EBITDA shows your restaurant's real operational profit without the clutter of interest payments, taxes, and equipment depreciation. This number cuts straight to the heart of your business performance. You'll master the calculation and understand what those digits mean for your restaurant's future.
What exactly is EBITDA?
EBITDA stands for Earnings Before Interest, Taxes, Depreciation and Amortization. Think of it as your pure restaurant profit - just what you earn from feeding customers and running great service.
💡 Why EBITDA matters:
- Shows your actual operational strength
- Lets you compare fairly with other restaurants
- Banks scrutinize it for loan decisions
- Predicts how much cash you'll generate
The EBITDA formula for hospitality
The calculation couldn't be simpler:
EBITDA = Net revenue - Operating costs
But what counts as operating expenses? For restaurants, you include:
- Food cost: every ingredient and drink
- Labor costs: wages, payroll taxes, temp workers
- Rent and utilities: space, gas, water, electricity
- Other operating costs: cleaning, repairs, marketing, insurance
⚠️ Note:
EBITDA excludes: loan interest, taxes, equipment depreciation and amortization.
Step-by-step calculation
Grab your latest monthly numbers and follow these steps:
💡 Example restaurant - March 2024:
Bistro De Smulhoek, 40 seats, open 6 days
- Net revenue: €45,000
- Food cost: €13,500 (30%)
- Labor costs: €18,000 (40%)
- Rent + utilities: €4,500 (10%)
- Other costs: €2,250 (5%)
EBITDA: €45,000 - €38,250 = €6,750 (15%)
What's a good EBITDA for restaurants?
EBITDA percentages vary by restaurant style:
- Fine dining: 8-15% (higher labor costs)
- Casual dining: 12-18% (more efficient operations)
- Fast casual: 15-22% (lower labor costs)
- Café/bistro: 10-16% (depends on beverage mix)
⚠️ Note:
Negative EBITDA means operational losses. You can't even cover your loan payments.
Improving EBITDA: where to look
If your EBITDA disappoints, target these areas:
- Slash food cost: dropping from 32% to 28% adds 4 percentage points to EBITDA
- Smart scheduling: cut staff during slow periods
- Energy savings: typically 2-3% reduction possible
- Revenue per square meter: more customers or higher average checks
💡 Impact example:
Restaurant with €500,000 annual revenue:
- Food cost from 32% to 28% = €20,000 extra EBITDA
- Labor costs from 42% to 38% = €20,000 extra EBITDA
- Combined: €40,000 additional profit annually
EBITDA vs. other figures
From years of working in professional kitchens, I've watched owners obsess over EBITDA while missing other vital numbers. Compare it with:
- Net profit: what's left after every single expense
- Cash flow: real money coming in versus going out
- Break-even point: minimum revenue to avoid losses
EBITDA gives the clearest picture of operational performance. It shows if your business runs efficiently, no matter how it's financed.
How do you calculate EBITDA? (step by step)
Gather your revenue and cost data
Grab your latest monthly figures: net revenue, food cost, labor costs, rent, utilities and other operating costs. Make sure you have everything excluding VAT.
Add up all operating costs
Food cost + labor + rent + utilities + other costs = total operating costs. Leave out interest, taxes and depreciation.
Subtract operating costs from net revenue
EBITDA = Net revenue - Operating costs. Divide by revenue and multiply by 100 for the percentage. A healthy hospitality EBITDA is between 10-18%.
✨ Pro tip
Review your EBITDA every 10 days by tracking food cost percentages against your 28% target and labor hours versus revenue goals. A 2% food cost spike over 3 months can slash your annual EBITDA by €18,000 on typical restaurant volumes.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
Was this article helpful?
Frequently asked questions
What's the difference between EBITDA and net profit?
EBITDA measures profit before interest, taxes and depreciation. Net profit shows what actually remains after every expense. EBITDA reveals operational strength, while net profit shows your true bottom line.
Is an EBITDA of 10% good for a restaurant?
10% sits on the lower end but isn't catastrophic. Most healthy restaurants achieve 12-18% EBITDA. Anything below 8% creates serious cash flow and debt service problems.
Should I include depreciation in my EBITDA calculation?
Never include depreciation in EBITDA calculations. You're measuring pure operational profit without accounting items like equipment depreciation.
How often should I calculate my EBITDA?
Calculate EBITDA monthly at minimum. Smart operators track it weekly or daily by monitoring major cost categories. This gives you real-time insight into operational performance trends.
📚 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.
Calculate your break-even point in seconds
Food cost is just one part of the story. KitchenNmbrs also helps you structure labor costs and other expenses for a complete break-even overview. Start free.
Start free trial →