How Much Do Restaurant Owners Make – Secret Earnings
Are you curious about the answer to the question How Much Do Restaurant Owners Make? You might be surprised.
Even though running a restaurant can be incredibly exciting and rewarding, it’s not usually the most profitable endeavor, especially when starting.
However, owning a restaurant can still be a terrific investment if you understand what you’re getting into.
How Much Do Restaurant Owners Make?
How Much Do Restaurant Owners Make? The average pay for a restaurant owner is $57,381 per year. However, the amount they make largely varies depending on their establishment’s success. Restaurant owners greatly influence their pay and earnings because they are entrepreneurs who run their businesses.
Restaurant owners can typically afford to pay a greater wage as their business grows more prosperous.
Restaurant owners may begin with a modest compensation when opening their trades. As the company builds a loyal customer base, it may boost its pay.
Also Read: Can a Restaurant Owner Become a Millionaire?
How Much Do Top Restaurant Owners Make?
Top restaurant owners can earn up to $139,500 a year. Conversely, 17% of restaurant owners are thought to make between $18,500 and $30,000 annually. They claim that the annual income for a restaurant owner in the United States is about $72,000.
How Much Do High-End Restaurant Owners Make?
High-end restaurant owners can earn a hefty sum, which varies based on restaurant size, location, unique dishes served, and owner’s approach.
On average, they make around $72,000 annually. Top earners bring in over $139,500 a year, according to ZipRecruiter. Some surpass these figures, depending on the mentioned elements.
Check out the Full Article: How Much Do High-End Restaurant Owners Make?
How Much Do Small Restaurant Owners Make?
According to a study, the average ranges from $29,000 to $200,000. The annual average wage in such a range is roughly $60,000.
Restaurant owners can earn anything from $29,000 to $200,000, depending on various conditions.
Unmasking the State-by-State Earnings of America’s Restaurant Owners.
Curious about the potential earnings as a restaurant owner in your state? We’ve compiled average salaries for restaurant owners nationwide based on data from ZipRecruiter.
Among the states, Washington boasts the highest average salary for restaurant owners, while North Carolina offers the lowest.
| State | Annual Salary | Monthly Pay | Weekly Pay | Hourly Wage |
|---|---|---|---|---|
| North Carolina | $52,596 | $4,383 | $1,011 | $25.29 |
| Missouri | $56,498 | $4,708 | $1,086 | $27.16 |
| Illinois | $57,415 | $4,785 | $1,104 | $27.60 |
| Mississippi | $57,588 | $4,799 | $1,107 | $27.69 |
| Michigan | $57,703 | $4,809 | $1,110 | $27.74 |
| Arkansas | $57,729 | $4,811 | $1,110 | $27.75 |
| Kentucky | $58,768 | $4,897 | $1,130 | $28.25 |
| Florida | $58,803 | $4,900 | $1,131 | $28.27 |
| New Mexico | $60,238 | $5,020 | $1,158 | $28.96 |
| Iowa | $60,864 | $5,072 | $1,170 | $29.26 |
| Alabama | $60,931 | $5,078 | $1,172 | $29.29 |
| Kansas | $61,472 | $5,123 | $1,182 | $29.55 |
| Colorado | $61,487 | $5,124 | $1,182 | $29.56 |
| Louisiana | $61,815 | $5,151 | $1,189 | $29.72 |
| South Carolina | $61,721 | $5,143 | $1,187 | $29.67 |
| Utah | $62,401 | $5,200 | $1,200 | $30.00 |
| Georgia | $62,391 | $5,199 | $1,200 | $30.00 |
| Oregon | $62,408 | $5,201 | $1,200 | $30.00 |
| Ohio | $63,217 | $5,268 | $1,216 | $30.39 |
| South Dakota | $63,389 | $5,282 | $1,219 | $30.48 |
| Wisconsin | $63,401 | $5,283 | $1,219 | $30.48 |
| Tennessee | $63,678 | $5,307 | $1,225 | $30.61 |
| Minnesota | $63,740 | $5,312 | $1,226 | $30.64 |
| Indiana | $64,261 | $5,355 | $1,236 | $30.89 |
| Arizona | $64,675 | $5,390 | $1,244 | $31.09 |
| North Dakota | $65,296 | $5,441 | $1,256 | $31.39 |
| Nevada | $65,316 | $5,443 | $1,256 | $31.40 |
| Montana | $65,348 | $5,446 | $1,257 | $31.42 |
| New Jersey | $65,424 | $5,452 | $1,258 | $31.45 |
| Pennsylvania | $65,797 | $5,483 | $1,265 | $31.63 |
| Alaska | $65,834 | $5,486 | $1,266 | $31.65 |
| Texas | $65,880 | $5,490 | $1,267 | $31.67 |
| Rhode Island | $66,225 | $5,519 | $1,274 | $31.84 |
| West Virginia | $66,931 | $5,578 | $1,287 | $32.18 |
| Maine | $67,108 | $5,592 | $1,291 | $32.26 |
| Connecticut | $67,186 | $5,599 | $1,292 | $32.30 |
| Idaho | $68,003 | $5,667 | $1,308 | $32.69 |
| Wyoming | $68,899 | $5,742 | $1,325 | $33.12 |
| Hawaii | $69,092 | $5,758 | $1,329 | $33.22 |
| Vermont | $70,259 | $5,855 | $1,351 | $33.78 |
| Massachusetts | $71,369 | $5,947 | $1,372 | $34.31 |
| California | $72,348 | $6,029 | $1,391 | $34.78 |
| Oklahoma | $72,615 | $6,051 | $1,396 | $34.91 |
| New Hampshire | $74,505 | $6,209 | $1,433 | $35.82 |
| Delaware | $74,698 | $6,225 | $1,436 | $35.91 |
| New York | $77,013 | $6,418 | $1,481 | $37.03 |
| Virginia | $77,104 | $6,425 | $1,483 | $37.07 |
| Nebraska | $78,128 | $6,511 | $1,502 | $37.56 |
| Maryland | $79,794 | $6,649 | $1,534 | $38.36 |
| Washington | $80,822 | $6,735 | $1,554 | $38.86 |
Watch a Video – How Much Do Restaurant Owners Make
Learn about the earnings of restaurant owners by watching an informative video on “How much do restaurant owners make?
How Does a Restaurant Owner Determine Their Salary?
With the help of a profit & loss calculator, you can easily calculate and determine your salary as a restaurant owner. You must know your profit margin to determine how much you will make.
Make careful you base your salary calculation on net profits rather than gross income.
You must confirm that the money left over after covering all of your overhead and operational costs is used to determine your remuneration.
What Should Restaurant Owners Keep in Mind About Their Salary?
As a general guideline, remember that most restaurant proprietors receive salaries less than 50% of overall revenues.
Operating expenses
What is the expense of maintaining the lights? What does rent cost? How much do you spend each month on food? And how much does it cost to pay your staff members and cooks? When considering running expenses, you should keep all of this in mind.
The likelihood is that your running costs will be significantly reduced if you operate your business out of a food truck.
On the other hand, your rental costs will be high if you own a sizable dine-in restaurant in San Francisco. Before writing a sizable check, keep all of this in mind.
Location
Your take-home pay can significantly vary depending on where your restaurant is situated. Your restaurant will have a more extensive potential client base, be able to charge higher pricing, and probably see more daily sales if it is located in a large city with a dense population.
Seasonality
Could your monthly payments fluctuate based on the season? Yes. While other seasons of the year could have slower sales, the summer months are frequently busier. Additionally, this can differ significantly from one place to the next.
Know when you have hectic times and downtime, and prepare to take home less money when things are hard.
How long you’ve been in business
Building a base of devoted clients may take some time. Don’t expect to start with a considerable income. Once you’ve made a name for yourself, you may begin discussing how much your pay should be raised.
Unveiling the Top 10 U.S Cities Where Restaurant Owners Strike it Rich.
We examined salary variations by state and identified the top 10 cities in the United States with the highest average annual income for restaurant owners.
| City | Annual Salary | Monthly Pay | Weekly Pay | Hourly Wage |
|---|---|---|---|---|
| Glendale, CA | $81,110 | $6,759 | $1,560 | $39.00 |
| Pasadena, CA | $81,588 | $6,799 | $1,569 | $39.22 |
| Hartford, CT | $81,888 | $6,824 | $1,575 | $39.37 |
| Santa Clara, CA | $82,050 | $6,837 | $1,578 | $39.45 |
| Palmdale, CA | $82,361 | $6,863 | $1,584 | $39.60 |
| San Francisco, CA | $83,258 | $6,938 | $1,601 | $40.03 |
| Lakes, AK | $83,278 | $6,940 | $1,601 | $40.04 |
| Bellevue, WA | $86,305 | $7,192 | $1,660 | $41.49 |
| Stamford, CT | $86,500 | $7,208 | $1,663 | $41.59 |
| Richmond, CA | $88,832 | $7,403 | $1,708 | $42.71 |
How Much Profit Should You Make in a Restaurant?
According to Restaurant Resource Group, the typical restaurant profit margin is between 2% and 6%, with full-service restaurants at the low and limited-service (or fast-service) restaurants at the top. However, there is no universally applicable answer to that issue.
Many factors affect this, but restaurants with fewer launches or overhead costs can make more money.
Geographic location significantly affects consumer behavior, competitive price, and cost of living.
Gaining a profit requires a thorough understanding of your business and its surroundings.
The concept is essential because the intended consumers of a dive bar and a martini bar are different, and the prices should reflect that.
How Long Does It Take a Restaurant to Turn a Profit?
Within three to five years, most restaurants only begin to break even. However, instability may not necessitate worry.
You’re probably in good shape if your financial reports indicate that your revenue is substantial and you can predict increased revenue.
Users can expect to stop often changing your layout once their expenditures settle, part of your facilities have been paid off, and you have a solid understanding of your operations.
What Is the Average Restaurant Revenue for a New Restaurant?
A new restaurant with fewer than 12 months of operation generates an average monthly income of $111,860.70.
This is a fair average to work from because unforeseen hiccups could counter this gain on the road.
A new multi-location restaurant site may have more revenue than a brand-new one because the brand is already known and trusted in a community.
However, the average revenue varies significantly among different restaurant kinds, geographic locations, sizes, and service patterns, much like everything else in the food business.
The business concepts of a fast-food restaurant and a fine dining venue are so dissimilar that it is difficult to draw comparisons.
How Do Restaurant Owners Get Paid?
For many of us stepping into entrepreneurship, one common query tends to cloud our minds: how do we earn from our efforts? This puzzle takes a unique shape in the restaurant industry, shaped by how your eatery is structured.
If your restaurant stands as its legal entity, the balance between profits and expenses tilts toward the company’s favor.
As the proud owner of a restaurant, your compensation comes in the form of a salary. The profits linger from paying rent, taxes, and salaries can be drawn or distributed.
Here’s where the magic happens – structuring your restaurant as a separate legal entity, like an S corporation, not only brings in financial perks but also minimizes your tax burden.
Deciding how to tackle incorporation specifics best should be guided by a professional who understands the nuances of legality and taxes, tailoring it to your unique needs.
Conversely, if you’ve opted for a sole proprietorship model, the restaurant’s profits blend with your income for tax matters.
As the ship’s captain, you can grant payment as suits your fancy. Yet, there’s a certain wisdom in securing a regular paycheck – a method that unveils the curtain on your monthly expenses more clearly.
When your restaurant proudly wears the crown of profitability, a prudent strategy is to pay yourself slightly less than half the profits as your salary.
The remaining chunk of the restaurant’s prosperity, left untouched after bills are paid, can be wisely invested in crucial aspects.
Whether erasing debts or fueling your business’s growth through smart marketing, upgrading equipment, or expanding your workforce, these unspent treasures promise a more prosperous future.
It’s worth mentioning that these profits could also be extended to your loyal investors who’ve embarked on this culinary journey with you.
The path to reaping rewards as a restaurant owner isn’t carved in stone but tailored to your establishment’s identity.
Let your aspirations for culinary excellence and financial wisdom guide you as you carve your unique route to success.
Is Opening a Restaurant a Good Investment?
Although restaurants will likely fail in the first five years, they can be profitable businesses.
If you must venture into a restaurant, pick a well-known one (preferably a franchise) and carefully review the financials before putting your name on the dotted line.
Before investing in a restaurant, some investors might wish to wait for even more significant economic growth.
It would be best if you made that choice, and while we wouldn’t advise you on how to handle your finances, it’s difficult to predict when the economy will rise more significantly.
Before you agree to a deal with a restaurant owner, make sure the amount of money you’re investing won’t negatively influence your life, even if you never see it again.
This can stop you from mortgaging your home or financing your entire life assets in a restaurant.
Which Type of Restaurant Is the Most Profitable?
The bar is the most profitable type of restaurant, and it has enormous profit rates in the industry.
Alcoholic drinks carry a substantially more significant markup than food, and a bar’s launch expenses typically range from $125,000 to $850,000.
Restaurant’s Annual Forecasting Guide
Forecasting can appear to be a game of speculation. You’ll need to do figure crunching if you want your forecasts to be more than generalizations like “outlook not so favorable” or “cloudy with a probability of profit.”
Below are ways to create an annual forecasting guide for your restaurant.
- To learn more, go to a resource. It is impossible to emphasize the significance of maintaining a record of your financial transactions, whether for tax purposes or to assist you in making better decisions in the future. Any prior year’s P&L reports you’ve stored are halfway there. If not, now is the perfect opportunity to go on the hunt for them.
- Establish Categories. Instead of adding up two enormous totals, it is worth the extra time to break down your spending and revenue by category. We advise adopting a generic version of your chart of accounts divided by functional categories, such as bar and kitchen, or by purchasing categories, such as booze and groceries.
- Determine the YoY Change. Instead of just making objectives out of thin air, you should calculate year-over-year change after you know your totals for revenue and spending for each category. The idea is to maintain reality, regardless of whether your goals are more aggressive or modest, such as a 1-2 percent year-over-year (YoY) rise.
- Make a Growth Plan. After addressing YoY change, you are prepared to establish realistic growth objectives. Use past data to decide whether to pursue a more aggressive approach to revenue growth or sustain a moderate and steady income increase to outpace inflation.
Consider your income potential carefully when making plans for advancement. Sales driven by seasonal tourist traffic will not increase at the same rate during sluggish months as during busier ones.
Your salary will vary from month to month.
No, escaping that climate and weather significantly impacts business. Still, you may better plan your financial life using sales data from earlier weeks, months, and years to estimate how well the restaurant will perform at any particular moment.
Using the same data to implement innovative scheduling techniques and guarantee that your inventory purchasing is in line with how much you will likely sell, you can also ensure that your profit margin % doesn’t suffer too much in idle periods.
Your take-home money may vary due to unforeseen, unexpected expenses like repairs for damaged equipment.
Taking personal time will always be costly.
Recognizing when to give your entire team the day off and close your doors is among the most challenging decisions in the restaurant industry.
Giving your workers time off can help them maintain a healthy work-life balance, which will help keep them on staff for longer.
However, closing your restaurant’s doors is very expensive, even for a day.
To give the entire crew a break and allow them to spend time with their families or on vacation, several restaurants closed for a few weeks in January or March, both of which are traditionally sluggish months for the business.
You may be the boss, but you might not have the biggest paycheck.
Initially, you may not even be the highest-paid in the company. Running a business isn’t a certain way to become wealthy quickly.
Your restaurant staff may start making more money than you do due to tips. Therefore, it’s in your best interest to accept that. Your servers might be making more money consistently than you are due to the hefty startup costs for restaurants and the other expenses that will reduce your net profits in the first few years.
Still ready to take the plunge?
Never start a restaurant before equipping yourself with the necessary tools to manage your finances.
Your POS should be able to assist you in gathering the analytics and information you require to stay afloat and eventually arrive at a position where you can earn a respectable living.
Who Is the Wealthiest Restaurant Owner?
The wealthiest restaurant currently is Tilman Fertitta. Although he’s not a chef, he is a restaurant owner with a roughly $4.6 billion net worth. He is one of America’s wealthiest citizens and has the title of “World’s Richest Restaurateur.”
What Is the Best Location in Florida to Start a Business?
The best place to open a business in Florida is Miami. Miami had 2.5 times as many industrial and commercial areas as the typical city, with 14,058 per 100,000 population during the past five years (5,931). During the epidemic, Miami has developed into a haven for various IT, finance, and other major industries.
What Tools Can Help Determine Your Salary As a Restaurant Owner?
Before deciding on your restaurant owner’s salary, you need access to adequate information to make a well-informed choice. Software for restaurant reporting and analytics can help with it.
You can see exactly where you are in terms of sales and profitability. Even better, you can run reports and get current information.
After customizing them to your requirements, you can also schedule the reports to run at a specified time, ensuring you always have the required data.
FAQS – How Much Do Restaurant Owners Make
How Much Does a Restaurant Owner Make?
Restaurant owners make an average annual pay of $57,381, although this can fluctuate significantly based on the success of their establishment. Their earnings are closely tied to their business acumen as entrepreneurial individuals who oversee their ventures.
Do Restaurants Make a Good Profit?
Restaurants do make a good profit, but their profit margins are poor. The size and style of restaurants and the local economy all affect profitability.
The average time for a new restaurant to make money is two years. Unfortunately, restaurants fail at an alarmingly high rate.
A lack of money or preparation for the initial few years of growth is to blame here. As part of your company plan, you should include these considerations.
Labor and food expenditures are two of the most critical aspects in determining a restaurant’s profitability. The price of food in a restaurant can be 10-20% higher than the price of alcohol in a pub.
A restaurant’s expenses far exceed a bar’s when you factor in personnel expenditures, which typically run between 20 and 40 percent more.
Cooking takes more time and attention to detail than preparing drinks. To be candid, the profitability of a restaurant’s beverage strategy is often an effective form of assistance for the restaurant’s overall operations.
How Much Profit Can You Make with a Restaurant?
The typical restaurant profit margin is between 3 and 5 percent. However, the range might be as comprehensive as 0 to 15 percent in other cases.
Outliers – data points at the distribution extremes significantly impact averages, as is explained in every introductory statistics textbook.
Examining profit margins relevant to your niche is essential to determine how much profit a restaurant should make.
The most important thing to take up from this is to aim for “average-or-better” restaurant margins each year.
What Is the Highest-paying Restaurant Job?
The general or operations manager role is frequently the highest-paid in a single restaurant.
In 2018, these workers earned an average of $38.30 per hour or $79,670 per year, respectively.
Geographical location has a significant impact on wages, as it does in the majority of professions.
The CEO and other restaurant managers may meet with their general managers to discuss company goals and the day-to-day operations at their locations.
In addition to hiring and terminating restaurant employees, they train and promote them and deal with client issues that their subordinates cannot resolve. They have a bachelor’s or a Master of Business Administration degree.
Yet, they may have started as a server or a lower-level employee at the company before being promoted to a higher position with greater responsibility.
How Much Should a Restaurant Make a Day?
A Restaurant’s Average Monthly and Annual Revenue Are $40,500 and $486,000. For example, Restaurants in the United States Make an Average of $1,350 Daily. There Are 47 Transactions Every Day, with an Average Check of $28.43.
On weekend nights, the average American restaurant generates more money. Friday, Saturday, and Sunday account for 54% of their weekly sales. Based on the numbers above, the weekly average sales for a restaurant are $9,450. That would equate to a weekend income of $5,103.
Conclusion – How Much Do Restaurant Owners Make
In conclusion, the average restaurant owner makes between $30,000 – $60,000 annually, depending on the size and location of the establishment.
The owners of large restaurants typically earn the most money. The smaller restaurants usually pay less, and the owners must work long hours.
Jeff Smith is a Restaurant Consultant with over 20 years of hospitality experience ranging from server to owner and general manager. He focuses on Restaurant POS technology as well as restaurant marketing. Make sure to check out our world famous restaurant resources page for a comprehensive offering of hand picked resources and tools to help your business. You can also check out some of our other restaurant business articles.
