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How to create a realistic budget for your restaurant


If you have a restaurant, you know that the business aspect of it takes time and attention to detail. From marketing your food and drinks to creating a comfortable atmosphere for your customers, there are many aspects of running a restaurant that can be challenging for new or experienced owners alike. One thing that many people overlook when starting out is budgeting: what will it cost to run your restaurant? Will you make any money? If so, how much? It's easy to get wrapped up in all the other details of opening up shop—you don't want to miss out on meeting this important milestone.

Determine your ideal profit goals

Now that you've figured out your costs, it's time to set some profit goals.

Before we talk about how to set these goals, let's discuss what they should include:

  • What is the ideal amount of money that you want to make each month? This will depend on a number of factors, including your restaurant's size and location (the larger the space and higher rent costs are likely to be).

  • How much profit did other restaurants in similar businesses make last year? If this is something that interests you, there are plenty of websites where you can find information on competitors' financial performance--just Google "restaurant profitability reports."

Identify unavoidable expenses

The first step in creating a realistic budget for your restaurant is to identify all of the unavoidable expenses. These are costs that will be incurred no matter what, so it's important that you plan for them. Here are some common expenses:

  • Rent and utilities.

  • Insurance (property and worker's comp).

  • Cost of goods sold (food and beverage).

  • Payroll taxes and benefits.

Consider competitive pricing and look at your financials

You can also use data to make decisions.

  • Look at your competitors' prices and menus and see how you stack up. If they're cheaper than you, consider lowering your prices slightly. If their food is more expensive, keep in mind that people may think twice about spending more for something similar when there are other options available at a lower price point.

  • Look at the financials of other restaurants like yours (or ones in the same neighborhood). How much do they spend on labor? What percentage of revenue goes toward overhead costs like rent and utilities? Are these numbers comparable with yours? If not, what might explain the difference?.

Take into account unexpected expenses

  • You need to be prepared for unexpected expenses. This is a fact of running a restaurant, and it can be especially true for new businesses. You may find that equipment maintenance and repairs are more frequent than expected, or perhaps there's an unusually high spike in food costs. Whatever the reason, make sure you have enough cash on hand to cover these unexpected expenses before they happen.*

  • If all goes well with your business plan and budgeting process, then all is good! But if know what happens next: "Here comes another unexpected expense!" And maybe this time it's bigger than the last one was--and maybe it even affects more than one area of your business (like payroll or inventory). What do we do now?.

Take time to think about your finances to ensure the success of your restaurant.

To create a realistic budget, you need to take time to think about your finances. You can't just look at the numbers and hope for the best. You must understand what is driving your costs and revenue, as well as how much you are making.

This will help ensure that when you open up shop, everything is in order and running smoothly from day one.


In the end, it's important to remember that a budget is not something that you should make once and forget about. It's something that will change over time as your restaurant grows and evolves. The key is to keep track of those changes so that you can make informed decisions about how much money goes where.

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