How to Increase Your Restaurant Profit Margin
Most UK restaurants run on a net margin of roughly 3% to 9%. That thin band means small, consistent improvements to the right costs compound quickly. Here are the levers that actually move the number.
Start with prime cost
Your prime cost, COGS plus labour, is where the biggest, most controllable savings sit. Aim to keep it under about 65% of sales. Two points off prime cost drops almost straight to the bottom line.
1. Get food cost under control
Track food cost percentage weekly, cost your recipes, tighten portioning, and cut spoilage. This is usually the fastest win.
2. Match labour to demand
Labour creeps up when rotas are set by habit, not by trade. Use your sales patterns to schedule to demand, and watch revenue per labour hour rather than headcount.
3. Engineer the menu
Every menu has heroes and passengers:
- Promote high-margin dishes with placement and specials.
- Re-cost or re-price low-margin dishes.
- Remove items that sell rarely and tie up prep and stock.
4. Price with intent
Small, deliberate price moves on the right items protect margin without denting demand. Review pricing against food cost regularly, not once a year.
5. Know what delivery actually costs you
Platform commissions take a bite out of every delivery order, and the fees sit scattered across statements and portals, so most operators never see the true number per platform. Add commissions up weekly and check each channel still makes money after fees, packaging, and labour. If one doesn't, re-price that menu or push regulars to order direct.
6. Trim the quiet leaks
Subscription creep, utility waste, and unchecked supplier increases add up. Review your P&L for costs that grew without a reason.
You cannot improve what you cannot see
Every lever above depends on knowing your numbers early enough to act. Alpa turns your bank, POS, and invoices into a real-time P&L with margin alerts, so you catch a slipping margin in the same week, not a month later.