The Restaurant Budget Guide

By Rob Bruni, founder of OpsEdge Hospitality, twenty years running restaurants, bars, clubs and resorts. Updated November 2026.

Free printable: Weekly Prime Cost Close checklist (PDF)

A restaurant budget is a forecast of every line on your P&L for the year ahead, month by month, built from how the business actually works: days open, covers, check average, the schedule and the lease. Done well, it takes an afternoon to build and gives you a target to manage against every month of 2027. This guide walks through the six steps we use, with a full worked example for a 120-seat full service restaurant doing about $2.6 million a year.

Why a budget, and not just last year plus three percent

Most operators who say they have a budget have last year's P&L with a growth rate on top. That gives you a number, but not a plan. It cannot tell you what happens if you close Mondays, add a brunch, raise prices in March or lose a sous chef in July, and it bakes last year's mistakes into this year's targets.

A driver-based budget starts from the things you control. Sales come from days open, covers per day and average check. Food and beverage cost come from your target percentages. Labor comes from the hours you plan to schedule and the people on salary. Rent comes from the lease. When something changes, you change the driver and the whole year updates. That is the difference between a budget the general manager uses and one that sits in a folder.

It also sets up the most useful report you will look at all year, budget versus actual. If you already read a monthly restaurant P&L, the budget is simply that same statement written in advance.

Step 1: Build sales from days, covers and check

Sales drive everything else, so build them carefully. The formula is simple:

Sales = days open x covers per day x average check

Days open. Count them on the 2027 calendar, not by assumption. 2027 starts on a Friday and has 52 Mondays. Our example restaurant is closed Mondays, Thanksgiving (Thursday, November 25) and Christmas Day (a Saturday in 2027), which leaves 311 days open. A month with five Fridays and Saturdays is worth noticeably more than one with four, so count each month separately.

Covers per day. Start with last year's covers by month from your point of sale, then adjust for what you know is changing: a new patio, a competitor opening down the street, a road closure, a menu change. Our example averages about 151 covers a day across the year, roughly one and a quarter turns of 120 seats, ranging from 129 in January to 168 in December.

Average check. Use last year's check, plus any price increase you are planning and when it takes effect. Our example uses $56 per cover all year. If you plan a 3 percent increase on April 1, budget the old check for the first quarter and the new one from April on.

Then split sales into food and beverage using last year's mix. Our example runs 74 percent food and 26 percent beverage. That split matters because the two carry very different cost percentages, which is why the beverage program is a budget lever, not just a menu decision.

Step 2: Set cost of goods targets

Budget food cost as a percent of food sales and beverage cost as a percent of beverage sales, never as one blended number. Use targets you can actually hit, based on your recent actuals and your plan to improve them. The benchmarks page lists typical ranges by concept; for a full service restaurant, 28 to 32 percent food cost and 18 to 24 percent beverage cost are common.

Our example budgets 30 percent food cost and 22 percent beverage cost, which blends to 27.9 percent of total sales. If last year ran 33 percent food cost, do not budget 28 because it looks good. Budget 31, write down the two or three changes that get you there (a recosted menu, tighter ordering to par, a weekly count), and hold the kitchen to it.

Step 3: Budget labor from the schedule

Labor is the line most budgets get wrong, because it gets entered as a percentage instead of built from hours. Build it in three parts.

Hourly wages. Take a typical week's schedule for slow, average and busy periods, multiply the hours by the wage for each position, and apply the right week to each month. This is where 2027 wage changes belong: many states and cities raise minimum and tipped minimum wages on January 1, so check the rates that apply to your location and build them in from the first pay period. Our example budgets hourly wages at 20 percent of sales.

Salaried management. List every salaried person by name or role, with their salary and any planned raise, and spread it evenly by month. Our example runs 8 percent of sales.

Payroll taxes and benefits. Employer payroll taxes, workers' compensation, health insurance and any other benefits. Budget these by month, not as a flat percent. Federal and state unemployment taxes apply only to the first part of each employee's wages each year (federal unemployment tax covers the first $7,000), so they land heavily in January through March and fall away later. A budget that ignores this will show a surprise labor miss in the first quarter every year. Our example runs 5 percent of sales for the year.

Total labor in the example is 33 percent, and prime cost is 60.9 percent, inside the normal range for full service. The labor cost guide and the prime cost guide cover the targets in more detail, and the free labor cost calculator will check your number in a minute.

Step 4: Controllable and occupancy expenses

Controllable expenses are the costs management can influence month to month. Budget each one from last year's actual dollars, adjusted for known changes, and note which ones move with sales:

• Direct operating: smallwares, paper and disposables, linen, cleaning supplies, uniforms. Moves with sales.
• Credit card fees: a percent of card sales, usually 2.5 to 3.5 percent. Moves with sales.
• Marketing: a fixed monthly plan plus any planned campaigns.
• Utilities: by month from last year's bills, because summer cooling and winter heating swing it widely.
• Repairs and maintenance: service contracts monthly, plus an allowance for breakdowns.
• General and administrative: software, accounting, payroll service, licenses, bank fees.

Our example totals 19 percent of sales for controllables. Subtract prime cost and controllables from sales and you have controllable profit, the number a general manager should be judged on.

Occupancy comes straight from the lease and the insurance and tax bills: base rent, any percentage rent, common area charges, property tax and property insurance. Our example runs 10 percent. If your lease has percentage rent above a sales breakpoint, model the month you cross it.

The full worked example

Here is the 2027 annual budget for our example: a 120-seat full service restaurant, closed Mondays, about 151 covers a day at a $56 check.

Line	2027 budget	% of sales
Food sales (74%)	$1,939,641	74.0%
Beverage sales (26%)	$681,495	26.0%
Total sales	$2,621,136	100.0%
Food cost (30% of food sales)	$581,892	22.2%
Beverage cost (22% of beverage sales)	$149,929	5.7%
Hourly wages	$524,227	20.0%
Salaried management	$209,691	8.0%
Payroll taxes and benefits	$131,057	5.0%
Prime cost	$1,596,796	60.9%
Controllable expenses	$498,016	19.0%
Controllable profit	$526,324	20.1%
Occupancy (rent, CAM, insurance, property tax)	$262,114	10.0%
Operating profit before depreciation	$264,210	10.1%

Two things to notice. First, prime cost at 60.9 percent leaves room for a healthy controllable profit, but only because the cost targets are realistic and the labor is built from a real schedule. Second, every point of food cost is worth about $19,396 a year at this volume, and every point of labor about $26,211. Those are the numbers worth putting in front of the kitchen and the floor managers. The break-even guide shows how to find the sales level where this restaurant stops making money.

Step 5: Spread it across the months

An annual budget is not much use on February 10. Spread every line by month so you have a target to compare against each time the books close.

Sales come first, using days open in each month and a seasonal covers figure. This is the example's monthly sales plan:

Month	Days open	Covers a day	Sales budget
Jan	27	129	$195,048
Feb	24	138	$185,472
Mar	26	150	$218,400
Apr	26	153	$222,768
May	26	162	$235,872
Jun	26	156	$227,136
Jul	27	147	$222,264
Aug	26	144	$209,664
Sep	26	150	$218,400
Oct	27	156	$235,872
Nov	24	153	$205,632
Dec	26	168	$244,608
Year	311	151 avg	$2,621,136

Then spread each cost line the right way. Variable costs (food, beverage, hourly labor, card fees, direct operating) follow sales. Fixed costs (salaries, rent, insurance, most of G&A) are the same every month. Seasonal costs (utilities, payroll taxes, marketing campaigns) follow their own calendar. The result is that your slow months show a thin or negative profit and your busy months carry the year, which is exactly what happens in real life. A budget that shows the same profit percent every month is hiding that.

Mark the 2027 dates that matter to your sales, too. Valentine's Day falls on a Sunday, Mother's Day is May 9, Thanksgiving is November 25 and New Year's Eve is a Friday, which is good news for December.

Step 6: Budget versus actual, every month

The budget earns its keep once the year starts. Within ten days of each month closing, put the actual P&L next to the budget, line by line, with the variance in dollars and percent. Then look at it in this order:

1. Sales versus budget. Was it covers or check? Covers point to marketing, service and reputation; check points to pricing, menu mix and upselling.
2. Prime cost percent versus budget. If sales were down and prime cost percent went up, labor did not flex. If sales were on budget and food cost was up, look at inventory, waste and pricing.
3. Controllables over budget by more than a few hundred dollars. Each one gets a one-line explanation.
4. Year to date. One bad month is noise; three in a row is a trend that needs a plan.

Do not rewrite the budget when actuals miss it. Keep the original as the target and add a reforecast column if the year has truly changed, for example after a major remodel or a lost lease. The weekly version of this habit, tracking prime cost every week, catches most problems before they ever reach the monthly P&L.

Six budget mistakes we see every year

• Budgeting sales as last year plus a percent. Count the days and build from covers and check instead.
• One blended cost of goods percent. Food and beverage need separate targets, or a change in mix will look like a cost problem.
• Labor as a flat percent. Build it from the schedule and salaries, and put payroll taxes where they actually land.
• Forgetting January 1 changes. Minimum wage, tipped wage, insurance renewals, vendor price increases and rent escalations often all start in January.
• Hope-based targets. A food cost target five points below last year with no plan behind it will be missed by March, and then ignored.
• Building it and never opening it again. The budget is only worth the monthly budget versus actual meeting that follows it.

FAQ

What should be in a restaurant budget?

Every line of the P&L for the year, by month: food and beverage sales, food and beverage cost, hourly labor, salaried labor, payroll taxes and benefits, each controllable expense, occupancy costs and the resulting prime cost, controllable profit and operating profit. A good budget also shows the drivers behind sales: days open, covers per day and average check.

How do you calculate a restaurant sales budget?

Multiply days open by covers per day by average check, month by month. Count days open on the actual calendar, base covers on last year's point of sale data adjusted for known changes, and apply any planned price increase from the month it takes effect.

What percentage of sales should each restaurant cost be?

For a full service restaurant, common ranges are 28 to 32 percent food cost on food sales, 18 to 24 percent beverage cost on beverage sales, 30 to 36 percent total labor, 15 to 20 percent controllable expenses and 6 to 10 percent occupancy. Your own targets should come from your recent actuals and a specific plan to improve them.

When should I build my 2027 restaurant budget?

Start in November or December so it is ready before January 1, when wage rates, insurance renewals and vendor increases often change. If you are late, build it in January anyway; a budget that starts in February is far better than none.

How often should I compare budget to actual?

Every month, within about ten days of the books closing, line by line with the variance in dollars and percent. Track prime cost weekly in between so problems show up before the month ends.