15 Financial Projection Assumptions for Restaurants

July 8, 2022

Adam Hoeksema

If you are looking to secure a loan or investment in order to start your own restaurant, the potential lender or investor is likely to ask for financial projections.  In order to put together a realistic set of projections, you will need to base your assumptions on industry standards.  We did the research for you and pulled together 15 key financial projection assumptions for restaurants that will help you fill out your restaurant financial projections spreadsheet

Restaurant Revenue Projection Assumptions

Let’s start with key assumptions for your restaurant revenue projections. 

1.      How many seats does the typical restaurant have?

 

According to Maxsun the typical fine dining restaurant should have 12 to 20 square feet per customer.  A fast casual restaurant should have 11 to 14 square feet per customer.  

According to this answer from Quora:

  • A small restaurant has 8 to 20 tables accommodating 2 to 4 people.  This gives a small restaurant a maximum capacity of 80 seats. 
  • A medium sized restaurant typically has from 15 to 35 tables with 2 to 6 seats per table.  A medium sized restaurant would have a maximum capacity of roughly 120 seats.
  • A large restaurant could have 40+ tables with a capacity of several hundred seats. 

2.      How many times can you turn a table per meal?

According to GloriaFood, for most sit down restaurants, you can turn a table 3 times at most during dinner hours.  This assumes dinner hours from 5 PM to 10 PM with an average table turnover time of 90 minutes. 

3.      How many fast food orders can you take per Point of Sale Terminal per hour?

For a fast food or fast casual restaurant, one of the major bottlenecks can be how fast you can take an order.  To give you some idea of how many orders per hour per point of sale terminal, we looked to a study from QSR Magazine that estimated that customers spend 4.5 minutes in the average drive through.  So if you only have 1 point of sale terminal taking orders in your restaurant or food truck you can assume that you will only be able to take roughly 20 orders per hour if you can get the order and payment down to a 3 minute process. 

4.      How many orders per hour can a typical drive-through handle?

According to FESmag, it takes the typical customer 45 to 75 seconds to place an order in a drive-through.  This means that at best, if there are no delays down the line, a drive-through can handle 48 to 80 orders per hour.  

5.      How often do Americans eat out per month?

One key assumption when working on financial projections for your restaurant is how often will your “regulars” visit the restaurant.  According to a survey of 1,000 Americans, 56% say they dine out at a restaurant, get take out, or have a meal delivered 2 to 3 times per week.  This should give you some from of reference when you are projecting how often your customers might visit your restaurant each month.  

6.      How much do Americans spend at restaurants per month?

According to a Bureau of Labor Statistics poll, the average American household spends $198 per month on food prepared away from home.  Households spent roughly ⅓ of their total food budget at restaurants, take out or delivery.  

7.      How do new restaurants acquire customers?

One growing way to attract new customers is to ensure that your Google Business Profile is up to date and active.  That way when customers search for “Restaurants Near Me” on Google you have an opportunity to show up.  In the image below you can see the growing search volume trends of customers Googling “Restaurants Near Me”

From just over 16 million monthly search in the summer of 2018 to over 30 million search by June of 2022:

search volume trends of customers Googling “Restaurants Near Me”

We also put together a detailed article on 14 ways to get more customers at your restaurant.

8.      How much does a typical restaurant generate in monthly revenue?

It is impossible to say exactly how much revenue a restaurant should generate per month, but TouchBistro provides a great rule of thumb.  Restaurants need to generate roughly $150 to $250 per square foot per year in sales in order to breakeven. 

If you have a 3,000 square foot restaurant, you will want to generate roughly $600,000 per year in sales ($200 per square foot) to have a good chance of breaking even. 

9.      What percentage of restaurant revenue is typically carry out, delivery or drive through? 

According to Statista, before COVID, the average full service restaurant had 17% of total sales as carry out. That number increased to 38% in 2020 during the height of the pandemic. As you plan your restaurant, you might assume that carry out could be higher than the pre-pandemic levels as consumer behavior has changed.

Restaurant Expense Projection Assumptions

Next, let’s look at some assumptions related to restaurant expenses. 

10. How many tables can one server handle? 

According to Qwick the average server can manage roughly 4 tables at once.  We have seen reports of servers handling up to 8 tables at once, but a more sustainable approach seems to be in the 4 tables per server range. 

11. How many orders can 1 cook support per hour? 

This will depend on the complexity of your restaurant’s menu, but according to Qwick, the average restaurant will need roughly 4 cooks per 50 tables.  

12. What is the average food cost as a percentage of revenue for a restaurant? 

According to Lightspeed, the average food cost for a restaurant is between 28 and 35% of revenue.

13.  What is the average labor cost as a percentage of revenue for a restaurant?  

According to Upserve, most restaurants aim to keep labor costs between 20 to 30% of revenue.  For a fast casual restaurant you might be toward the lower end of the range; whereas, a fine dining restaurant may be 30% or more for labor cost due to the higher level of service expected. 

Restaurant Projected Profit Assumptions

Finally, let’s look at some expected profitability assumptions for your restaurant.  

14. What is the average profit margin for a restaurant? 

According to Toast, restaurant profit margins usually fall between 3 and 5 percent, but could reach as high as 15%.  If you have used one of our restaurant financial projection templates and have a projected profit margin of greater than 15% you might want to take a second look at your numbers and make sure you aren’t being overly optimistic.  

15.  How long does it take for a restaurant to breakeven? 

It is ok if your restaurant or bar doesn’t breakeven in the first year, but according to BinWise you should expect to reach a break even point in year 2 or 3. 

If you need any help developing your restaurant financial projections, please do not hesitate to contact us, we would be happy to help! 

 

About the Author

Adam is the Co-founder of ProjectionHub which helps entrepreneurs create financial projections for potential investors, lenders and internal business planning. Since 2012, over 50,000 entrepreneurs from around the world have used ProjectionHub to help create financial projections.

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