How Much Do Restaurant Owners Make?

Stephanie Graham
July 21, 2021

If you’re asking yourself “how much do restaurant owners make?”, you’ve come to the right place. Whether you are a restaurant owner looking to find out how much you should be paying yourself or you are someone interested in becoming a restaurant owner in the future, we are here to educate you.

In this article we will cover how restaurant owners are paid, in what quantity, and get some tips from the experts on how to keep your costs low and head held high during your first year of restaurant ownership.


How are restaurant owners (and staff) paid?

Before we get to the big question of how much restaurant owners make, it is essential to understand how everyone within the restaurant ecosystem is paid as well. Generally speaking, the wages paid out in a restaurant are set up on an hourly or salary basis. Owners, managers, and chefs tend to be salaried, while most other positions in the restaurant, including both front-of-house and back-of-house, are paid hourly. While salaried positions might seem ideal, remember that it sometimes means you will get paid less on an hourly basis for the work you complete, especially as a restaurant owner.

That being said, when it comes to your hourly employee, you’ll want to consider tipped versus non-tipped employees, legal concerns, and the need for a competitive wage that helps you to fill your restaurant with quality employees. 


Do restaurant owners make good money?

Restaurant owner salaries can range due to several different factors, including offerings, amenities, location, and restaurant size. Can you get rich owning a restaurant? Undoubtedly. But while restaurant owners can receive hefty paychecks, it’s also important to remember that entering the world of restaurant ownership can be very risky, especially in the first few years. Here are some things to consider, and that will affect your potential paycheck, before you dive in headfirst.

Operational factors.

In drafting the business plan for your restaurant before ever opening the doors, you will need to address anticipated operational costs. Some of these costs might include:

  • Start-up expenses
  • Overhead operating costs
  • Training
  • Staff recruitment
  • Supplies
  • Equipment

Included in your overhead costs will be your salary as the restaurant owner. Since you are the owner of your restaurant, you are free to set this salary at any level you choose, but it’s more common for owners to take a percentage of profits to maintain their incentive for keeping the business running smoothly.

Location factors.

In addition to operational impacts on restaurant owner salaries, location factors can also determine how much you can make. A lot of the success of a restaurant has to do with its location. Owners of similar restaurants in different areas can have surprisingly different salaries.

How much do restaurant owners make?

Once you set aside all of the different cost factors impacting your salary as a restaurant owner, you can anticipate an average of about $60,000 in annual earnings. As you can imagine, this average is based on a pretty wide range. Restaurant owners in the United States typically earn anywhere from $29,000 to $153,000, depending on any of the factors mentioned above, however in this example we aren't considering what a franchise, or chain owner could make. Here are some other factors to consider that could affect take home pay.

Consider experience.

Another thing to consider is the level of experience as a restaurant owner. If you have been in the game for a while now, you likely better understand how to keep overhead costs lower. Typically, restaurant owners with ten years of experience make more money than those starting. Don’t be discouraged as a beginner, though, and remember that everyone starts somewhere.


Other similar ventures.

Maybe you’re interested in food and beverage, but restaurants just don’t seem like the right fit for you. Have you ever considered owning a candy shop? The salary of a candy shop owner ranges anywhere from the low end of $18,000, found in Hawaii, to the high end of $30,000 in California.

Studies show that candy shop owners make more money than small food store owners, including convenience and grocery stores. With an average of $24,000 in annual earnings, small food store owners fall $3,000 below the national average for candy shop owners.

Another venture to consider would be opening a gift shop that sells candy or treats. Gift shop owners, on average, earn $31,000 annually, or 14.8% more than candy shop owners.


Is opening a restaurant a good investment?

The restaurant industry is a notoriously tough one to be successful in from an investment standpoint. As a restaurant owner, the business will be under your control but you will be more at risk of failure.

Bringing restaurant investors on board will give you a financial cushion to work with, especially during the early crucial years. The downside is that you will lose total control of your business and your profit margins will be cut.

That being said, it is not an impossible feat to invest in a restaurant that is run profitably and makes a lot of money from the enterprise. Those who invest in restaurants and are successful are the ones who do not let anything deter their focus on the numbers, not just their dreams.

how much do restaurant owners get paid

What are ways to increase restaurant profits?

Owning a restaurant is a business venture which means your main goal is to increase your profits and maximize your return on investment.   Ways to increase profits could involve improving service, strategic food prices,

Here are 10 few tips on how to increase restaurant profits without additional costs:


Learn to upsell and cross-sell.

Upselling and cross-selling are critical tools for restaurant employees to use to help raise profit margins without raising prices.


Understand the menu.

Having your staff gain a proper understanding of your menu helps in their ability to sell products to your customers.


Learn customer names.

Whenever possible, everyone in the restaurant should be addressing customers by name. Building a personal relationship with customers is what keeps them coming back.


Follow customer patterns.

All people are creatures of habit, naturally, which means in restaurants you’ll begin seeing regulars. Get to know their patterns so you can work on customizing their experience each time.


Choose a ‘best dish’.

Have a ‘best dish’ section on the menu. That way, if customers don’t know what to order, there’s a quick recommendation readily available.


Create a vibe.

Dining in a restaurant should always be a relaxing experience for guests. Keep this idea in mind when designing your space and think carefully about lighting, seating, and all aspects of the experience.


Have great training.

Keeping your staff well trained will arm them with the tools needed to connect your restaurant to your customers with every interaction.


Feature dish.

Aside from having the restaurant’s best dish, feature some other dishes that have excellent profit margins.


Purchasing behavior.

All of the technology available today makes tracking customer purchasing behavior easier than ever. Use these tools to your advantage.

Use technology to streamline operations.

Using a workforce management solution that offers all in one HR, scheduling, time tracking, and payroll, plus POS integration will save you hours and thousands when managing your people at a restaurant.


Have fun!

Owning a restaurant is a business, but you have to remember to have fun.

Working in a restaurant can be extremely challenging, from line-level employees up through to owners. That’s not to say there isn’t fun to be had. Use your time wisely to interact in fun ways with your staff and promote them doing the same with their guests. Not only will it boost morale, but you’ll see that it can also boost sales and profits.

Is being a restaurant owner difficult?

Owning a restaurant comes with many perks, especially when you get to see your customers enjoying your product for the first time. While there are plenty of hurdles to overcome in setting up your restaurant, once your doors have opened it is just the beginning. Not surprisingly, maintaining a business, especially one in the food and beverage industry, comes with its challenges.

The first year of restaurant ownership can quickly become overwhelming, so it’s crucial to understand some of the challenges you might have to face and what you can do to overcome each of them.


how much do restaurant owners get paid

Here are 5 challenges restaurant owners face that could affect revenue.


Unanticipated costs.

While unexpected costs are a regular occurrence in the world of restaurants, as a new owner, you’ll find that a lot crop up in your first year. Machines malfunction, things break, and dishes shatter. Unfortunately, it all happens uncontrollably, which means the best thing you can do is be sure to have a rainy day fund saved up.

It’s recommended to have a reserve fund equivalent to approximately three months worth of operational costs. Although this might seem excessive, you’ll be surprised how quickly your expenses add up in your first year. Having a rainy day fund will help you cover the replacement cost of items in your restaurant, and any unanticipated marketing demands or high labor costs.

Unstable financial reporting.

It’s normal not to turn a profit in your first year as a restaurant owner. It is much more likely to start seeing a profit in your third to the fifth year of ownership in the industry. But that’s not necessarily true for everyone.

You might find that your finances show that you are turning over good revenue and anticipate its continued rise but you are still not making a profit. That’s normal too. As previously mentioned, with operational costs being so extraordinarily high in your first year, you can expect things to calm down in the years to come.

When it comes to managing your restaurant’s finances, make sure you are always looking into the long-term goals. Depreciation is very real, and general wear and tear will need to be accounted for.

Staffing concerns.

In the first three months of opening your restaurant, you’ll quickly find that your staffing is all over the place. You’ll be wildly understaffed or overstaffed, on a nearly daily basis. Responding to  this fluctuation requires understanding the demand of your market. Pay very close attention to your business demands during these three months as you fine-tune your staffing levels.

Thankfully, with today’s restaurant technology you can quickly and easily check reports and set up automations based on pas data directly through your workforce managment software. These tools will you manage your peoples labor, time, and information so you can turn a profit sooner than the projected three to five-year mark.


Concept readjusting.

You might have a flawless business design established in your head, but you won’t know if it works for your market, area, or restaurant until opening your doors. During your first year of being a restaurant owner, you will learn so much more than any sort of demographic data could have taught you, regardless of the countless hours you’ve spent analyzing them.

What’s the solution? Keep it simple. Really. You’ll want to keep your restaurant as simple as possible with things like a condensed menu and conservative hours of operation in the first year. The more simple a concept you begin with, the more you will be able to grow your business to meet the demands of your market. Your restaurant is much more likely to withstand the test of time by having the flexibility of readjusting your concept as needed.


Lifestyle changes.

Last but not least, as a first-year restaurant owner, you will immediately see changes in your lifestyle. Anyone familiar with the industry can anticipate the lack of social life, financial instability, and painfully long hours—but the list doesn’t stop there.

Suddenly, you’ll notice friends and family members coming out of the woodwork looking to get hookups in your restaurant. Be very careful! Do not forget you are running a business, after all, which has the primary goal of turning a profit.

Keep your head on straight with your goals always top of mind. Recognize your true friends and those who are just looking for freebies. Allow yourself to have fun. It’s your business.


Conclusion

The good things in life don’t come easy, and restaurants are no exception. As a restaurant owner, you can anticipate countless ups and downs in your day-to-day life, but the reward is always there, especially for those who are passionate about the industry. And it always helps when you have technology helping you run your restaurant.


As we’ve seen, when it comes to annual salaries, how much restaurant owners make is a question that covers a wide range depending on location, restaurant size, and even cuisine.  There is money to be made in restaurant ownership, but it will require patience.  Good luck! 

how much do restaurant owners make



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