Michigan State University Extension
Tourism Educational Materials - 33311029
06/06/02
Restaurant Industry Comparison
List of files and visuals associated with this text.
Industry averages can help you compare the operating
performance of your restaurant with other similar
operations. By periodically comparing your average daily
seat turnover, average check, sales and expense figures
with industry averages and your past performance, you can
identify areas that need attention and opportunities to
increase your profitability.
If you are planning a restaurant, industry averages can
provide a basis for developing your financial projections.
This data, along with local market area statistics, can
provide you with information to develop realistic
assumptions to support your projections.
This publication summarizes selected industry averages for
three types of restaurant operations in the U.S.:
full-menu table service, limited-menu table service, and
limited menu without table service (fast food). In
addition, industry averages for Wisconsin restaurants
(overall) are included. The statistics are based on 1992
operating results.
The national industry averages presented in this
publication are from the "Restaurant Industry Operations
Report, 1993" (for the year 1992), a publication of
Deloitte & Touche and the National Restaurant Association.
To order a copy of the complete report contact the NRA
Distribution Center, One School Street, Glen Cove, NY
11542-2549 or call 800-526-6662. The Wisconsin industry
averages are from "Wisconsin Restaurant Operations, 1992,"
a publication of the Wisconsin Restaurant Association. To
order a copy of the complete report, contact the WRA, 31
S. Henry St., Madison, WI 53703-3110 or call 800-589-3211.
Seat Turnover and Average Check
Two key variables that determine restaurant sales are the
Average Daily Seat Turnover and the Average Check.
Average daily seat turnover is equal to the average number
of times each seat in a restaurant is occupied per day.
Average check is equal to average food and beverage
spending, per guest. Accordingly, restaurant sales are
generally calculated as follows:
Sales = Days Open x Number of Seats x Average Daily Seat
Turnover x Average Check
Presented below are 1992 average daily seat turnover and
average check levels for various types of restaurants.
(Vis. 1)
Revenue and Expense Industry Averages
The National Restaurant Association has adapted a series
of revenue and expense categories for restaurants called
the Uniform System of Accounts. These accounts provide a
standardized format for analyzing your operation.
Definitions of these Accounts are presented on the back
page of this publication.
Each revenue or expense account can be analyzed as a
percent of sales (% of Sales) or as a dollar amount per
seat ($ per Seat). Accounts that vary in relation to
sales, such as Cost of Food Sales, are better analyzed as
a % of Sales. Accounts that are relatively fixed, such as
marketing, are better analyzed as a $ per Seat.
The table below presents industry averages for the four
restaurant categories.
(Vis. 2)
Comparison with Your Restaurant
(Vis. 3)
1. Enter your restaurant's annual income statement data in
the first column titled "$ Amount." if you are using
different account classifications, translate them into
this uniform industry format.
2. For each account, calculate and record your "% of
Sales." Food and beverage costs should be based on their
respective sales. All other accounts should be based on
total sales.
3. For each account, calculate and record your "$ per
Seat" ratio. This is simply the amount of revenue or
expense on each line divided by the number of seats in
your operation.
4. Using the industry averages on the previous page,
analyze your "% of Sales" and "$ per Seat" amounts. Look
for significant differences and record your comments in
the space provided.
Once you complete this analysis, focus on those variances
that are significant and controllable. Investigate how
other operations have managed to increase sales or
decrease expenses in the categories you have identified.
Work with your staff to correct problems and set your
sights on doing better than the industry averages.
Chart of Accounts
Food Sales include revenue from food, coffee, tea, milk,
juices and other non-alcoholic items typically part of a
meal. If there is no alcoholic beverage service, soft
drinks would also be included in this category.
Beverage Sales includes wine, liquor, beer and soft
drinks.
Food Cost includes food, coffee, tea, milk and soft drink
expenses associated with the service of meals.
Beverage Cost includes beverage expenditures associated
with the sale of all wines, liquors and beers.
Other Income includes cover charges, banquet room rental,
sundry sales, vending sales, telephone commissions,
salvage sales and other miscellaneous revenue items.
Payroll Expense includes all positions including
categories such as restaurant manager, host, server bus
person, cook, dishwasher, storeroom clerk and bartender.
Employee Benefits include social security taxes such as
the federal retirement tax (FICA), federal and state
unemployment taxes and state health insurance tax. It also
includes insurance (such as worker's compensation and
health coverage), employee meals and other benefits.
Direct Operating Expense includes uniforms, laundry,
tableware and linen, utensils, kitchen fuel, supplies,
menus, contract cleaning, flowers and decorations, auto
expense, licenses and permits and other expenses.
Music and Entertainment Expense includes musicians,
entertainers, royalties and other costs.
Marketing Expense includes selling and promotion costs,
advertising, public relations, franchise fees and other
expenses incurred to make the public aware of the
restaurant.
Utilities Expense includes electricity, gas, water and
sewer services. It excludes fuel used to operate the
kitchen.
Administrative and General Expense includes overhead items
required to run the business, but not directly related to
the service of the customer. Items included are office
supplies, postage, computers and software, telephone, dues
and subscriptions, travel, general insurance, credit card
commissions, collection fees, cash shortages, provision
for doubtful accounts, professional fees and other
administrative costs.
Repairs and Maintenance Expense includes supplies,
materials and contracted work associated with maintaining
the building and grounds.
Rent is the amount paid to a lessor for the use of a
premises.
Property and Other Taxes include both the real property
and personal property taxes.
Property Insurance Expense includes the cost of insuring
against destruction to the building and its contents.
Interest Expense is the periodic charge for the use of
funds loaned by a bank or other lender.
Depreciation Expense is a measure of the loss of value of
business assets during a period. It is an accounting
measure and may not correspond to the market value of the
assets.
This publication was produced by the Tourism Research and
Resource Center, University of Wisconsin-Cooperative
Extension.
Written by Bill Ryan with layout and technical assistance
provided by Karen Marvin.
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This file was generated from data base TD on 09/30/03.
Data base TD was last revised on 06/06/02.
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