How Much Do Chinese Restaurants Make?

How Much Do Chinese Restaurants Make? (Chinese Restaurant Profit Margin)

Asian food is incredibly popular all across the United States. In fact, Pew Research Center reports that 12% of all restaurants in the country serve Asian food. 

Pew also finds that Chinese food is by far the most popular type of Asian cuisine, accounting for 39% of all Asian restaurants nationwide. Additionally, their research shows there are Chinese restaurants in every state, and in 70% of all counties.

Given this widespread popularity, opening a Chinese dining establishment could be a lucrative venture. However, the market is also highly competitive. To be successful, it’s crucial that you optimize every financial aspect of your business.

That’s why, in this article, we’ll explore typical Chinese restaurant revenue, expenses, and profit expectations. By the end, you’ll have a better understanding of how to drive more sales, control costs, and maximize profit margins to ensure the long-term success of your business.

Key takeaways

• Running a profitable Chinese restaurant requires you to minimize costs while maximizing revenue.

• Some of the most significant expenses for Chinese restaurants to manage are food costs, labor costs, and operational costs.

• Key strategies for boosting Chinese restaurant revenue include refining your marketing, integrating technology, increasing average order values, and improving customer retention and frequency.

• Using a robust point-of-sale system, like Toast, can help you streamline your operations and provide a better customer experience in one easy-to-use platform.

Are Chinese restaurants profitable?

Chinese restaurants can certainly be profitable. However, the degree of profitability depends on several factors, including:

• Location

• Management practices

• Market conditions 

Generally, Chinese restaurants that maintain high customer volumes and effectively manage their costs are profitable. However, the level of profitability can vary widely based on the type of restaurant:

• Quick-Service or Takeout Chinese Restaurants: Tend to be profitable due to their low overhead costs and high turnover. However, they often operate with thinner profit margins due to intense competition.

• Casual Dining and Buffet-Style Chinese Restaurants: Can be profitable if they manage to balance higher operational costs with consistent customer traffic and efficient operations.

• Fine Dining Chinese Restaurants: Typically enjoy higher profit margins, but they also face greater risks due to higher costs associated with premium ingredients, skilled labor, and maintaining an upscale ambiance.

How Much Revenue Do Chinese Restaurants Make?

The type of establishment you run is one of the most significant factors influencing your revenue and profit potential.

So, to give you a better idea of what you can expect, we break down revenue and profit expectations for four different types of Chinese restaurants below.

Quick-service or takeout Chinese restaurants

Quick-service and takeout Chinese restaurants focus on fast service and high turnover. Establishments located in busy urban areas or near office spaces can achieve especially high revenues.

According to IBIS World, the Chinese takeout industry has grown 4.7% each year over the last five years. They also expect the industry to generate $27 billion in revenue in 2024, with a total of 24,692 total restaurants.

Given this data, the average revenue expectation for each restaurant is over $1 million per year, or about $91,000 per month. However, since this is an average, your revenue could be significantly higher or lower.

While quick-service Chinese restaurants typically have lower overhead costs compared to other types of Chinese food establishments, they also face intense competition. This means they tend to have somewhat modest profit margins.

According to FinModelsLab, profit margins generally fall between 10% and 15%. This means that, for a restaurant earning $91,000 each month in revenue, they can expect to make between $9,100 and $13,650 per month, or between $100,000 and $150,000 per year, in net profits.

Just bear in mind that the efficiency of your operations and the strength of your delivery sales can have a big impact on your revenue and profit potential.

Casual dining Chinese restaurants

Casual dining Chinese restaurants offer a sit-down experience and generally feature a more extensive menu than takeout establishments. Additionally, they typically generate more revenue than quick-service restaurants due to higher menu prices and the potential for alcohol sales. 

While we couldn’t find any revenue data specifically for Chinese casual dining establishments, we can make some inferences based on similar restaurants.

For example, Statista reports that Miller’s Ale House, a popular casual dining chain, generated $457 million in 2021. At the end of that year, they had 95 different locations, meaning each location made an average of $4.8 million that year, or over $400,000 per month, in revenue.

Meanwhile, Olive Garden generated $4 billion in revenue in 2021 with 875 total locations. This means each restaurant also made an average of almost $4.8 million that year, nearly the same as Miller’s Ale House.

While your casual dining Chinese establishment may not have the same brand recognition as the chains above, it’s reasonable to expect that your casual dining Chinese establishment could drive $300,000 to $400,000 or more in revenue each month.

The average profit margin for a casual dining restaurant typically falls between 3% and 9%. So, if you make $400,000 per month in revenue, you could earn between $12,000 and $36,000 per month, or between $144,000 and $432,000 per year, in net profits.

Remember though, while casual dining establishments may have higher revenue potential, they also face higher labor and operational costs. This is why the expected profit margins tend to be a bit lower compared to takeaway restaurants.

Buffet-style Chinese restaurants

Buffet-style Chinese restaurants offer all-you-can-eat food for one set price. According to a study by The Hustle, the average buffet price is $20. 

However, these types of establishments operate on thin margins, typically earning a 5% profit. This means that, on average, they only make $1 for each customer.

So, to make this business model work, buffets rely on high volumes of customers. In the study from The Hustle, Joe Ericsson, managing partner at food consultancy business Restaurant Owner, said:

“At a typical restaurant, a cook can service 25 customers per hour — and that’s at best… In the same amount of time, a single buffet cook might be able to prep enough food for 200 people.”

So, if a buffet restaurant serves 200 people per hour for five hours a day, it could generate $4,000 per day, $112,000 per month, and over $1.3 million per year in total revenue.

Since the average profit margin is just 5%, this means the restaurant would make $5,600 per month, or over $67,000 per year, in net profits.

Fine dining Chinese restaurants

Lastly, fine dining Chinese restaurants focus on providing a premium dining experience with high-quality service and ambiance. Additionally, they’re usually located in affluent areas and have more expensive menus, meaning they can generate high levels of revenue.

According to IBIS World, the fine dining industry is expected to drive $16.7 billion in revenue in 2024. With a total of 4,688 businesses in the United States, this means the average fine dining restaurant earns more than $3.5 million in revenue each year.

The average profit margin for fine dining establishments was just 5% to 10%. This is due to unique expenses these businesses face, such as:

• Premium, high-quality ingredients

• Skilled labor

• Maintaining an upscale environment

Given these profit margins, if a fine dining Chinese restaurant generates $3.5 million in annual revenue, it can expect to make between $175,000 and $350,000 per year in net profits.

How to optimize Chinese restaurant costs

One of the two key aspects of improving your Chinese restaurant’s profitability is optimizing costs. So, below we discuss some essential strategies for minimizing expenses so you can increase your profit margins.

Food costs

Regardless of the type of Chinese restaurant you operate, cost of goods sold (COGS) will likely be one of your biggest expenses. This includes the ingredients and materials needed to prepare the food. The difference between these costs and the sales price determines your gross profit margin.

However, the gross profit margin you should aim for will depend on the type of establishment you run. 

For example, Orderly reports that successful fine dining restaurants typically have a gross profit margin of about 65% to 70% because they use premium ingredients. Meanwhile, Orderly suggests that quick-service Chinese restaurants should aim for a gross profit margin in the 70% to 75% range.

Fortunately, there are several strategies you can implement to lower your COGS, such as:

• Menu Engineering: Identify high-margin items and promote them on the menu. Regularly review the menu to remove low-performing or low-margin dishes.

• Portion Control: Implement strict portion control measures to reduce food waste and ensure consistent serving sizes.

• Supplier Negotiation: Negotiate better deals with suppliers or explore alternative vendors for high-quality ingredients at lower costs.

• Dynamic Pricing: Adjust menu prices based on demand, cost fluctuations, and competitive analysis. 

Ultimately, looking for ways to lower your food costs and improve your gross profit margins is one of the best ways to increase overall profitability.

Labor costs

Labor costs are also likely to be one of your most significant expenses when running a Chinese restaurant. Like food costs, ideal labor cost percentages will also depend on the type of establishment you operate.

For instance, Restaurant 365 reports that:

• Quick-service and takeout restaurants should aim for a labor cost percentage of 25% due to less specialized labor

• Casual dining establishments should aim for a labor cost percentage of between 25% and 30%

• Fine dining restaurants should aim for a labor cost percentage of 30% to 35% because of the need for premium-quality service

Whichever type of Chinese restaurant you run, consider optimizing your labor costs by using these tactics:

• Efficient Scheduling: Optimize staff scheduling to match customer traffic, ensuring you align labor costs with revenue.

• Cross-Training Staff: Train employees to perform multiple roles, allowing for greater flexibility and reducing the need for a larger workforce.

• Integrate Technology: Invest in technology like a robust POS system to streamline operations and reduce the need for excessive labor.

Just keep in mind that while it’s important to manage staffing expenses, it shouldn’t compromise the quality of your service.

Operational costs

One more important consideration for optimizing your Chinese restaurant’s expenses is reducing your operational costs. To accomplish this, think about using the following strategies:

• Energy Efficiency: Reduce utility costs by investing in energy-efficient kitchen equipment and lighting. Regular maintenance of equipment also helps prevent costly breakdowns.

• Waste Reduction: Implement practices to minimize waste, such as recycling programs and better inventory management to prevent spoilage.

• Lease Negotiation: If possible, negotiate better lease terms or consider relocating to a more cost-effective location without compromising foot traffic.

Lastly, consider using technology to streamline and simplify your operations in one easy-to-use platform. This can help you centralize all your key data, which will help you identify areas for cost control and improving overall operational efficiency.

How to increase Chinese restaurant revenue

While cost control is crucial to maximizing your Chinese restaurant’s profitability, so is boosting revenue. Below we discuss key strategies for increasing sales and driving business growth.

1. Refine your marketing strategies

Effective marketing is essential for standing out in a crowded market. By implementing strategies that resonate with your target customers, you can attract new patrons and increase customer retention.

While there are lots of marketing strategies you can use, be sure to consider these tactics:

• Highlight Signature Dishes: Use high-quality photos and videos of your most popular dishes, like Peking duck or Kung Pao chicken, in your social media posts and on your website. Additionally, think about sharing the story behind these dishes, such as explaining their cultural significance, to create a deeper connection with customers.

• Offer Exclusive Online Deals: Create online-only promotions, such as a 10% discount on orders placed through your website or app. Promote these deals on social media and through email marketing to drive online sales and build your customer database.

• Cultural Events and Celebrations: Host events around Chinese holidays, like Lunar New Year or the Mid-Autumn Festival. Offer special menus or discounts during these periods, and use these events to engage with the community and increase foot traffic.

• Collaborate with Local Influencers: Partner with local food bloggers or influencers to create content that highlights your restaurant. Invite them for a complimentary meal in exchange for a review or feature on their platforms to increase your visibility.

Ultimately, it’s best to focus your marketing efforts on the most profitable customer segments and use cost-effective digital marketing strategies. Once you have a good idea of what resonates most with your target audience, invest more in those strategies to increase your return on investment (ROI).

2. Improve productivity with technology

Adopting the right technology can help streamline your operations, allowing you to serve more customers efficiently and provide a better overall customer experience. A few great tools to help increase your Chinese restaurant revenue include:

• Mobile POS Systems: Implement mobile POS systems that allow servers to take orders and process payments tableside. This reduces wait times and increases table turnover, which is especially important during peak hours.

• Inventory Management Software: Set up alerts for low-stock items, especially those essential for popular dishes, to avoid running out during busy periods and maintain sales.

• Digital Reservation and Waitlist Management: Implement a digital reservation system that allows customers to book tables online and join a waitlist remotely. This helps manage customer flow and reduces no-shows, optimizing seating capacity.

• Automated Online Ordering: Integrate an automated online ordering system on your website that links directly to your kitchen’s order queue. This minimizes errors and ensures that you process both online and in-house orders smoothly.

Remember, using the latest technology is essential for boosting productivity, helping you stay ahead of the competition and meet evolving customer expectations..

3. Increase average order value (AOV)

Encouraging customers to spend more each time they visit your Chinese restaurant is another effective tactic for driving additional revenue.

However, this doesn’t mean you should arbitrarily raise prices. Instead, consider using these strategies to increase average order value:

• Upsell Specialty Items: Train your staff to recommend specialty items like house-made dumplings, seafood dishes, or traditional Chinese desserts. Ensure they’re knowledgeable about the dishes and can suggest pairings that enhance the dining experience.

• Value Engineering: Offer combo meals or set menus that bundle high-margin items with lower-cost options, increasing the average ticket size.

• Introduce Premium Ingredients: Offer premium versions of popular dishes using ingredients like lobster, abalone, or truffle oil. Consider promoting these items as limited-time offerings to create a sense of exclusivity and urgency.

• Beverage Pairing Menus: Create beverage pairings for your menu items, such as pairing spicy Sichuan dishes with cooling jasmine tea or recommending Chinese spirits like baijiu with traditional meals. These pairings can increase both food and drink sales.

• Dim Sum Combos and Family-Style Meals: Introduce combo meals or family-style dining options that include multiple dishes for a set price. This not only increases the average order size, but also encourages customers to try a variety of items from your menu.

Just keep in mind that the effectiveness of each strategy will highly depend on the type of Chinese restaurant you run, as well as your target demographics. For example, value engineering will likely be a useful tactic for quick-service restaurants, whereas upselling is probably better for fine dining establishments.

4. Boost customer frequency

Lastly, one more key way to increase your Chinese restaurant revenue is by increasing how often customers visit. To accomplish this, think about implementing the following ideas:

• Weekly Specials: Promote weekly specials that rotate different regional Chinese cuisines, such as Cantonese, Hunan, or Shandong dishes.

• Loyalty Programs: Implement a loyalty program that offers customers rewards, such as a free dim sum platter after a certain number of visits or a discount on Lunar New Year feasts.

• Personalized Customer Experience: Use your POS system to track regular customers' favorite dishes and offer personalized recommendations or discounts on their next visit. A personalized experience can make customers feel valued and more likely to return.

• Seasonal Menus and Exclusive Tastings: Introduce seasonal menus showcasing the best ingredients of each season, like a summer menu featuring fresh seafood or a winter menu with hearty, warming dishes. Host exclusive tasting events for loyal customers to sample these new items before they’re widely available.

Remember, building a loyal customer base and giving customers a reason to return regularly helps ensure consistent streams of revenue. Ultimately, this is essential for the long-term success of your restaurant. 

Increase your Chinese restaurant revenue, control costs, and maximize profits

While the expected revenue, costs, and profit margins can vary significantly based on the type of Chinese restaurant you run, one business principle applies to all of them–to maximize profits, you need to increase revenue while minimizing expenses.

Even though there’s a lot to manage, you can make everything much simpler by implementing the right strategies and tools.

For example, with Toast’s POS system you can streamline all of your operations, like inventory management, staff scheduling, and payment processing in one easy-to-use platform. Better yet, you can improve your customer experience with features like online ordering, loyalty programs, and third-party delivery integrations.

To discover all the ways Toast can help you run a better Chinese restaurant, be sure to check out all of the amazing features!