A mid-sized casual dining restaurant generating $480,000 annually typically spends $168,000 on overhead costs - that's 35% of total revenue. These expenses often surprise new restaurant owners because they consist of dozens of smaller line items that accumulate rapidly. You'll discover exactly which overhead costs to expect and proven methods to control them.
What exactly are overhead costs?
Overhead costs encompass all expenses beyond food cost and labor costs. This includes rent, utilities, insurance, administration, marketing and all other fixed and variable expenses required to operate your restaurant.
💡 Example overhead costs restaurant:
Restaurant with €50,000 monthly revenue:
- Rent: €6,000 (12%)
- Utilities: €2,500 (5%)
- Insurance: €800 (1.6%)
- Administration: €1,200 (2.4%)
- Marketing: €1,500 (3%)
- Maintenance: €1,000 (2%)
- Other costs: €4,000 (8%)
Total overhead: €17,000 (34% of revenue)
Average overhead percentages per cost item
Here are the typical percentages for main overhead costs in restaurants:
- Rent: 8-15% of revenue (varies by location)
- Utilities: 3-6% of revenue (gas, electricity, water)
- Insurance: 1-2% of revenue (liability, inventory, fire)
- Administration: 2-4% of revenue (accountant, software, phone)
- Marketing: 2-5% of revenue (website, social media, ads)
- Maintenance: 1-3% of revenue (equipment, interior, small repairs)
- Depreciation: 3-6% of revenue (inventory, renovations)
- Other costs: 5-10% of revenue (licenses, cleaning, miscellaneous expenses)
⚠️ Watch out:
Many entrepreneurs overlook small cost items like music licenses, waste disposal, small repairs and replacements. Together these can add up to 3-5% of your revenue.
Differences by restaurant type
Overhead costs vary significantly by restaurant type and location:
- Fine dining: 40-50% overhead (higher rent, more service, luxury interior)
- Casual dining: 35-45% overhead (average rent and equipment)
- Fast casual: 30-40% overhead (more efficient operation, less staff)
- Delivery only: 25-35% overhead (no restaurant rent, but packaging and platform fees)
💡 Example location difference:
Same restaurant concept in different locations:
- Amsterdam city center: 45% overhead (high rent)
- Suburb of mid-sized city: 35% overhead
- Industrial area: 28% overhead (low rent)
The difference is mainly in rent and parking costs for staff.
How do you keep overhead costs under control?
This approach prevents your overhead costs from spiraling out of control:
- Monthly check: Compare each cost item with the previous month and the same month last year
- Benchmark yourself: Verify if your percentages align with typical figures
- Negotiate annually: Insurance, utilities, phone - everything's negotiable
- Automate where possible: Digital receipts, online reservations, automatic temperature logging
- Bundle purchasing: Cleaning supplies, office supplies - larger orders = lower prices
💡 Example savings:
Restaurant with €600,000 annual revenue saves 2% overhead:
- From 40% to 38% overhead
- Savings: €12,000 per year
- That's €1,000 extra profit per month
Small percentages make a big difference on an annual basis.
Signs that your overhead is too high
Based on real restaurant P&L data from hundreds of establishments, watch for these warning signals:
- Overhead above 45%: Unless you're fine dining in an expensive location
- Rising trend: Overhead that increases every month
- Rent above 15%: Your location's probably too expensive for your concept
- Utilities above 6%: Possibly outdated equipment or poor insulation
- No overview: You don't know where the money's going
A system like KitchenNmbrs helps you track all your costs and automatically see which percentages deviate from the norm.
How do you calculate your overhead percentage? (step by step)
Collect all overhead costs from the past month
Add up all costs except food cost and labor costs. Think of rent, utilities, insurance, administration, marketing, maintenance and all small expenses. Don't miss any invoice.
Divide by your monthly revenue and multiply by 100
Use the formula: (Total overhead costs / Monthly revenue) × 100 = Overhead%. Calculate with revenue excluding VAT for a clear picture of your cost structure.
Compare with the benchmark of 35-45%
Above 45%? Then your overhead costs are running too high. Below 30%? Check if you're not missing any costs. Create an action plan for cost items that are too high.
✨ Pro tip
Track your rent-to-revenue ratio every 90 days - if it creeps above 12% for casual dining or 15% for fine dining, you need to boost sales or renegotiate immediately. Rent alone accounts for roughly one-third of total overhead costs.
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 healthy overhead percentage for my restaurant?
For most restaurants, a healthy overhead percentage falls between 35-45% of revenue. Fine dining can run higher (up to 50%) due to more expensive locations and equipment. Fast-casual operations often achieve 30-40%.
Should I include depreciation in my overhead costs?
Yes, depreciation on inventory and renovations belongs in overhead. It doesn't cost cash per month, but it does on an annual basis. Budget 3-6% of your revenue for depreciation.
How often should I check my overhead costs?
Check your overhead costs monthly. Compare with the previous month and the same period last year. This way you'll spot trends and can adjust quickly if costs are rising.
What if my rent is more than 15% of my revenue?
Then your location's probably too expensive for your concept. Negotiate the rent, increase your average check, or consider moving to a more affordable location. Some high-traffic areas might justify 16-18%, but anything beyond that's risky.
Do packaging costs belong to overhead or food cost?
Technically, packaging costs for takeaway and delivery belong in overhead, but many restaurants count them as food cost because they're directly tied to sales. Either approach works as long as you're consistent.
How much should I budget for equipment maintenance and repairs?
Budget 1-3% of revenue for maintenance and repairs. Older equipment requires more maintenance, while newer establishments might spend closer to 1%. Don't forget to include preventive maintenance contracts.
Can I reduce overhead costs without hurting service quality?
Absolutely. Focus on energy efficiency, negotiate supplier contracts annually, and automate administrative tasks. You can often cut 2-3% from overhead without affecting customer experience by being more strategic about spending.
📚 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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