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The restaurant business is a dynamic and ever-changing environment. With so many types of restaurants to choose from, determining which ones are the most profitable can be challenging. Certain kinds of eateries, however, constantly rank first in terms of profitability.
From bars and grills to quick food chains and upscale casual eating places, these restaurants have discovered the optimal cost-revenue mix to optimize their earnings. In this article, we will look at the ten most profitable restaurant types and what makes them so profitable
Table of Contents
The U.S. Restaurant Industry in 2023
According to the National Restaurant Association, the US food service industry is forecast to reach $997 billion in sales in 2023, driven in part by higher menu prices. The industry workforce is projected to grow by 500,000 jobs. The restaurant and food service industry added 2.8 million jobs over the past 24 months, bringing the industry total to 15 million at the end of 2022.
In 2023, many operators plan to invest in equipment or technology to increase front- and back-of-the-house productivity. Off-premises-only locations are expected to grow in popularity, and 69% of adults like the option to dine outside.
What is the most profitable type of restaurant?
There are several factors that can contribute to the profitability of a restaurant business and including its location, food costs, marketing strategies, and customer satisfaction. For example, fine dining because of its higher menu prices and the upscale atmosphere generally has higher profit margins.
However, quick-service eateries, such as fast-food franchises and casual dining restaurants, have a larger customer base and reduced overall overhead expenses. Because of their relaxed ambiance and low costs, casual eating places typically have moderate profit margins and a large customer base.
Most Profitable Types of Restaurants
In the food industry, running a restaurant business can be a profitable business. While there are many different types of restaurants, some are more profitable than others. Here are the ten most profitable types of restaurants:
Quick Service Restaurants
Quick service restaurants (QSRs), also referred to as Fast food restaurants, are a form of eatery that provides quick and inexpensive meals. These restaurants typically have limited seating, with most customers choosing to order their food to go or for drive-thru service.
Quick-service restaurants are made to accommodate people who are on the go and need a fast and easy meal. They have a small selection that is frequently centered on one specific food item, like tacos, pizza, sandwich franchises, or hamburgers. These menus are created to be straightforward and simple to make, enabling quicker service and more affordable rates.
To make their dinners even more reasonable, the majority of Quick service restaurants also provide value meals and combo packages. Due to their frequent association with fast food, casual dining restaurants may have a poor image in terms of diet and health. Salads, grilled poultry, and veggie choices are just a few of the healthy options that many QSRs are attempting to give on their offerings.
Fine Dining Restaurants
Fine dining establishments are renowned for their elegant decor, first-rate service, and superior food. These eateries frequently offer menus that let patrons select from a variety of dishes that have been skillfully created by a skilled cook. The dishes are displayed in a creative and eye-catching way, and the menu frequently includes upscale components like foie gras, truffles, and caviar.
The quality of the cuisine at fancy dining establishments is one of their benefits. These eateries employ highly skilled cooks who use the best materials to make elaborate, flavorful, and aesthetically pleasing dishes. Additionally, the service at these establishments is frequently first-rate, with waiters attending to the requirements of every single patron.
The price of the meals often reflects the high-quality ingredients and service. They also often have strict dress codes and reservation policies, which can limit accessibility for some customers.
Food Truck Business
In recent years, food trucks have grown in popularity and revolutionized the restaurant industry business. These mobile kitchens are a popular option for those looking for a fast and inexpensive meal because they offer a variety of dishes and allow customers to eat on the go. Food lovers who are searching for unusual and inventive dishes that they can’t find at conventional eateries have started to favor food trucks.
The mobility of a food truck is one of their benefits. They can move to various places, unlike conventional restaurants, making them more available to customers. They can also function in places where conventional brick-and-mortar eateries find it challenging to do business because of neighborhood regulations or expensive rent.
Food trucks offer affordable pricing and unique menu items, appealing to budget-conscious customers. Despite their popularity, they face challenges such as complying with local regulations and logistics. There are many food truck ideas to consider, so you can find the niche that works best for your goals.
Buffet Restaurants
Buffet restaurants are popular with customers who are looking for a variety of options at an affordable price. Due to the variety of cuisine available at these establishments, patrons can try a variety of entrees without making a commitment. Another advantage of buffet restaurants is the value for money they provide.
Customers can eat as much as they want for a fixed price, which can be more affordable than ordering several dishes at a traditional restaurant. Buffet restaurants can also help to reduce food waste, as customers can take only what they want and avoid leaving uneaten food on their plates. Overall, buffet restaurants offer a unique dining experience that appeals to a wide range of customers.
They provide a casual, affordable, and varied dining experience that is perfect for families, groups, or those who want to try different dishes without committing to a full meal.
Seafood Restaurants
Seafood restaurants are a type of restaurant that specializes in seafood cuisine, including fish, shellfish, and other aquatic animals. Seafood restaurants can be found in coastal towns, cities, and tourist destinations. These restaurants offer a wide variety of seafood dishes, ranging from classics like fish and chips to more exotic options like sushi and sashimi.
Many seafood eateries take pleasure in using local, fresh seafood and frequently offer daily specials based on the catch of the day. The decor of these restaurants often reflects their coastal location, with nautical themes and ocean-inspired artwork. It is anticipated that the appeal of seafood restaurants will increase in the years to come as people become more conscious of the health advantages of seafood.
Steakhouse restaurants
Steakhouse restaurants are known for their high-quality cuts of beef, cooked to perfection and served with a variety of sides and sauces. These establishments frequently offer a selection of types, ranging from sirloin to filet mignon, and give customers the option to choose how they would like their steak cooked.
Steakhouse restaurants are popular choices for special events, work meals, and date nights because they frequently have an expensive atmosphere. The high grade of beef served at steakhouse eateries is one of their benefits.
These eateries frequently purchase their meat from top-notch farms and ranchers, guaranteeing that their patrons will receive the best portions. Additionally, they provide a range of cuts so that clients can select the steak variation that best suits their palates.
Ethnic Restaurants
Ethnic restaurants are a type of restaurant that specializes in cuisine from a specific country or region. These restaurants offer a unique dining experience, featuring authentic dishes and flavors that are often difficult to find elsewhere.
From Italian to Mexican to Indian, ethnic restaurants showcase the diversity of global cuisine and allow customers to experience new flavors and cultural traditions. Many ethnic restaurants are family-owned and operated, passed down through generations, and pride themselves on using traditional cooking techniques and ingredients. The decor of these restaurants often reflects the culture of the cuisine they serve, creating a vibrant and immersive dining experience.
Farm-to-table Restaurants
Farm-to-table restaurants are a type of restaurant that emphasizes locally sourced and seasonal ingredients. These restaurants prioritize using fresh and high-quality produce, meats, and dairy from nearby farms and food producers. The goal of farm-to-table restaurants is to support local agriculture, reduce the environmental impact of food transportation, and provide customers with a unique and healthy dining experience.
Farm-to-table restaurants often have close relationships with farmers, often sourcing ingredients directly from them. The menus of these restaurants change frequently to reflect the seasonality of ingredients and showcase the diversity of local produce. Many farm-to-table restaurants also offer vegetarian and vegan options, making them a popular choice for health-conscious diners.
Diners
Diners are a type of restaurant that has been an iconic part of American culture for over a century. These casual, often 24-hour eateries are known for their affordable and hearty comfort food, such as burgers, fries, and milkshakes. Diners typically have retro decor with vinyl booths, neon signs, and a counter with stools, giving them a nostalgic and homey feel.
Diners are a popular choice for a quick and satisfying meal at any time of day or night. They are often open 24/7 and serve breakfast all day, making them a favorite among night owls, truck drivers, and road trip enthusiasts. Diners are a staple of American culture, offering a nostalgic and comforting dining experience. While the menu may not be gourmet, diners provide a taste of classic American comfort food in a casual and laid-back environment.
Bar restaurants
Bar restaurants, also known as gastropubs, are a type of establishment that combines the atmosphere of a bar with the cuisine of a restaurant. These businesses typically offer a full bar with an extensive beer, wine, and cocktail selection, as well as a menu of high-quality, often upscale pub-style food.
Bar restaurants often have a cozy and casual atmosphere, with a focus on creating a welcoming and inviting space for diners and drinkers alike. Many bar restaurants pride themselves on using fresh, locally sourced ingredients in their dishes, elevating traditional pub food to a higher culinary standard.
Bar restaurants are popular among a wide range of customers, from those looking for a casual night out with friends to those seeking a more refined dining experience. They offer a unique and versatile business model that combines the profitability of a bar with the culinary creativity of a restaurant, making them a popular choice for entrepreneurs in the food and beverage industry.
Are restaurants profitable?
Restaurants can be profitable, but it depends on many factors such as location, concept, management, and market demand. The restaurant business is known for its tight profit margins, with the average profit margin for a restaurant business being between 2% to 6%. However, some types of restaurants have higher profit margins than others. It’s important for restaurant owners to have a strong business plan and to manage their food costs effectively in order to maximize their profits.
Which is more profitable, bars or restaurants?
Bars have one of the highest profit margins in the restaurant business due to the high markup on alcoholic beverages. However, there are a variety of profitable food business ideas to consider.
Can a small restaurant be profitable?
Yes, a small restaurant can be profitable. In fact, many small restaurants have found success by offering a unique dining experience and high-quality food. However, like any business, the profitability of a small restaurant depends on many factors such as location, concept, management, and market demand.
It’s important for small restaurant owners to have a strong business plan and to manage their costs effectively in order to maximize their profits. By focusing on providing excellent customer service and creating a loyal customer base, small restaurants can thrive and be profitable.
What restaurant food has the highest profit margin?
On average, some of the highest profit margin foods include meat-free vegan and vegetarian dishes which utilize vegetables, pulses, and legumes; sauce-based cuisines such as curries, chili, and soups; and other items that have low-cost base ingredients such as pizza and pasta. Additionally, alcohol sales often have high-profit margins for restaurants.
If you are looking for a business that does not follow a brick-and-mortar model, check out our article on offline business ideas.
What are the least profitable items on a restaurant menu?
The least profitable items on a restaurant menu can vary depending on several factors, including the type of restaurant, location, and menu offerings. Generally, items with a lower profit margin include appetizers, vegetarian or vegan dishes, specials, alcoholic beverages, and discounted items. These items may require more expensive or specialized ingredients, have smaller portions, or require the purchase of ingredients not typically used.
Restaurant owners must carefully analyze the cost of ingredients and labor when setting menu prices to ensure that each item is profitable and helps to maintain the overall financial health of the business.
How much money do restaurant owners make?
According to BizBuySell’s Quarterly Insight report, restaurant acquisitions jumped 20% in 2022, with restaurants showing stronger financials and selling at higher prices, suggesting pent-up demand for ownership. The average restaurant revenue for a business that is less than 12 months old is $111,860.701.
However, this figure can vary greatly depending on factors such as location, size, and type of restaurant. For example, a quick-service restaurant may have lower average revenue than a fine dining establishment.
If you’re looking for profitable business ideas, check out our article on the most profitable small businesses.
What is the success rate of restaurants in the United States?
The success rates of restaurants vary depending on factors such as location, cuisine, marketing strategy, food costs, and management. For example, both a quick-service restaurant and a fine-dining restaurant can be profitable, but they require different approaches to succeed. QSRs rely on high volume, low prices, and efficient service to generate revenue, while fine dining restaurants rely on quality, exclusivity, and exceptional service to attract customers and justify higher prices.
To improve their chances of success, restaurant owners need to have a solid business plan, choose a good location, hire and train well-qualified staff, offer high-quality food and service, and keep up with changing trends and customer preferences.
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FAQs
What are the most profitable types of restaurants? ›
- Bar. In the restaurant business, bars have the highest profit margins. ...
- Diner. The low cost of breakfast food ingredients increases the profit margin for diners. ...
- Food Truck. ...
- Delivery. ...
- Pizzeria. ...
- Pasta Restaurant.
Like all businesses, restaurants make money by selling more in product than they spend. This requires keeping prices high enough to more than cover the cost of goods sold and labor costs. Together they make up a restaurant's prime cost which gives you a figure to target when optimizing profit.
What is the most profitable restaurant in America? ›| Rank | Chain | 2019 Sales (Millions) |
|---|---|---|
| 1 | Olive Garden | 4,351 |
| 2 | Applebee's | 4,085 |
| 3 | Buffalo Wild Wings | 3,700 |
| 4 | Chili's | 3,550 |
1. QSR, aka Fast Food Restaurants: One of the Most Popular Types of Restaurants in America. Quick-service restaurants are more commonly known as fast-food restaurants in the US. Customers tend to eat their meals on the go, but most establishments also offer seating.
What are the best type of business for restaurant? ›You can open a restaurant using almost any kind of business entity. However, for most people, an LLC will be the best option because it is relatively easy to form and offers liability protection to the owners without creating a more complex tax situation like an S or C Corporation would.
How do restaurants become successful? ›A strong restaurant identity, hiring and retaining your staff and building a supportive environment, familiarizing yourself with profit and loss statements, creating a profitable menu (and learning how to market your best-selling items) are just some of the key elements of successful restaurants.
How do you know if a restaurant is profitable? ›Total expenses include the cost of goods sold (COGS) plus all the other costs of running your business, like operating cost, payroll, and taxes. These figures are easy to find on your restaurant profit and loss statement. With the figures in hand, subtract total expenses from total revenue to determine net profit.
How profitable is a successful restaurant? ›| Average Restaurant Profit Margins | |
|---|---|
| Full-service restaurant | 3-5%* |
| Quick-service restaurant | 6-9%* |
| Bar | 10-15%** |
| Catering | 7-8%* |
On average, some of the highest profit margin foods include meat-free vegan and vegetarian dishes which utilize vegetables, pulses, and legumes; sauce-based cuisines such as curries, chili, and soups; and other items that have low-cost base ingredients such as pizza and pasta.
What is the biggest selling restaurant food? ›...
America's Favorite Fast Food.
| Rank | Food Category | Category Cumulative Sales |
|---|---|---|
| #1 | Burger | $92.2 billion |
| #2 | Snack | $42.5 billion |
| #3 | Chicken | $36.7 billion |
| #4 | Global | $27.0 billion |
What restaurant has the highest sales? ›
McDonald's had sales of 45.96 billion U.S. dollars in the U.S. in 2021, making it the leading chain restaurant in the United States in terms of sales.
What is 6 the most common method used in restaurants? ›Hot water is the most common method used in restaurants.
What is an 8 top in restaurant terms? ›Noun. eight-top (plural eight-tops) (restaurants) A table seating eight diners.
What is an 8 top in restaurant? ›* Top – The number in a dining party. For example, an eight top is a dining party of eight. A three top is a party of three.
What is the best major for restaurant owner? ›What Should I Major in to Become a Restaurant Owner? Most restaurant owners, 30% to be exact, major in business. Some other common majors for a restaurant owner include accounting and management majors.
What is the fastest growing category in the restaurant business? ›The DTC (direct-to-consumer) food segment is one of the fastest-growing sector in this space. DTC brands cut out intermediary retailers. Which lets them capture more profit margin (and/or offer lower prices) than traditional players.
What are the 3 P's of successful restaurant? ›We've broken down the three core elements of a successful food precinct - people, place and product.
What makes a restaurant stand out? ›The general attractiveness of the place consists of beautiful interior designs, mood, and ambiance. The restaurant can stand out from the crowd through its bold signage, unconventional paint color, and creative window décor.
Can a restaurant owner become rich? ›However, what many people don't realize is that the restaurant industry is one of the easiest fields for anyone to become extremely wealthy. No matter where you start in the restaurant industry, you can become a millionaire or more.
How much should a restaurant owner pay himself? ›In most restaurants, it's typical for an owner to take less than 50 percent of the profits as salary. The remaining 50 percent goes toward any back debts and upgrades that will benefit the business. Before you go about determining your salary, first calculate your profit margin.
What should food cost be in a restaurant? ›
In general, restaurants should keep their food cost percentage of between 25 and 40%. That means that for every dollar of revenue a restaurant earns, it will have spent between 25 and 40 cents to buy the ingredients that make up that dish.
Do restaurants have a high success rate? ›The National Restaurant Association estimates a 20% success rate for all restaurants. About 60% of restaurants fail in their first year of operation, and 80% fail within 5 years of opening.
How can I make my restaurant more profitable? ›- Keep Track of Restaurant Metrics. ...
- Monitor Inventory. ...
- Focus on Staff Engagement. ...
- Double Down on Customer Retention. ...
- Create More Ordering Avenues. ...
- Expand the Restaurant's Offerings. ...
- Use the Right Restaurant Technology.
| State | Annual Salary | Monthly Pay |
|---|---|---|
| California | $72,348 | $6,029 |
| Massachusetts | $71,369 | $5,947 |
| Vermont | $70,259 | $5,855 |
| Hawaii | $69,092 | $5,758 |
Restaurant owners can get paid by earning a consistent salary each year or by taking a portion of the restaurant's overall profits. They can also have a combination compensation package that combines a regular salary and dividends from business profits.
What food has the best markup? ›Produce has one of the highest markups because it's the most perishable, explains Lempert. When you buy chopped or cubed fruits and veggies from the grocer, you're also paying for the time the staff took to cut it up.
What is Best foods revenue? ›- Bestfoods has 44,000 employees, and the revenue per employee ratio is $386,363.
- Bestfoods peak revenue was $17.0B in 2022.
McDonald's is by far the most popular fast food chain in the United States. It has about 13,500 locations in the U.S., 40,000 worldwide, and it operates in 118 countries.
What is the most sold food item in America? ›As of Q3 2022, hamburgers, mashed potatoes, and cheeseburgers were the most popular American dishes in the United States.
Who goes to restaurants the most? ›According to recent trends, millennials (defined as those born between 1980 and 2000) spend the most dining out, averaging $95 per week.
What fast-food chain makes the most money per store? ›
The leading quick service restaurant chain in terms of sales per unit was Chick-fil-A, with 5.01 million U.S. dollars worth of sales per unit in 2020.
What are the two highest costs in restaurants? ›Food is the biggest variable cost for restaurants and labor is the biggest semi-variable cost. Both of these costs can be calculated by using the prime cost formula.
How profitable is a small restaurant? ›| Average Restaurant Profit Margins | |
|---|---|
| Full-service restaurant | 3-5%* |
| Quick-service restaurant | 6-9%* |
| Bar | 10-15%** |
| Catering | 7-8%* |
- Honey production – 30% average profit margin.
- Coffee shop – 25% average profit margin.
- Popcorn business – 22% average profit margin.
- Custom cakes – 19% average profit margin.
- Chicken poultry -17% average profit margin.
- Pizza – 15% average profit margin.
- Fruit juice – 14% average profit margin.
McDonald's Corporation is the largest fast-food chain. As of 2022, Starbucks is the largest restaurant company by revenue, with 35,000 stores globally. Yum!
What do restaurants spend the most money on? ›- Rent and utilities (electricity, water, internet, cable, and phone): 5% – 10% of revenue.
- Food cost: 25% – 40% of food sales. ...
- Labor cost: Roughly 30% of revenue including management salaries of 10%
- Insurance varies by provider and type. ...
- Monthly marketing costs.
Employ Cost-Plus Pricing
Cost-plus pricing is one of the most common pricing strategies around. This strategy provides a solid guideline for how you price your food items, and it's very easy to do, too. All you have to do is to compute all the expenses that go into making a dish and add the desired profit margins.
Grand Velas Tacos $25,000
The most expensive dish in the world, this taco features Kobe Beef, Almas Beluga Caviar & Black Truffle Brie Cheese and is served on a gold flake-infused corn tortilla. The taco is also served with an exotic salsa comprised of dried Morita chili peppers, Ley.
The average total cost to open a restaurant will range from $95,000 to over $2 million. The total cost of opening a restaurant will depend on the cost of rent, furniture, construction costs and any permits required to operate a new restaurant business.
Can you become a millionaire owning a restaurant? ›However, what many people don't realize is that the restaurant industry is one of the easiest fields for anyone to become extremely wealthy. No matter where you start in the restaurant industry, you can become a millionaire or more.
How do restaurant owners pay themselves? ›
Some restaurant owners earn a salary right away and pay themselves through loans or startup funds from investors. Others live off of savings or funds from other jobs while they wait for the business to become profitable to pay themselves a salary or taking a portion of the profits.