Are you actually making money, or just keeping the lights on? Net profit reveals what's truly left after every single expense gets deducted from your revenue. Unlike gross profit, it factors in operating costs like rent, staff wages, and utilities—giving you the honest picture of your restaurant's profitability.
What exactly is net profit?
Net profit represents your revenue after subtracting every cost your restaurant incurs. It's the most accurate measure of profitability because it goes beyond food costs to include all your fixed and variable expenses.
? Example:
Restaurant with €50,000 monthly revenue:
- Revenue: €50,000
- Food cost (30%): €15,000
- Staff costs: €18,000
- Rent: €4,500
- Energy: €2,200
- Other costs: €3,800
Net profit: €6,500 (13%)
The difference with other profit figures
Gross profit = Revenue - Food cost
Operating profit = Gross profit - Operating costs
Net profit = Operating profit - All remaining costs (interest, depreciation, tax)
Most restaurant owners find operating profit and net profit nearly identical, since they don't carry substantial loans or major capital investments.
The formula for net profit
Net profit = Revenue - All costs
Breaking it down further:
Net profit = Revenue - (Food cost + Staff costs + Rent + Energy + Marketing + Insurance + Depreciation + Other costs)
⚠️ Watch out:
Entrepreneurs often overlook expenses like insurance premiums, accounting fees, software subscriptions, and small repairs. Track every business expense you actually pay.
What is a healthy net profit for restaurants?
Restaurant net profit typically ranges from 8% to 15% of revenue. Your concept determines where you'll land:
- Fine dining: 10-15% (premium pricing supports higher margins)
- Casual dining: 8-12% (balances volume with profitability)
- Fast casual: 6-10% (higher volume compensates for thinner margins)
- Delivery/takeaway: 5-8% (platform fees compress margins)
? Calculation example:
Bistro with €40,000 monthly revenue:
- Food cost: €12,000 (30%)
- Staff costs: €16,000 (40%)
- Rent + energy: €6,000 (15%)
- Other costs: €2,400 (6%)
Net profit: €3,600 (9% - healthy for a bistro)
Where things often go wrong
Many restaurant owners assume they're profitable because cash sits in their bank account. But that money might represent:
- VAT you'll remit to authorities
- Outstanding invoices (utilities, suppliers)
- Equipment depreciation
- Your unpaid salary
Net profit cuts through these illusions—it's the kind of thing you only learn after closing your first month at a loss. If your net profit dips below 5%, you're earning too little for the entrepreneurial risk you're shouldering.
How do you improve your net profit?
You can boost revenue or slash costs. Cost reduction typically delivers faster results:
- Optimize food cost: Every 1% improvement flows directly to net profit
- Minimize waste: Can boost annual profits by 2-5%
- Cut energy expenses: LED lighting, efficient equipment upgrades
- Smart staff scheduling: Avoid over- and understaffing
? Impact example:
Restaurant with €500,000 annual revenue and 8% net profit (€40,000):
If food cost drops from 32% to 30% (2 percentage points):
- Savings: 2% of €500,000 = €10,000
- New net profit: €50,000 (10%)
- Improvement: 25% more profit!
How do you calculate net profit? (step by step)
Gather your total monthly revenue
Add up all income: food, drinks, catering, events. Use revenue excluding VAT, because that's not yours. Check your POS system or accounting for exact figures.
Add up all costs
Literally add up everything you pay: food cost, staff costs, rent, energy, insurance, accountant, software, cleaning, repairs. Don't forget small amounts - they add up.
Subtract costs from revenue
Net profit = Revenue - All costs. Divide this by your revenue and multiply by 100 for the percentage. A healthy net profit is 8-15% for restaurants.
✨ Pro tip
Calculate your net profit every 10 days rather than waiting for monthly statements. This 3-week cycle catches margin erosion after just 2 busy weekends, giving you enough time to correct course before losses compound.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
Calculate it yourself?
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Frequently asked questions
What's the difference between gross and net profit?
Should I include my own salary in the costs?
What if my net profit is negative?
Does VAT count in the net profit calculation?
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
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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