Speak with a college business professor, and he or she will tell you that every successful business must have a budget to follow. Talk with a married couple with 3 children, and they will tell you that every stable household needs to have a budget. If this is such common knowledge, then why do so many restaurants fail to create one? Creating a realistic restaurant budget for your operation, long before you open the doors can literally be the difference maker between success and failure.

A “budget” is defined by Webster’s Dictionary as: an estimate, often itemized, of expected income and expenses for a given period in the future. When you create a restaurant budget in the beginning stages of your concept development, you are creating the foundation to answer all the questions that will come up as you go through the process. I’ve had several clients in the past say that they don’t see the need for it since they haven’t opened their doors yet. The reasoning is because they say all the information in it will essentially be a guess. This is only partially true. You can get real time numbers on almost all of your expenses and with a little legwork, you should also be able to generate a reasonable expectation of sales based on the size and location of the building you are looking for, as well as its surrounding demographics, which are all readily available online.

The first step in creating a restaurant budget is to create your food cost analysis. If you haven’t already done this, we suggest reading our post “How to Create a Food Cost Analysis” before you go any further. Your food cost analysis will provide most of the information you need to create your sales and inventory expense forecasts.

Below is an example of a complete restaurant budget. If your intention is to acquire funding through a financial institution, we strongly suggest that you create 3 budgets; Conservative, Moderate and Aggressive. Each should be reflective of different, but realistic, revenue scenarios; to see if your concept is financially feasible. If all 3 budget outcomes show a profit (10% or 15% of total revenue at minimum), then most likely your concept is a sound one. If profit is only shown in 2 out of 3 scenarios, I suggest you alter your strategy or concept altogether.

restaurant budget conservative

Creating a Restaurant Budget Step by Step

The anatomy of a restaurant budget is comprised of essentially two parts; Income and Expenses. When you deduct total monthly expenses from total monthly revenue, what you are left with is your profit.  Sounds simple enough, right? Let’s look at each part to see how you get these numbers. For the purposes of this post, let’s say we are opening a hamburger shop that sells burgers, fries, soft drinks and ice cream shakes.

Don’t Want To Create Your Own Templates?

Go to our Business Resources page to Purchase a Downloadable copy of our
Food Cost Analysis or Budgeting Templates in Microsoft Excel.


Your projected revenue is simply the number of customers you serve per day, multiplied by your estimated check average. This is a budget remember so we are going to work with average sale prices for each menu category. For example: if we have 4 different burgers in this menu category, prices being $7, $8, $9 and $10; our average burger sale price is $8.50. You’ll need to create these averages for each category to calculate your check average. For our purposes, it would be as follows:

Burgers: $7, $8, $9, $10
Average sale price: $8.50

Fires: $2, $4
Average sale price: $3.00

Beverages: $1, $3, $5
Average sales price: $3.00


In our hamburger shop, we are going to attempt to sell every customer, a hamburger, fires and a drink. So our sales assumption is that each customer will have a check average of $14.50. This check average would be appropriate to associate to every customer in our Aggressive budget. We know not everyone is going to get everything we offer so our Moderate budget could be reflected by say every customer purchasing a burger and a drink. And our Conservative could be say only a burger. You will have to decide what it most realistic for your concept.  Make sense? OK, good.

Sales Forecast

Now that we have our check average calculated, we need to determine our sales forecast based on our anticipated volume of customers. At this point, you should have some idea as to the size of your restaurant so for our hamburger shop, I believe we will need about 1,500 square feet in total. If you are not sure about the size you need for your concept, we suggest reading our blog post “How to Determine Restaurant Size.” Based on the approximated size of the restaurant, we need to figure out the size of our dining area to determine seating capacity. For our hamburger shop, we are going to use a ratio of 1 part kitchen to 3 parts dining area since our food production needs are minimal. If you are not sure what the ratio of kitchen to dining room is, we suggest reviewing our post “Restaurant Kitchen Size : An Importance Aspect of Design.”

Based on our calculations, of 1 part kitchen to 3 parts dining area, that gives us an approximate seating area of 1,125 square feet. The average square feet person ranges from 15-20 square feet per person, with the higher number being more for a fine dining operation. For our purposes, we can use 15 square feet per person, divided by 1,125 square feet of dining room, gives us roughly 75 seats. Since we have not accounted for bathrooms, walk-ways and an ordering area (which will be lager for a burger shop), I will error on the side of caution and say that we will estimate that we will have roughly 50 seats.

Customer Volume

Determining your potential customer volume is where your demographic research and operations planning will come into play. For our hamburger shop, we intend to be open for lunch and dinner service periods. Based on the type of location I think will be best, say in a high traffic area such as next to a shopping mall or a Home Depot, where this is busy afternoon traffic from working people, I could also estimate we will have a considerable number of take-out customers.

This is where some guesswork comes into play… I am going to estimate that based on my future intended location (the exact location of your choice will have an impact on this guess), that 25% of my customer volume will come from take-out customers. Remember, it is always better to error on the low side with estimations so you can always see the worst-case scenario.

To summarize, my hamburger shop will have 50 seats and I believe that an additional 25% of sales will come from take-out customers. I can how begin to approximate my sales volume based on number of times I intend to “turn the tables” for each service period. Keeping in mind that I want to generate a Conservative, Moderate and Aggressive restaurant budget, based on my average projected customer volume, I my forecast would look something like this:


Lunch Service: 62.5 customers X .5 table turns = 31.25 covers
Dinner Service: 62.5 customers x 1 table turns = 62.5 covers
Total Covers per day: 93.75


Lunch Service: 62.5 customers X 1 table turns = 62.5 covers
Dinner Service: 62.5 customers x 1.5 table turns = 93.75 covers
Total Covers per day: 156.25


Lunch Service: 62.5 customers X 1.25 table turns = 78.125 covers
Dinner Service: 62.5 customers x 2 table turns = 125 covers
Total Covers per day: 203.125

If you are going to be a 7 day per week operation, you can now easily calculate your projected sales volume based on the number of covers per day, multiplied by your estimate check average (based on our conservative, moderate and aggressive assumptions noted above), that total then multiplied by average number of days you will be open per month (30.42 for 7 days per week) to acquire a projected monthly revenue figure for your restaurant budget.


93.75 covers per day x $8.50 check average x 30.42 days per month= $24,240.94 income per month


156.25 covers per day x $11.50 check average x 30.42 days per month= $54,660.94 income per month


203.125 covers per day x $14.50 check average x 30.42 days per month= $89,596.41 income per month

Clearly, these appear to be lofty income aspirations. Keep in mind, no one (yourself included) is going to believe that these projections are going to happen immediately after you open your doors. Since we want to create a budget for at least 1 year, these figures should represent your 12th or last month revenue projection of the budget since you should be hitting your business stride by that time.

An average restaurant should expect at minimum, a 5% per month growth in revenue until you reach your volume capacity; so, working backwards from our 12th month revenue projection, our estimated income should look something like this:

restaurant budget sales forecast

Ok, now let out a BIG sigh… The hard part is over! Now that we have our revenue projections, we can start pulling information from our food cost analysis to begin filling in our expenses based on our food and in our case, disposables percentages.

*TIP: Having done all this work to get your numbers is great, but you also need to substantiate where they came from in either your business plan, or on the budget itself. Either way, make sure to remember that if you are trying to get funding to open your operation, your financial institution is going to want to know how you came up with these numbers in your restaurant budget; and telling them Mise Designs told you how to do it, isn’t going to fly.

restaurant budget market assumptions


Assuming you’ve done all your legwork thus far, now it is just a matter or organizing your information in a spreadsheet in a way that makes sense, using formulas to create your calculations. Since this part is pretty basic, I’ve outlined below what most expense line items every restaurant should have in heir budget.

Food Supplies Cost

Use the food cost percentage from your menu analysis to take that percentage from your sales revenue. This is your approximated food cost for the month.

  • 84% food cost x $24,240.94 revenue= $4,820.07 food cost of goods sold
    • Add additional expense lines for Disposables and Retail COGS if applicable


Create a mock schedule to see how many people will work every day. Estimate what you will pay each staff position. Not sure? Try PayScale to find average salaries in your area. Multiply that amount by our 30.42 days per month and you have your estimated monthly payroll expense.


This is the cost of having employees and includes costs for things like payroll taxes, health care, benefits, etc. I suggest asking your accountant for this percentage.

Lease or Rent Cost

Use LoopNet to find average prices in your area.


This is business insurance so talk to a broker to get a quote


If you can find a restaurant similar to yours, give them a call and ask. Most owners know why you are asking and will be happy to help. You can also call the utility companies in the area and they should be able to give you a budget number.

  • Gas
  • Electric
  • Water/Sewer
  • Telephone
  • Internet
  • Cable TV?

Fixed Business Operating

You can easily make some calls around to different companies to find out their fees for the items below:

  • Legal fees
  • Accounting fees
  • Equipment Maintenance Contact
  • Restaurant & Hood Cleaning Contract
  • Trash Collection


Every restaurant has a different marketing strategy, and each will cost a different amount of money so you’ll need to write out this strategy. This is again, an operating budget; so it does not include the cost of a building a website, but does include ongoing costs to maintain it.

Sundry Operating Expenses

This number is one that encompasses all the little variable costs office supplies, light bulbs, HVAC filters, etc.; so make an estimate that is bigger than you expect. If these include some fixed costs that will be ongoing like landscaping fees for example, better to include them as a sub-line item to make sure they don’t get overlooked.

Restaurant Budget Summary

Creating a realistic restaurant budget serves several purposes:

  • Establishes benchmarks based on current and future income/expense projections
  • Presents factual financial information to owners, investors and lending agencies
  • Guides your decisions to proceed with, or change your sales and marketing strategies
  • Acts as an ongoing tool to provide real time information about the health of your restaurant

As you can see, creating a sound restaurant budget is not an easy task; but when it is created properly, it can guide the restaurant owner in almost every decision he or she makes at the beginning and evolution of their concept.

We’ve helped develop dozens of business plans with clients over the years, and know how daunting of a task it can be when you are starting from scratch. We always recommend using a software platform to make things easier after you’ve completed your food cost analysis, using our Free Food Cost Calculator. Palo Alto Software has several programs to help entrepreneurs develop their business, sales and marketing plans that you can also view on our Business Resources page.

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