How much do restaurant owners make cafe

How Much Do Restaurant Owners Make?

Dahlia SnaidermanAuthor

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You’ve heard it a million times: no two restaurants are the same. 

Some restaurants are family-owned and serve homestyle dishes and takeout to members of their community. Others have hundreds of tables and serve seafood and steaks to tourists and businesspeople in bustling downtown areas and through online ordering. Many fall somewhere in the middle. You can imagine that the books and functionality look drastically different in each case. 

In the restaurant industry, an owner’s salary depends entirely on two huge factors: how much it costs to do business, and how much product the business sells. Basically, your salary will always be tied to your new restaurant startup’s profit margin. If, at first, the business is running on fumes and accruing debt, you won’t be bringing home any money. 

Key Takeaways

  • Restaurant Owner Salaries Vary Widely: Owners can earn between $24,000 and $155,000 annually, influenced by location, business size, and profit margins.

  • Profit Determines Pay: Most owners take less than 50% of net profits as salary, with the rest reinvested in the business or used to pay debts.

  • Pay Structure Matters: Your salary depends on business structure (e.g., sole proprietorship vs. S Corp), with tax rules impacting how income is distributed.

  • Earnings Fluctuate Seasonally: Expect lower pay during slow months and higher during peak seasons, with planning key to smoothing income.

  • Employee Retention is Crucial: Turnover and burnout can hurt profits, so keeping staff happy reduces replacement costs and improves team stability.

  • Owners May Earn Less Than Staff Initially: High labor costs and reinvestment mean servers may out-earn owners during the early years.

  • Time Off Impacts Revenue: Closing for holidays or staff breaks supports morale but cuts into earnings.

  • Preparation is Essential: Use tools like POS systems and financial calculators to monitor profits and ensure long-term success.

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The question is further complicated by the fact that when you’re your own boss, it’s on you to decide how much you make, so we’ll get into all that. 

But first, let’s look at some salary ranges. 

How Much Do Restaurant Owners Make?

On average, restaurant business owners make anywhere between $24,000 a year and $155,000 a year. Yup, that’s a massive range.

How’d we get those numbers? 

  • Payscale.com says restaurateurs make anywhere from $41,000 a year to $150,000. They also estimate that the national average is around $88,000 a year.

  • Indeed.com estimates an average range of $88,500 per year.

  • Finally, ZipRecruiter.com gives a much broader range, with an average of $97,173, with the low end being around $19,500 per year, and the top 2% making around $333,000 per year.

A great way to determine how much you should get paid is to ask your peers. Though frank discussions of money are still fairly taboo, it’s worth asking fellow  restaurant entrepreneurs what they take home each year to get an idea of what range you’ll be looking at (considering your area and type of restaurant). If you don’t have access to these entrepreneurs in your local area, consider using social media and leveraging podcasts to increase your network.

The big question: If you’re the boss, how do you decide how much you get paid?

According to PayStub.org, here's a good rule of thumb: In most profitable small businesses, an owner takes less than 50% of the profits as a salary. The other 50% typically goes towards paying back debts or investors, or paying for non-essential upgrades in restaurant marketing, staffing, or equipment that will help scale the business.

To calculate how much you’ll be making, you need to know your profit margin. You can calculate it easily with our free Profit & Loss calculator. Be sure that when calculating your salary, you work off of your net profits, not your gross revenue. You need to be sure that your salary is being calculated based on the money that’s left over after you’ve paid all your overhead and restaurant operations. 

It’s also important to take into consideration the question of multiple independent restaurant owners. There’s only one pool of profit, and if you have a business partner, you’ll have to determine fair salaries for both of you from that one pool.

According to Rewards Network, different business structures also have different tax rules. Whether you’re operating under a sole proprietorship, a partnership, an LLC, or an S or C corporation, consult an accountant to make sure you’re following the rules. Rewards Network put it like this:

“For example, if you are a sole proprietor, you can pay yourself as you like, where the profits of your company are seen as the same as your income, and therefore, taxed similar to that of a regular employee. One suggestion is to pay yourself (as owner) a salary on a regular basis. This can also help you to get a clear picture on what it costs to operate the business and what you will be able to retain as personal income.

On the other hand, if you’ve structured your company as an S Corporation, you pay yourself a salary while also deducting normal payroll taxes like FICA and federal taxes. Any remaining profits to the company can be distributed as draws or distributions and are taxed at a lower rate than your salary/income. The S Corp model helps to avoid double taxation: once at the corporate level and once at the individual level. Unlike a sole proprietorship, the profits are not seen as personal income. Rather, they accrue to the corporation and a corporate income tax return must be filed annually. Any pay you receive is seen as personal income, of course.”

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Your salary will vary month to month.

Say goodbye to predictable, unchanging paychecks year-round – you should expect to take home less during slow months, and much more during high season. 

Seasons and weather have a huge impact on business, and there’s no getting around that, but if you use customer data from previous weeks, months, and years to predict how well the restaurant will do at any given time, you can plan your financial life more effectively despite the unevenness. 

You can also make sure your profit margin percentage doesn’t take too much of a hit in slow periods by using the same data to put smart scheduling practices in place, and to ensure your inventory management and purchasing is in line with checklists showing how much of your food menu items you’ll likely sell. 

Another factor that will contribute to variance in your take-home pay is unpredictable, uncontrollable costs like broken equipment. 

Finally, turnover isn’t just frustrating – it’s expensive, too. The cost of losing and replacing an employee can be up to $5,864, according to a study by Cornell’s School of Hotel Administration. Keeping your employees happy and on your team is crucial if you don’t want your profits – and your paycheck – to take a hit. 

Taking personal time will always be costly.

One of the toughest decisions in the restaurant business is knowing when to give your whole staff the day off and close your doors. It’s important to give your staff time off in order to help them maintain good work-life balance, which will in turn help you keep them on staff for longer – but closing your restaurant’s doors is extremely costly even for a day. 

The restaurant industry is one of the top spots where staff experience mental health issues. In fact, it’s right behind personal care positions regarding the number of employees who experience depression. A survey by Paychex revealed that over 80% of employees in the hospitality industry, including food services, feel burned out by their workload. Our sector was followed by manufacturing, which came in at over 77%.

Marisa Upson
Writer for Emerging Insights

Some restaurants choose to close for a few weeks during January or March, both typically slow months in the food service industry, to let the whole staff breathe and take time for family time or vacations. Others only close on major holidays like Christmas – and some restaurants are open 24/7/365. 

You may be the boss, but you might not have the biggest paycheck.

Opening a restaurant is in no way an effective get-rich-quick path: in fact, for a long time, you may not even have the biggest paycheck in the restaurant. 

Especially starting out, your waitstaff may be making more than you because of tips – and it’s in your best interest to be ok with that. Because of the high labor costs of starting a restaurant, and the many expenses that will eat into your net profits in the first couple of years, your servers may be seeing more consistent money than you are.

If you run on an open-book restaurant management model, though, your staff will see that you’re not hoarding money that you could be sharing with your workers, and this will lead to more trust of you as a boss and across the team. 

Still ready to take the plunge?

Don’t open a restaurant without arming yourself with the right tools to keep track of all your finances. Your POS systems should help you with compiling the analytics and reports needed to stay above water and eventually get to a place where you can take home a healthy paycheck as a successful restaurant owner

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