Running a restaurant is about way more than just putting out great food—it’s also about keeping the business side healthy.
One number that can tell you a lot about how you’re doing financially is Restaurant EBITDA—short for Earnings Before Interest, Taxes, Depreciation, and Amortization.
Sounds complicated, but the idea is simple: EBITDA shows how profitable your restaurant is before you take out things like loan payments, taxes, or equipment wear-and-tear.
So if you’re wondering whether a 10% EBITDA margin is “good”—you’re not alone. And the answer is… it depends.
Let’s break it down in plain English.
What Does a 10% EBITDA Margin Really Mean?
If your restaurant’s EBITDA margin is sitting at 10%, it means you’re profitable—you’re bringing in more than you’re spending on your day-to-day operations. That’s a great start.
But the real question is: is it enough?
Let’s say this upfront: 10% isn’t bad. It’s right on the line of what many would call “healthy.”
But it’s also kind of the minimum if you’re aiming to grow, weather ups and downs, or even think about expanding someday.
Here’s how the numbers generally shake out across different types of restaurants:
- Quick-Service Restaurants (QSRs): Usually hit 15–25% margins. Their lower labor costs and high volume help boost profits.
- Full-Service Restaurants: Land in the 10–15% range. More staff and longer customer interactions bump up costs.
- Fine Dining: Often sit between 5–10%, thanks to higher food and labor costs, plus premium ambiance.
So, if you’re at 10%, you’re holding your own—but there’s definitely room to improve.
What Impacts Restaurant EBITDA?
A lot goes into your EBITDA margin. Things like your restaurant’s location, your cost structure, and even national economic trends all play a part.
Some current trends shaping margins across the industry:
- Revenue is up: According to KPMG’s 2024 report, restaurant sales improved in 2023 thanks to lower inflation and better staffing. That’s great news—but it’s not the whole story.
- Customer traffic is still tricky: 44% of restaurants saw fewer guests year-over-year, while only 25% saw more.
- Consumer habits are shifting: Deloitte reports that people are dining in about as much as they did pre-pandemic, but takeout and delivery are more popular than ever.
- Operators are investing in operations: KPMG says over half of restaurants are reworking their back-office systems, especially accounting, financial planning, and HR.
Long story short: to stay competitive, restaurants need to stay nimble—not just in the kitchen, but behind the scenes too.
How to Calculate Restaurant EBITDA (Don’t Worry—It’s Simple)
If you’re not tracking your EBITDA yet, here’s a quick formula to use:
EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization
Let’s say your numbers look like this:
- Net income: $200,000
- Interest: $50,000
- Taxes: $30,000
- Depreciation & Amortization: $20,000
That gives you: $200,000 + $50,000 + $30,000 + $20,000 = $300,000 in EBITDA
Easy enough, right? Just keep in mind: EBITDA doesn’t account for everything. Big one-time expenses, debt payments, or capital investments still matter.
But it’s a great starting point for understanding your core profitability.
Want to skip the math? We’ve got a free, easy-to-use profit margin calculator you can try out. It takes the guesswork out and gives you a quick snapshot of your margins.
If You’re at 10%, What’s Next?
Let’s talk about what a 10% EBITDA margin actually means for your restaurant.
- You’re profitable. You’ve got a solid foundation.
- You might be tight on cash flow. A 10% margin doesn’t leave much wiggle room for surprises or investment.
- You’ve got room to grow. Even a small bump—say from 10% to 12%—can make a big difference in your ability to reinvest or scale.
How to Improve Your Restaurant EBITDA
There’s no one-size-fits-all solution, but improving your EBITDA often comes down to pulling the right levers—and knowing which levers to pull. That’s where working with an experienced accountant (like us at Vast) can make a huge difference.
We help restaurant owners dig into the details and figure out exactly where there’s room to improve. That could mean rethinking your labor model, renegotiating vendor contracts, or identifying places where costs have quietly crept up. We also help set smart benchmarks—like keeping rent at or below 8% of revenue—so you’re not flying blind.
The key is to get granular.
Instead of just asking, “How do I increase profit?” we break it down into:
- Are your food costs creeping too high?
- Are labor costs aligned with peak hours?
- Are marketing expenses actually driving traffic?
- Is your rent eating into margins?
If you want a quick way to see how these categories stack up, check out our free Restaurant Profit Margin Calculator. It’ll help you play with different numbers—like cutting marketing by 2% or trimming labor hours—to see how that affects your bottom line.
Final Thoughts: Don’t Stop at “Good Enough”
A 10% EBITDA margin means you’re on the right track—but if you want to grow, you’ll need to dig a little deeper.
That could mean optimizing costs, increasing efficiency, or just understanding your finances a bit better.
The restaurant industry is constantly changing. Staying on top of your numbers—and knowing what they actually mean—can help you make smarter decisions and build a business that lasts.
Not sure where to start? Try our free restaurant profit margin calculator to see where you stand and what’s possible.
Or go ahead and book a call with us. We’re always here to help. And if we can’t, we’ll steer you in the right direction.
Until next time!
