Running a successful restaurant isn’t just about serving great food—it’s also about managing
your finances wisely. One common framework used in the industry is the 30-30-30-10 rule. This
simple breakdown offers a way to allocate a restaurant’s revenue to ensure long-term
sustainability and profitability.
The Breakdown:
Here’s what the 30-30-30-10 rule means:
- 30% Cost of Goods Sold (COGS):
This includes all the food and beverage costs required to create your menu items. It’s the raw
material—the meat, vegetables, drinks, condiments, etc. Keeping COGS around 30% helps
ensure you’re not overspending on ingredients or underpricing your menu. - 30% Labor Costs:
These are the wages, salaries, and benefits paid to everyone from your kitchen staff to front-of-
house servers. Efficient scheduling and avoiding overstaffing are key to keeping this cost in line. - 30% Operating Expenses:
This bucket covers everything else needed to keep the restaurant running: rent, utilities,
maintenance, marketing, licenses, insurance, and more. Fixed and variable costs both fall here. - 10% Profit Margin:
What’s left should ideally be net profit. While a 10% profit margin might sound small, it’s
actually quite healthy in the restaurant industry, where margins can be razor-thin.
Why It Matters
This rule acts as a quick diagnostic tool. If one area starts creeping above 30%, something has to
give—or your profit disappears. It encourages restaurateurs to constantly monitor and adjust
operations, menu pricing, staffing, and spending.
A Word of Caution
While it’s a helpful benchmark, the 30-30-30-10 rule isn’t a one-size-fits-all solution. Fast-casual
restaurants may have lower labor costs and higher COGS, while fine dining might spend more on
staff but less on rent due to higher check averages. Local markets, business models, and
customer bases also play big roles.
Final Thoughts
If you’re running a restaurant—or planning to—understanding and applying the 30-30-30-10
rule can provide a solid foundation for financial health. Like any rule of thumb, it’s most
powerful when used alongside detailed, real-time data and sound judgment.
If you don’t have these figures at your fingertips, not just monthly…but every single week, then
you are simply not utilizing all of the tools that every “corporate” restaurant utilizes.
That’s where Restaurant Accounting Services (RAS) comes in!
If it’s time to get back into the kitchen and out of the office, RAS is here. Restauranteurs need to
focus on their product, their guests and their team to run a thriving and profitable establishment.
Every percent saved in cost of goods or labor puts thousands of dollars in your pocket. And
remember, RAS is far more reasonable that you might imagine, particularly considering the
expected cost savings, and expertise we offer. We’re just an email or phone call away.
Call or email Tim today at (781) 706-5725 or tim@restaurant-accounting.com