Picture this: your restaurant's busy every night, but you're still living paycheck to paycheck. Most hospitality owners work 70-hour weeks but forget to calculate what they actually need to take home. Here's how to work backwards from your personal expenses to the revenue your business must generate.
Start with your personal expenses
Before you can calculate what your business needs to generate, you need to know what you personally need. Not just for fun things, but for your entire life.
💡 Example personal expenses:
- Mortgage/rent: €1.400
- Insurance: €200
- Car: €400
- Groceries: €600
- Clothing, going out, vacation: €500
- Pension contributions: €300
- Emergency buffer: €200
Total net per month: €3.600
From net to gross income
Your personal expenses are net. But your business needs to pay you a gross amount. With taxes and premiums, that's much more than you need net.
As a self-employed person, you'll pay:
- Income tax (37-49% in higher brackets)
- Possibly VAT (if you're above €20.000 in revenue)
- Your own health insurance
- Pension contributions out of pocket
⚠️ Note:
As a self-employed person, you don't have unemployment insurance, employer-provided health insurance, or pension contributions. You've got to arrange all of that yourself.
Rule of thumb: net × 1.6 to 1.8 = gross needed from your business
💡 Example gross calculation:
Net needed: €3.600 per month
Gross needed: €3.600 × 1.7 = €6.120 per month
Per year: €6.120 × 12 = €73.440
From your income to your business profit
Your personal income isn't the only profit your business needs to make. There are more expenses lurking:
- Corporate tax (if you have a BV)
- Investments in equipment
- Buffer for slow months
- Loan repayments
- Maintenance reserves
From years of working in professional kitchens, I've seen too many operators forget about equipment replacement costs. That €15,000 walk-in cooler doesn't fix itself.
Rule of thumb: your income × 1.3 to 1.5 = total profit needed
💡 Example total profit:
Your income: €73.440 per year
Total profit needed: €73.440 × 1.4 = €102.816
Per month: €8.568 profit
From profit to required revenue
Now it gets interesting. How much revenue do you need to generate to keep €8.568 profit per month?
That depends entirely on your profit margin. And that varies enormously depending on the type of business.
Formula: Required revenue = Required profit / (Profit margin % / 100)
Common profit margins in hospitality:
- Restaurant: 3-8%
- Café/bar: 8-15%
- Fast food: 6-9%
- Catering: 8-12%
💡 Example revenue calculation:
Required profit: €8.568 per month
Restaurant profit margin: 5%
Required revenue: €8.568 / 0.05 = €171.360 per month
Per year: €2.056.320 revenue
⚠️ Note:
This example shows why many restaurants struggle. To pay yourself €3.600 net, you need over 2 million in revenue at a 5% profit margin.
Reality check: does this match your situation?
If your calculation results in unrealistic revenue figures, you've got three options:
- Increase your profit margin: Better purchasing, higher prices, lower costs
- Lower your personal expenses: Spend less
- Accept lower income: At least for now
Many entrepreneurs unknowingly choose option 3, without realizing it. They're working for less than minimum wage because they haven't factored in their own costs.
How do you get control of your actual profit margin?
To make this calculation work, you need to know your actual profit margin. That requires insight into:
- Your food cost per dish
- Your total labor costs
- Your fixed expenses (rent, energy, insurance)
- Your actual revenue per month
Many entrepreneurs estimate this, but that leads to wrong decisions. With systems that track exact food costs, you get real insight into what each dish actually generates.
How do you calculate what you need? (step by step)
Make a list of all your personal expenses
Write down what you need per month: mortgage, insurance, groceries, car, going out, buffer. Add it all up for your net monthly amount.
Calculate from net to gross income
Multiply your net amount by 1.6 to 1.8 to know what gross you need to take from your business. This compensates for taxes and premiums.
Calculate the total profit your business needs to make
Multiply your gross income by 1.3 to 1.5 for investments, business taxes, and buffers. This is your required profit.
Calculate back to required revenue
Divide your required profit by your profit margin (in decimals). At 5% profit margin: profit / 0.05. This gives you minimum revenue.
✨ Pro tip
Calculate your break-even point for the next 6 months, then add 20% buffer for unexpected costs. Most operators underestimate seasonal fluctuations and equipment repairs.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
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Frequently asked questions
What is a realistic profit margin for a restaurant?
Restaurants typically run 3-8% profit margins. That's low compared to other industries, but normal in hospitality due to high labor and food costs.
Should I count my own salary as an expense?
As a self-employed person, no—you take your income from the profit. If you have a BV, you can pay yourself a salary, which then counts as a cost item.
What if my calculation results in unachievable revenue?
Then you need to choose: higher profit margin through better prices or lower costs, reduce personal expenses, or accept earning less than desired. Most operators accidentally pick the third option without realizing it.
How do I know what my actual profit margin is?
Track your real revenue and actual costs, including your own time. Many entrepreneurs guess at these numbers and make poor decisions as a result.
📚 Sources consulted
- EU Verordening 852/2004 — Levensmiddelenhygiëne (2004) — Official source
- EU Verordening 853/2004 — Hygiënevoorschriften voor levensmiddelen van dierlijke oorsprong (2004) — Official source
- EU Verordening 1169/2011 — Voedselinformatie aan consumenten (2011) — Official source
- NVWA — Hygiënecode voor de horeca (2024) — Official source
- NVWA — Allergenen in voedsel (2024) — Official source
- Codex Alimentarius — International Food Standards (2024) — Official source
- FSA — Safer food, better business (HACCP) (2024) — Official source
- BVL — Lebensmittelhygiene (HACCP) (2024) — Official source
- Warenwetbesluit Bereiding en behandeling van levensmiddelen (2024) — Official source
- WHO — Foodborne diseases estimates (2024) — Official source
Food Standards Agency (FSA) — https://www.food.gov.uk
The HACCP standards shown in this application are for informational purposes only. KitchenNmbrs does not guarantee that displayed values are current or complete. Always consult the FSA or your local authority for the latest regulations.
Written by
Jeffrey Smit
Founder & CEO of KitchenNmbrs
Jeffrey Smit built KitchenNmbrs from 8 years of hands-on experience as kitchen manager at 1NUL8 Group in Rotterdam. His mission: give every restaurant owner control over food cost.
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