Restaurant math, starting from zero

You do not need a finance background. Read one example, try the question, then check the explanation. Everything here is free, needs no account and uses fictional U.S.-dollar examples.

01 / 14

What a percent is

Why it matters

Every restaurant number you will be asked about, from food cost to rent, is a percent of sales. If the word is fuzzy, every decision built on it is fuzzy too.

How to calculate it

Percent means 'out of 100'. 10% means 10 of every 100. To calculate with a percent, divide it by 100 to get a decimal: 10% = 0.10, 25% = 0.25, 8% = 0.08. To turn a decimal back into a percent, multiply by 100.

Worked example

Sales are $1,000 and rent is $100. Rent takes $10 of every $100 sold, so rent is 10% of sales.

Written as a decimal, 10% is 10 ÷ 100 = 0.10. Multiplying $1,000 by 0.10 gives the $100 back.

Watch out for

Do not type 0.10 into a field that asks for a percent, or 10 into a field that asks for a decimal. The tools on this site ask for percents as plain numbers: 10 means 10% and 12.5 means 12.5%, not 0.10 or 0.125.

Practice

What decimal is 25%?
Show the answer
25 ÷ 100 = 0.25. Multiplying an amount by 0.25 gives a quarter of it.
What decimal is 8%?
Show the answer
8 ÷ 100 = 0.08. Small percents are easy to mistype; 0.8 would be 80%.
What percent is the decimal 0.3?
Show the answer
0.3 × 100 = 30%. Three of every ten dollars.

02 / 14

A percent of an amount

Why it matters

This is how you turn a target into dollars: a 30% labor target on next week's sales is a labor budget in dollars.

How to calculate it

Amount × percent ÷ 100 = the part. Convert the percent to a decimal first, then multiply.

Worked example

A 30% labor budget on $10,000 of sales is $10,000 × 0.30 = $3,000.

Check with easy pieces: 10% of $10,000 is $1,000, so 30% is three of those, $3,000.

Watch out for

Multiply by the decimal, not by the whole number. $10,000 × 30 is $300,000, which is not a labor budget anyone has.

Practice

What is 15% of $2,000?
Show the answer
2,000 × 0.15 = 300. Or: 10% is $200 and 5% is $100, together $300.
What is a 30% labor budget on $10,000 of sales?
Show the answer
10,000 × 0.30 = 3,000.
What is 4% of $12,500?
Show the answer
12,500 × 0.04 = 500. One percent is $125, so four percent is $500.

03 / 14

What percent a cost is

Why it matters

Labor percent, food cost percent and rent percent are all this one calculation. It is the most used number in a restaurant and the most often inverted.

How to calculate it

Cost ÷ sales × 100 = cost percent. Use the cost and the sales from the same period, and use net sales (without sales tax or pass-through tips).

Worked example

Labor of $3,000 ÷ sales of $10,000 = 0.30; × 100 = 30%.

That leaves 70% of sales for every other cost and for profit. It does not mean 70% profit.

Watch out for

The cost goes on top. Dividing sales by the cost (10,000 ÷ 3,000 = 3.33) produces a number that means nothing here.

Practice

Labor costs $4,000 on $16,000 of sales. What percent is that?
Show the answer
4,000 ÷ 16,000 = 0.25; × 100 = 25%.
Food used was $3,600 on $12,000 of sales. What is the food cost percent?
Show the answer
3,600 ÷ 12,000 = 0.30, which is 30%.
Rent is $1,800 and monthly sales are $9,000. What percent of sales is rent?
Show the answer
1,800 ÷ 9,000 = 0.20 = 20%.

04 / 14

Working backward to the sales you need

Why it matters

A landlord quotes a rent and a payroll has a size. The question that matters is what sales make them fit. That is the same formula turned around.

How to calculate it

Cost ÷ (target percent ÷ 100) = the sales that put the cost exactly at the target. A smaller target needs more sales.

Worked example

At a 10% occupancy target, $7,000 of monthly occupancy cost needs $7,000 ÷ 0.10 = $70,000 of monthly sales.

At a 25% labor target, $4,500 of weekly labor needs $4,500 ÷ 0.25 = $18,000 of weekly sales.

Watch out for

This tells you what the target requires. It does not tell you whether customers will show up. Test the sales figure against demand and capacity separately.

Practice

At a 10% occupancy target, what monthly sales support $7,000 of occupancy cost?
Show the answer
7,000 ÷ 0.10 = 70,000.
At a 25% labor target, what weekly sales support $4,500 of labor?
Show the answer
4,500 ÷ 0.25 = 18,000.
At an 8% target, what sales support a $6,000 cost?
Show the answer
6,000 ÷ 0.08 = 75,000. The smaller the target, the larger the sales it requires.

05 / 14

Percentage points are not percent change

Why it matters

'Labor went up 3%' can mean two very different things. Being precise avoids arguments with your accountant and your manager.

How to calculate it

Subtract two percentages to get percentage points. Divide the change by the original percentage to get the relative percent change.

Worked example

Labor moving from 30% to 33% of sales rose 3 percentage points.

Relative to the original 30%, that is 3 ÷ 30 × 100 = a 10% increase in labor cost as a share of sales.

Watch out for

Always say which one you mean. A change from 2% to 4% is 2 points and a 100% increase.

Practice

Food cost rises from 25% to 30%. How many percentage points did it rise?
Show the answer
30 − 25 = 5 percentage points.
Same change, 25% to 30%. What is the relative percent increase?
Show the answer
5 ÷ 25 × 100 = 20%.
Labor falls from 35% to 28%. How many percentage points is the drop?
Show the answer
35 − 28 = 7 points. Relative to 35, it is a 20% reduction.

06 / 14

From an hourly rate to a weekly and monthly cost

Why it matters

Pay is quoted per hour but bills arrive per month. You need both views to see whether a hire fits.

How to calculate it

Hours per week × hourly rate = weekly gross wages. Weekly × 52 ÷ 12 = an average month (there are not exactly four weeks in a month).

Worked example

$20 an hour for 32 hours is $640 a week in gross wages.

$640 × 52 ÷ 12 = $2,773.33 in an average month. Multiplying by 4 would understate it by $213.

Watch out for

Gross wages are before employee withholding and before the employer's own payroll taxes. The employer's full cost comes in the burden lesson.

Practice

An employee works 32 hours a week at $20. What are weekly gross wages?
Show the answer
32 × 20 = 640.
What is that $640 a week in an average month (52 weeks ÷ 12)?
Show the answer
640 × 52 ÷ 12 = 2,773.33.
40 hours at $18 an hour: what is the average monthly gross wage?
Show the answer
40 × 18 = 720 a week; 720 × 52 ÷ 12 = 3,120.

07 / 14

Weekly overtime

Why it matters

One person at 45 hours costs more than 45 × the rate. Two people at 30 hours do not. Overtime is calculated employee by employee, week by week.

How to calculate it

Under the U.S. federal rule described by the Department of Labor, covered nonexempt employees receive at least 1.5 × their regular rate for hours over 40 in a workweek. Wages = up to 40 hours × rate + hours above 40 × rate × 1.5. State rules can add more; confirm what applies to you.

Worked example

One $20 rate, 45 hours: 40 × $20 = $800, plus 5 × $30 = $150. Gross wages $950.

Paying 45 × $20 = $900 would miss $50 of overtime premium. An agreement to skip it does not remove the obligation.

Watch out for

Hours are per employee per workweek; averaging two weeks is not permitted under the federal rule. Different rates, bonuses and tips change the regular rate and need a payroll calculation.

Practice

One employee works 42 hours at $20 under the weekly 40-hour, 1.5× rule. What are gross wages?
Show the answer
40 × 20 = 800; 2 × 30 = 60; total 860. Straight time (42 × 20 = 840) misses $20.
45 hours at $18 an hour. Gross wages?
Show the answer
40 × 18 = 720; 5 × 27 = 135; total 855.
50 hours at $22 an hour. Gross wages?
Show the answer
40 × 22 = 880; 10 × 33 = 330; total 1,210.

08 / 14

The employer's cost is more than the wage

Why it matters

Employees see their withholding come out of gross pay. The employer pays its own taxes and insurance on top. Budget with the top number.

How to calculate it

Full labor cost = gross wages × (1 + employer costs as a decimal) + fixed labor costs. Employer costs include the employer's share of payroll taxes, unemployment insurance, workers' compensation and any benefits you provide.

Worked example

IRS Publication 15 for 2026 lists the employer's social security share at 6.2% (up to a $184,500 wage base) and Medicare at 1.45%: 7.65% together. On $1,000 of wages that is $76.50 before anything else.

Federal unemployment (FUTA) is 6.0% on the first $7,000 per employee, reduced by a credit of up to 5.4% when state unemployment tax is paid on time, so often 0.6%, or $42 per employee per year. State unemployment, workers' compensation and benefits are on top and vary. A planning allowance of 15% is a fictional placeholder, not a rate for your state.

Watch out for

Do not add employee withholding to the employer's cost; it is part of gross wages. Ask a payroll provider or accountant for your state's figures and enter that percentage in the tools.

Practice

Employer social security (6.2%) plus Medicare (1.45%) on $1,000 of wages. How much?
Show the answer
6.2 + 1.45 = 7.65%; 1,000 × 0.0765 = 76.50.
Gross wages are $950 and you use a 15% planning allowance for employer costs. What is the full cost?
Show the answer
950 × 1.15 = 1,092.50.
FUTA at the 0.6% net rate on the $7,000 federal wage base: the maximum per employee per year?
Show the answer
7,000 × 0.006 = 42. Only if the full state credit applies.

09 / 14

Labor cost percent for the whole week

Why it matters

Investors, lenders and your own P&L talk about labor as a percent of sales. Now you can build it from the bottom instead of guessing it from the top.

How to calculate it

Add every employee's wages (with overtime), apply employer costs, add fixed labor costs. Divide by the same week's net sales and multiply by 100.

Worked example

Cook: 45 hours at $20 = $950. Counter: 32 hours at $20 = $640. Gross wages $1,590. With a fictional 15% allowance: $1,828.50.

On $6,000 of weekly sales: $1,828.50 ÷ $6,000 × 100 = 30.5%. On $5,000 of sales the same payroll is 36.6%.

Watch out for

When the percent rises, ask whether payroll rose or sales fell. They need different fixes. Do not remove compensable hours to hit a number.

Practice

Full labor cost is $3,000 on $10,000 of sales. Labor percent?
Show the answer
3,000 ÷ 10,000 × 100 = 30%.
The same $3,000 of labor on $8,000 of sales. Labor percent?
Show the answer
3,000 ÷ 8,000 × 100 = 37.5%. Payroll did not change; sales did.
Labor of $1,828.50 on $6,000 of sales. Labor percent (to one decimal)?
Show the answer
1,828.50 ÷ 6,000 × 100 = 30.475%, about 30.5%.

10 / 14

Food cost from inventory counts

Why it matters

Purchases alone can hide the truth: a big delivery on the last day of the month makes food cost look terrible, and an empty walk-in makes it look great.

How to calculate it

Food used = opening inventory + purchases − closing inventory. Food cost % = food used ÷ the food sales for the same period × 100.

Worked example

Start the month with $2,000 of stock, buy $3,000, finish with $1,500. Food used is $2,000 + $3,000 − $1,500 = $3,500.

On $10,000 of food sales that is 35%. Purchases alone ($3,000) would have said 30%, which is wrong.

Watch out for

Count the same way each time, at the same moment. Reconcile transfers, staff meals, waste and count errors before treating a bad percent as a kitchen problem.

Practice

Opening $1,000, purchases $2,500, closing $1,500, food sales $8,000. Food cost percent?
Show the answer
Food used = 1,000 + 2,500 − 1,500 = 2,000. Then 2,000 ÷ 8,000 × 100 = 25%.
Opening $2,000, purchases $3,000, closing $1,500, food sales $10,000. Food cost percent?
Show the answer
Food used = 3,500; 3,500 ÷ 10,000 × 100 = 35%.
Opening $1,200, purchases $4,300, closing $1,100. How much food was used?
Show the answer
1,200 + 4,300 − 1,100 = 4,400.

11 / 14

Rent: the 10% test

Why it matters

Rent is the cost you cannot renegotiate next week. Testing it against sales before signing is the cheapest mistake you will ever avoid.

How to calculate it

Occupancy % = (base rent + other occupancy charges) ÷ monthly net sales × 100. Ryan's planning benchmark is rent around 10% of sales; it is a test to run, not a rule or a guarantee. Then work backward: occupancy ÷ target decimal = the sales the space needs.

Worked example

$5,000 base rent on $50,000 of sales is 10%. Add $1,000 of CAM, tax and insurance charges: $6,000 ÷ $50,000 = 12%.

At a 10% total-occupancy target, $6,000 ÷ 0.10 = $60,000 of monthly sales. At a $20 average order over 26 days that is 116 orders every open day.

Watch out for

Charges are part of occupancy even when the listing only mentions rent. And 116 orders a day for rent are the same orders that must pay for food, labor and everything else, not additional ones.

Practice

Base rent $5,000, monthly sales $50,000. Rent as a percent of sales?
Show the answer
5,000 ÷ 50,000 × 100 = 10%.
Rent $5,000 plus $1,000 of charges. At a 10% target, what monthly sales are needed?
Show the answer
6,000 ÷ 0.10 = 60,000.
Occupancy is $7,000 a month and you accept a 12% target. Sales needed?
Show the answer
7,000 ÷ 0.12 = 58,333.33.

12 / 14

Markup is not margin, and a menu price from a food-cost target

Why it matters

Suppliers talk markup, accountants talk margin, and menu pricing uses a target food cost. Three formulas, easily confused.

How to calculate it

Markup % = (price − cost) ÷ cost × 100. Margin % = (price − cost) ÷ price × 100. Price at a target food cost = plate cost ÷ (target % ÷ 100).

Worked example

A dish costs $10 to plate and sells for $15: markup is 50%, margin before other expenses is 33.3%.

For a 30% food-cost target on a $3.60 plate cost: $3.60 ÷ 0.30 = $12.00 before rounding to a menu-friendly price.

Watch out for

Neither markup nor margin is the restaurant's profit; labor, rent and everything else still come out of the margin.

Practice

An item costs $8 and sells for $10. Margin percent before other expenses?
Show the answer
(10 − 8) ÷ 10 × 100 = 20%. Its markup is 25%.
Same item. Markup percent?
Show the answer
(10 − 8) ÷ 8 × 100 = 25%.
Plate cost $3.60, target food cost 30%. Menu price before rounding?
Show the answer
3.60 ÷ 0.30 = 12.00.

13 / 14

Average order and orders per day

Why it matters

Sales targets become real when they turn into a number of customers on a Tuesday.

How to calculate it

Average order = net sales ÷ number of orders. Orders needed = required sales ÷ average order. Orders per open day = orders needed ÷ open days, rounded up because you cannot serve a fraction of a customer.

Worked example

$12,000 of sales from 600 orders is a $20 average order.

$60,000 of monthly sales at $20 an order is 3,000 orders; over 26 open days that is 115.4, so 116 a day.

Watch out for

Compare the daily figure with what the room, the kitchen and the hours can actually produce. If they cannot, the sales target is wrong, not the arithmetic.

Practice

$12,000 of sales from 600 orders. Average order?
Show the answer
12,000 ÷ 600 = 20.
How many orders produce $60,000 at a $20 average?
Show the answer
60,000 ÷ 20 = 3,000.
3,000 orders over 26 open days: orders per day, rounded up?
Show the answer
3,000 ÷ 26 = 115.38, rounded up to 116.

14 / 14

The sales that cover the bills

Why it matters

Break-even is the first number a lender or partner asks for, and it is built from the percentages you just learned.

How to calculate it

Contribution margin = 1 − (variable costs as a share of sales). Break-even sales = fixed costs ÷ contribution margin.

Worked example

With $20,000 of monthly fixed costs and variable costs (food, variable labor, packaging, fees) at 60% of sales, contribution is 40%.

Sales needed = $20,000 ÷ 0.40 = $50,000 a month. At a $20 average order over 26 days, that is 96.15, so 97 orders a day.

Watch out for

Break-even covers operating costs. Loan principal, equipment purchases, deposits and the owner's own living costs may need separate cash. The break-even calculator handles the rounding and a profit goal.

Practice

Fixed costs $12,000 a month, variable costs 50% of sales. Break-even sales?
Show the answer
12,000 ÷ (1 − 0.50) = 24,000.
Fixed costs $20,000, variable costs 60%. Break-even sales?
Show the answer
20,000 ÷ 0.40 = 50,000.
$50,000 of break-even sales, $20 average order, 26 open days. Orders per day, rounded up?
Show the answer
50,000 ÷ 26 ÷ 20 = 96.15, rounded up to 97.

Now put the math to work

The calculators and the opening plan are in English.

Read the guides

Sources for the figures quoted above

Overtime, tax and wage figures are quoted from the sources below as they read on September 10, 2026, to illustrate the arithmetic. They are not a statement of what applies to your restaurant. Verify the current rules for your jurisdiction, your employees' classification and the date.