Running a restaurant requires more than great food and good vibes—it takes sharp financial planning. With razor-thin margins and rising labor and food costs, even small oversights in budgeting can seriously eat into your profits.
According to the National Restaurant Association's 2025 State of the Industry report, restaurant profit margins average just 3–6%, making it more important than ever to understand your fixed and variable monthly expenses—and control what you can.
Here’s a detailed breakdown of the major monthly restaurant expenses you should be budgeting for in 2025, with up-to-date benchmarks to help you stay financially healthy
Labor Costs (28%–34% of Sales)
Labor continues to be the single largest controllable expense for restaurants.
This includes:
- Hourly wages (FOH and BOH)
- Manager salaries
- Payroll taxes
- Benefits (health, PTO, bonuses)
- Workers’ compensation
- Scheduling compliance costs (if applicable in your state)
2025 Benchmark:
💰 Target labor cost: 28–34% of revenue
💡 Operators in QSR and fast-casual aim to keep it closer to 28–30%
Tip: Tools like HigherMe help reduce labor costs by speeding up hiring, reducing no-shows, and helping you staff efficiently for volume by role and shift.
Cost of Goods Sold (COGS) (25%–35%)
COGS refers to the cost of your food, beverages, and packaging.
Includes:
- Food and ingredient purchases
- Alcohol and beverage costs
- Paper goods and disposables
- Waste and spoilage
2025 Benchmark:
- Food-forward QSRs and casual dining: 28–32%
- Pizza or beverage-heavy models (like Kona Ice): as low as 20–25%
- Tip: Monitor food cost variance weekly. A sudden spike can signal waste, theft, or supply chain issues.
Rent and Occupancy (6%–10%)
Monthly rent is typically a fixed expense but may be subject to CAM (common area maintenance), property tax contributions, or annual escalations.
2025 Benchmark:
- Urban locations: 8–10% of revenue
- Suburban/drive-thru-heavy models: 5–7%
Utilities (2%–4%)
Includes:
- Electricity
- Gas
- Water and sewer
- Internet and phone
- Waste disposal
Increased energy costs and year-round HVAC usage mean you should budget conservatively.
2025 Benchmark: 2–4% of revenue
Marketing & Advertising (1%–4%)
Includes:
- Digital advertising (Google, Instagram, TikTok)
- Print flyers, local sponsorships
- Loyalty programs and CRM tools
- Promotions and discounts
New restaurants or locations may spend more initially to drive awareness.
2025 Benchmark:
- Established locations: 1–2%
- New/opening: up to 4–5%
Repairs & Maintenance (1%–3%)
Includes:
- Equipment repairs
- HVAC maintenance
- Hood cleaning
- Pest control
- IT and POS servicing
Preventative maintenance saves thousands in emergency costs.
2025 Benchmark: 1–3% of revenue
Technology & Software Subscriptions (1%–3%)
Includes:
- Point-of-sale (POS) systems
- Scheduling and payroll software
- Online ordering platforms
- Applicant tracking systems (ATS) like HigherMe
- Accounting or inventory software
Tip: Choose tools that integrate well and save you time—reducing overhead and human error.
Insurance (Fixed Monthly Premiums)
Includes:
- General liability
- Workers' comp
- Property and equipment insurance
- Business interruption coverage
- Commercial auto (if you do delivery)
Premiums vary based on location, number of employees, and coverage limits.
Licenses, Permits & Professional Services
May include:
- Health permits
- Alcohol licenses
- Accountant/legal fees
- Payroll processing
These are often annual costs but should be amortized into your monthly budget.
Loan Payments or Lease Financing
If you took out a loan to open or renovate your restaurant, factor in principal and interest payments here. Same goes for equipment leases.
|
Expense Category
|
% of Revenue (Target)
|
|
Labor
|
28–34%
|
|
Cost of Goods Sold (COGS)
|
25–35%
|
|
Rent & Occupancy
|
6–10%
|
|
Utilities
|
2–4%
|
|
Marketing & Advertising
|
1–4%
|
|
Repairs & Maintenance
|
1–3%
|
|
Tech & Subscriptions
|
1–3%
|
|
Insurance & Permits
|
Varies (Fixed)
|
|
Loan or Lease Payments
|
Varies (Fixed)
|
|
Total
|
~75–90% of Revenue
|
How HigherMe Can Help
While we can’t lower your rent, we can help you optimize the most volatile and expensive category on this list: labor.
HigherMe helps restaurant owners:
- Hire faster (get to qualified candidates before your competition)
- Reduce turnover by better matching candidates to the role
- Decrease interview no-shows through automated reminders
- Improve job ad performance with compliant, localized templates
- Save hours per week with centralized applicant tracking
In an industry where every point of margin matters, getting the right team in place—quickly—is one of the smartest moves you can make.
👉 Want to improve your labor ROI?
Email sales@higherme.com or book a demo today.
