Are you truly making money or just breaking even? Most restaurant owners focus solely on revenue, but five specific metrics reveal your actual financial position. These numbers tell the real story of where your business stands.
The five essential metrics for financial health
Track these five numbers monthly and you'll spot problems before they drain your profits. Each one reveals a different piece of your financial puzzle.
1. Food cost percentage
This shows what portion of your revenue disappears into ingredient costs. It's the metric that makes or breaks most restaurants.
💡 Example:
Restaurant with €50,000 monthly revenue:
- Ingredient costs: €16,500
- Food cost: (€16,500 / €50,000) × 100 = 33%
This sits comfortably within the 28-35% target range.
2. Labor cost percentage
Calculate what percentage of revenue goes toward your entire team. Include wages, benefits, taxes, and don't forget to pay yourself a market salary.
Formula: (Total payroll expenses / Revenue) × 100
Target range: 25-35% for most restaurant types.
3. EBITDA (profit before interest, tax, depreciation)
Your true operational profit before accounting for loans, taxes, and equipment depreciation. This number doesn't lie.
💡 EBITDA calculation:
- Revenue: €50,000
- Food cost: €16,500
- Labor costs: €15,000
- Other expenses: €12,000
EBITDA: €50,000 - €43,500 = €6,500 (13%)
Aim for 8-15% of revenue. Anything below 5% puts you in dangerous territory - a mistake that costs the average restaurant EUR 200-400 per month in lost opportunities.
4. Revenue per square meter
This reveals how well you're maximizing your space. Simply divide monthly revenue by your restaurant's square footage.
Formula: Monthly revenue / Square meters
- Casual dining: €150-250 per m²
- Fine dining: €200-400 per m²
- Fast casual: €300-500 per m²
5. Average check value
The amount each customer spends per visit. This metric exposes pricing problems and helps gauge customer satisfaction.
Formula: Total revenue / Number of transactions
⚠️ Note:
Declining check values with steady traffic means customers are ordering less. Time to review your menu strategy and pricing.
How these numbers work together
These five metrics create a complete financial snapshot:
- Food cost + labor costs = your two biggest expenses (typically 50-70% combined)
- EBITDA = what remains for rent, equipment, and actual profit
- Revenue per m² = how efficiently you're using your space
- Check value = whether customers are spending enough to sustain your business
Red flags that demand immediate attention
💡 Warning signs:
- Food cost exceeding 35%: review portion sizes and supplier contracts
- Labor costs above 35%: either overstaffed or underearning
- EBITDA under 5%: crisis mode - act now
- Shrinking check values: menu engineering required
Tracking systems
Manual calculations eat up valuable time you should spend running your restaurant. Food cost calculators like KitchenNmbrs automatically track these metrics, giving you instant visibility into your financial health each month.
How do you calculate financial health? (step by step)
Gather your monthly figures
Pull from your accounting: total revenue, ingredient costs, payroll costs, and other operational costs. Make sure you remove all VAT for a clear picture.
Calculate the percentages
Food cost = (ingredients / revenue) × 100. Labor costs = (total payroll / revenue) × 100. EBITDA = revenue minus all operational costs, divided by revenue × 100.
Compare with benchmarks
Check if your figures fall within healthy ranges: food cost 28-35%, labor costs 25-35%, EBITDA 8-15%. See where you deviate and prioritize actions.
Monitor monthly
Put this calculation on your calendar for every month. Trends are more important than individual figures - watch for rising costs or declining margins.
Take action on deviations
EBITDA below 5%? Immediate action. Food cost above 35%? Check portions and supplier prices. Labor costs too high? Look at efficiency and scheduling.
✨ Pro tip
Set a monthly "financial health day" on the 5th of each month to review all five metrics together. Track them on a single dashboard for 6 months to spot trends before they become problems.
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
How often should I monitor these metrics?
Monthly tracking is essential for all five metrics. But if you're facing challenges, check food cost weekly since it changes fastest. EBITDA calculations work better quarterly since some expenses don't occur monthly.
What does negative EBITDA actually mean?
You're bleeding money at the operational level before even paying loans or taxes. Check your three biggest costs immediately: food, labor, and rent. Usually food cost is the culprit.
Should I include my owner salary in labor costs?
Absolutely - use what you'd pay someone else to do your job. Many owners skip this step and think they're profitable when they're actually working for free.
Which metric should I focus on first?
EBITDA shows your overall health, but food cost delivers the quickest wins. Get food cost under control and you'll see immediate EBITDA improvement within weeks.
What if my revenue per square meter is below industry standards?
You're either underpricing, underutilizing your space, or in the wrong location. Consider table turnover rates, menu pricing, or layout changes to maximize every square meter.
Can I automate these calculations completely?
Food cost and check value can be automated with POS integration. EBITDA still requires your bookkeeping data, but you can build spreadsheet templates to speed up monthly calculations.
📚 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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