What is a good gross profit margin for a restaurant?
A good gross profit margin for a restaurant is typically 65–70% on food — meaning food costs should sit between 30% and 35% of the selling price (excluding VAT). Fine dining often runs closer to 60–65% GP due to premium ingredients, while cafés, bakeries and grab-and-go operations can achieve 70–75%. Beverages generally run higher: 70–80% GP on coffee and soft drinks, and 65–75% on alcohol.
If your kitchen's overall food GP is below 65%, it usually points to one of four problems: inaccurate recipe costing, portion drift, supplier price increases that never made it into your menu prices, or waste.
How to calculate gross profit margin
Example: a dish sells for €14.50 including 13.5% VAT. Ex-VAT price is €12.78. If the ingredients cost €4.10, GP is (12.78 − 4.10) ÷ 12.78 = 67.9% — a healthy margin.
Why margins slip without anyone noticing
Ingredient prices move constantly. In our own catering business (€3.5m turnover, 1,000 recipes), we found we were overspending €76,000 a year on ingredients — not through one big mistake, but through dozens of recipes whose costs had crept up while menu prices stood still. A recipe costed once in January can be 5–10% more expensive by June.
That's why the target isn't "cost your recipes" — it's "keep your recipes costed." Whether you use a spreadsheet (our free recipe costing template is a good start) or software like Prepsheets that updates every recipe automatically when supplier prices change, the kitchens that hold 65–70% GP are the ones that re-cost continuously, not annually.
Quick benchmarks
| Operation type | Typical food GP target |
|---|---|
| Fine dining | 60–65% |
| Casual dining / gastropub | 65–70% |
| Café / bakery | 70–75% |
| Catering / events | 65–72% |
| Grab-and-go retail | 70–75% |