Restaurant Costs & Expenses: Breakdown, Benchmarks & How to Cut Them

Restaurant costs are everything you pay to keep a restaurant open: food and beverages, labor, rent, utilities, card processing fees, delivery commissions, marketing, technology, repairs, and insurance.

Food and labor dominate the bill. In 2024, the median full-service restaurant spent 36.5% of sales on labor alone and kept just 2.8% as income before taxes, according to the National Restaurant Association.

Below is what each expense line costs as a share of sales, a $100,000-a-month example, and the levers that cut costs fastest.

What are restaurant costs?

Restaurant costs, also called restaurant expenses, are the money a restaurant spends to produce and sell its food. Operators group them into four buckets:

1. Cost of goods sold (COGS): food, beverages, and packaging that go into what you sell (see what counts as restaurant COGS).
2. Labor: wages, salaries, overtime, payroll taxes, and benefits.
3. Occupancy: rent, property taxes, and common-area maintenance (CAM) fees.
4. Operating expenses: everything else that keeps the doors open, from utilities and card fees to marketing, software, repairs, insurance, and licenses.

Food and labor together make up your prime cost, the number most operators check every week.

Costs also behave differently when sales change:

• Fixed costs such as rent, insurance, and loan payments stay flat whether you serve 50 guests or 500.
• Variable costs such as food, packaging, card fees, and delivery commissions rise and fall with every order.
• Semi-variable costs, such as labor and utilities, have a fixed base plus a portion that moves with volume.

One-time startup costs, like build-out and equipment, are a separate budget; see the full cost to open a restaurant.

Restaurant cost breakdown: what percentage of sales goes where

The most reliable benchmark is the National Restaurant Association's 2025 Restaurant Operations Data Abstract, built on 2024 financial data from more than 900 U.S. restaurants.

Here is what the median operator spent, and what it means for a restaurant with $100,000 in monthly sales.

Three patterns stand out in the data:

• Labor decides profit in full-service: Full-service operators that made a pre-tax profit kept labor at a median of 34.2% of sales; those that lost money ran at 42.9% (NRA). Our guide to restaurant labor cost percentage includes targets by format.
• Volume lowers food cost: Full-service restaurants with $2 million or more in annual sales ran a median food cost of 31.0%, versus 33.7% below that line, and earned 4.3% versus 1.1% before taxes (NRA).
• Location moves rent: Urban restaurants reached a median of 6.0% of sales for occupancy, while limited-service restaurants in small towns and rural areas paid 3.2% (NRA).

Want to see how margins compare by restaurant type? To turn these percentages into monthly targets for your own place, use our restaurant budget template.

Restaurant expenses list: 10 costs to budget for every month

Use this list as a checklist when you review your monthly profit and loss statement.

1. Food and beverage costs (COGS)

Ingredients, beverages, condiments, and to-go packaging. This is the most volatile line: 82% of operators reported higher food costs in 2025 (NRA). Track it weekly as a share of food sales using your food cost percentage.

2. Labor

Hourly wages, salaries, overtime, payroll taxes, benefits, training, and staff meals. Labor is semi-variable: salaried managers and chefs are a fixed base, while hourly shifts should flex with traffic.

That makes scheduling to forecast demand the main lever on this line.

3. Rent and occupancy

Base rent, property taxes, CAM fees, and annual rent escalations. Occupancy is the most fixed line on your P&L: once the lease is signed, your levers are renegotiation, subleasing unused space, or growing sales.

Read escalation clauses before you sign, because a fixed rent takes a bigger share of sales in every slow month.

4. Utilities

Electricity, gas, water, sewer, trash removal, and internet. Restaurants use about five to seven times more energy per square foot than other commercial buildings, and refrigeration usually uses the most electricity (ENERGY STAR).

Start with aging refrigeration, hood fans, and dish machines.

5. Credit card processing fees

Every card payment carries interchange, network, and processor fees. The NRA calls card processing the third-largest operating expense for most restaurants, behind food and labor, and reports that U.S. swipe fees have risen more than 50% since 2020 (NRA).

Because the fee is a percentage of each ticket, it grows with your menu prices. Read more about restaurant payment processing.

6. Third-party delivery commissions

Delivery marketplace commissions are a variable cost charged on every order.

The Wind-Chill Factory in Ticonderoga, New York, moved its online orders to its own app and website to save $77,200 in commissions in a year compared with paying a 20% marketplace commission.

7. Marketing and advertising

Paid social and search ads, local print, loyalty rewards, email and SMS tools, photography and menu printing.

New restaurants spend to build awareness; established ones get more from bringing regulars back. Set a monthly cap for each channel and review results every month.

8. Technology and software

POS, online ordering, website, mobile app, scheduling, inventory, payroll, and accounting tools.

Expect a mix of monthly subscriptions and per-order or per-transaction fees, so compare the total cost at your real order volume, not the headline price.

9. Repairs and maintenance

Equipment repairs, hood and grease-trap cleaning, pest control, HVAC servicing, and plumbing.

Breakdowns don't follow a schedule, so set aside a monthly repair reserve and keep a preventive maintenance calendar for refrigeration, cooking equipment, and HVAC.

10. Insurance, licenses and debt service

General liability, property, workers' compensation and liquor liability insurance; health permits and license renewals; accounting and legal fees; loan and equipment-lease payments.

Most are fixed and billed yearly, so divide them by 12 and book them monthly.

How to reduce restaurant expenses: 8 levers that work

Rising costs hit nearly every restaurant in 2025. Among full-service operators, 90% raised menu prices, 63% looked for alternative suppliers, and 60% removed items from their menus, according to the NRA's 2026 food cost report.

Price increases have limits when guests watch every dollar, so start with the variable lines you can measure weekly.

For step-by-step playbooks, see our guides on how to reduce food costs and how to reduce labor costs in a restaurant.

1. Engineer the menu around margin

Rank every item by sales volume and contribution margin. Reprice or rework popular low-margin dishes, promote high-margin ones, and cut items that rarely sell but still require ingredients.

2. Track food cost weekly, not monthly

Count high-value inventory every week, compare actual usage with recipe yields, and check each invoice against the last price paid.

A gap between theoretical and actual food cost usually points to waste, over-portioning, or theft.

3. Re-bid your suppliers twice a year

Get competing quotes on your most-purchased items, and negotiate volume pricing, payment terms, and delivery minimums. Keep a backup supplier for your top proteins.

4. Schedule to forecast demand

Build schedules from sales history by daypart, not from last week's roster. Cross-train staff so one person can cover two stations in slow hours, and require manager approval for overtime.

5. Keep the staff you've trained

Every resignation means recruiting, onboarding, and slower service while a new hire learns the menu. Consistent schedules, structured training, and recognition cost less than constant rehiring.

6. Move repeat customers to direct ordering

Marketplaces help guests discover you, but repeat orders don't need to pay a commission.

Promote your own ordering channel on packaging, receipts, and your website. With UpMenu's online ordering system, orders from your own website and app carry no per-order commission.

7. Review your card processing statement once a year

Divide total monthly fees by card sales to get your effective rate, then compare it with quotes from other processors.

Ask each one how interchange is passed through and which fees are fixed.

8. Cut energy, water, and repair bills together

Replace failing equipment with energy-efficient models, switch to LED lighting, fix leaks fast, and stick to a preventive maintenance schedule so equipment runs efficiently for longer.