Sarah's Italian bistro generated €45,000 last month, but she only paid herself €800. Smart move or overly cautious? Many restaurant owners struggle with this exact dilemma. The key lies in understanding what you can truly afford without jeopardizing your business.
Why you can't just take whatever's left
Many restaurant owners think: "Whatever's left at the end of the month is for me." But that's dangerous. Your restaurant always needs money for:
- Unexpected repairs (broken cooling, broken oven)
- Seasonal fluctuations (quiet months)
- Tax bills (VAT, corporate tax)
- Investments (new equipment, renovations)
⚠️ Heads up:
If you pay yourself too much and a big unexpected expense comes up, you can get into trouble. Always make sure you have a buffer.
The formula for a safe salary
You calculate a safe salary like this:
Payable salary = Net profit - Buffer - Taxes - Loan repayments
Let's break down each component:
Calculate your net profit
Your net profit is what remains after all operational expenses:
- Revenue (everything coming in)
- Minus: Cost of ingredients
- Minus: Staff costs
- Minus: Rent and fixed costs
- Minus: Other costs
💡 Example:
Restaurant with €40,000 revenue per month:
- Revenue: €40,000
- Ingredients: €12,000 (30%)
- Staff: €14,000 (35%)
- Rent and costs: €6,000 (15%)
- Other costs: €4,000 (10%)
Net profit: €4,000 per month
Set up a buffer
Always reserve at least 20-30% of your net profit as a safety net. This covers unexpected expenses and slower periods.
💡 Example buffer:
With €4,000 net profit per month:
- Buffer 25%: €1,000 per month
- Remaining: €3,000
Reserve for taxes
Personal income tax hits hard. Set aside 30-40% for taxes, depending on your bracket and location.
Include loan repayments
Business loan payments come from profit, not your personal salary. Factor these in first.
💡 Complete calculation:
Restaurant with €4,000 net profit:
- Net profit: €4,000
- Buffer (25%): €1,000
- Loan repayments: €500
- Available for salary: €2,500
- Tax reserve (35%): €875
Safe to pay yourself: €1,625 per month
Different payment methods
You've got several options for compensating yourself:
As an employee on payroll
Fixed salary through regular payroll. Provides security and pension benefits, but comes with higher employer contribution costs.
As a DGA (director-major shareholder)
For BV owners, DGA salary often proves more tax-efficient than standard employment wages.
Pay out dividends
BV structures allow dividend distributions with different tax implications than salary payments.
⚠️ Heads up:
Tax regulations shift frequently and vary by situation. Consult an accountant for personalized guidance.
Signs you're paying yourself too much
Based on real restaurant P&L data, these red flags appear consistently:
- Your account regularly runs negative
- Supplier payments get delayed
- Equipment repairs get postponed
- Tax bills require emergency borrowing
- Inventory shortages during peak seasons
Tracking your numbers
You need accurate profit tracking to make smart salary decisions. Monitor your food costs, labor expenses, and overhead monthly. Tools like food cost calculators help you see exactly what's left for owner compensation.
How do you calculate your payable salary? (step by step)
Calculate your actual net profit
Add up all income and subtract all costs: ingredients, staff, rent, other expenses. What's left is your net profit. Do this over at least 3 months for a realistic average.
Reserve 25% as a buffer
Subtract 25% of your net profit and set it aside in a savings account. This is for unexpected expenses, repairs and quiet periods. Don't touch this buffer for your salary.
Deduct loan repayments and taxes
Deduct any loan repayments from the remaining amount. Then reserve 30-40% for taxes. What's left you can safely pay yourself without putting your business at risk.
✨ Pro tip
Start with just 40% of your calculated safe salary for the first 90 days. This conservative approach protects against calculation errors and unexpected costs during your adjustment period.
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 percentage of revenue can I pay myself?
There's no universal percentage since it depends entirely on your profit margins. Most successful restaurants achieve 8-15% net profit, and you can safely take about half after buffers and taxes.
What if my restaurant is making a loss?
Zero salary during loss periods. You'll likely need to inject personal funds to keep operations running. Focus on achieving profitability through cost reduction or revenue growth first.
Can I pay myself more in good months?
Possible, but risky given seasonal fluctuations in hospitality. Better to calculate based on your slowest months and save excess profits for reinvestment.
How often should I recalculate my salary?
Review quarterly at minimum. Adjust immediately after major cost changes, seasonal shifts, or significant investments that impact your profit structure.
What if I have a BV instead of a sole proprietorship?
BV structures offer DGA salary options or dividend distributions, each with different tax treatments. The profit calculation remains identical, but consult an accountant for optimal structuring.
Should I prioritize paying myself over building cash reserves?
Cash reserves come first, especially in your first two years. Aim for 3-6 months of operating expenses in reserve before increasing your salary significantly.
📚 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.
Start your restaurant with the right numbers
A business plan without food cost calculation is a gamble. KitchenNmbrs lets you calculate recipes before you open. Start well-prepared. Try it free.
Start free trial →