Indian restaurants usually keep 8 to 18% of sales as net profit, depending on the format: about 8 to 12% for casual dining, 10 to 15% for quick service and cafes, and 12 to 18% for fine dining. Food, staff and rent together usually take 60 to 70% of sales.
Net profit margin by format
| Format | Net profit | Gross margin |
|---|---|---|
| Casual dining | 8 to 12% | 65 to 72% |
| Quick service | 10 to 15% | 68 to 75% |
| Fine dining | 12 to 18% | 65 to 70% |
| Cloud kitchen | 8 to 15% | 70 to 78% |
| Cafe | 10 to 15% | 68 to 76% |
Rough industry ranges for Indian restaurants. Gross margin is sales minus food cost; net profit is what is left after every cost.
Work out your net profit margin
A sample P & L Account: ₹10 lakh casual-dining outlet
| Line | Amount | Share of sales |
|---|---|---|
| Net sales | ₹10,00,000 | 100% |
| Food and drink cost | ₹3,20,000 | 32% |
| Staff cost | ₹2,20,000 | 22% |
| Rent | ₹1,20,000 | 12% |
| Delivery app commissions and marketing | ₹80,000 | 8% |
| Electricity, gas and water | ₹60,000 | 6% |
| Maintenance, licences, consumables and other | ₹1,10,000 | 11% |
| Net profit | ₹90,000 | 9% |
Healthy cost ranges
| Cost | Healthy | Warning |
|---|---|---|
| Food cost | 28 to 35% | Above 38% |
| Staff cost | 20 to 30% | Above 35% |
| Rent | 8 to 15% | Above 18% |
How to work out your own margin
- Start from net sales, not gross sales.
- Count food cost from stock used, not from purchases.
- Include salaries, rent, delivery commissions, utilities and every small monthly cost.
- Do it outlet by outlet: a brand average hides the outlet that is losing money.
Moving from 9% to 14%
The biggest swings usually come from food cost and buying, not from rent. See how to increase restaurant profit, even at the same sales.
Your margin, outlet by outlet, every morning
Peasily builds the P & L Account of every outlet from its own bills, stock and costs, and shows net profit first, every morning, with food cost and labour cost beside it.
The P & L Account comes with both Peasily packages. Screens from the Peasily demo brand.
Questions
What is the average profit margin of a restaurant in India?
Most Indian restaurants keep 8 to 18% of sales as net profit: about 8 to 12% for casual dining, 10 to 15% for quick service and 12 to 18% for fine dining.
What is the difference between gross margin and net profit?
Gross margin is sales minus food cost. Net profit is what remains after every cost: food, staff, rent, commissions, utilities and the rest.
Which cost should I fix first?
Usually food cost and buying prices. They move every day, while rent and salaries are fixed for months.
See your own numbers in Peasily
We'll walk you through it with your real menu and outlets.