volume and smart scheduling. For operators, trucks can extend brand reach without heavy capital expense.
Catering: 7–8% (sometimes higher)
Catering benefits from lower labor and rent costs compared to restaurants. High-end catering can deliver margins north of 15%, but it comes with seasonality and fluctuating demand. Multi-unit operators often treat catering as a margin booster alongside dine-in operations.
Bars: 10–15%
Alcohol markups drive strong returns, making integrated beverage programs one of the most reliable ways to improve portfolio profitability.
Quick-service and bar concepts typically offer the most flexibility, while full-service establishments require the strictest controls. For multi-unit groups, even a one-point swing in margin can mean hundreds of thousands gained or lost across the portfolio. And because food costs, labor, and overhead already consume 60–70% of sales, that sliver of profit is all you have left to protect.
So how do you protect it? By focusing on the areas you can actually control. Even minor adjustments in menu design, waste reduction, labor management, or overhead discipline can compound into big results across multiple locations.
How to Improve Restaurant Profit Margins
Margins may be tight, but improvement is possible. Focus on a few high-impact levers:
- Optimize Your Menu – Feature high-margin items and cut or re-engineer low-margin ones.
- Reduce Waste – Track inventory closely and cross-utilize ingredients.
- Manage Labor Smarter – Align staffing with sales patterns and cross-train employees.
- Control Overhead – Standardize processes and negotiate vendor and utility costs to optimize efficiency and reduce costs.
Final Word
When you’re running several restaurants, margins aren’t abstract; they’re the scoreboard that tells you how the whole business is performing. Gross profit indicates whether your pricing and food costs are sustainable. Net profit reveals whether the entire operation is sustainable. Benchmarks help you see where you stand, while focused improvements ensure your profits are protected and multiplied at scale.
When margins are razor-thin, even one point can decide whether you open your next store or cut back. The operators who pay attention and take action are the ones who continue to grow. Forte helps you do that by giving you a clear view of your numbers and the tools to improve them across every location.
SHARE