What is a restaurant budget?
A restaurant budget is a simple plan for your money. It estimates how much you'll make in sales and how much you'll spend on food, labor, rent, and other costs so you're not guessing month to month.
7 Simple Steps to Build a Restaurant Budget
Why Every Restaurant Needs a Simple Budget
Money moves fast in a restaurant. Food orders, payroll, rent, delivery apps, repairs, taxes - it all hits your account whether sales are strong or slow. With so much going on, it's easy to lose track. Many restaurants operate on thin profit margins, often around 3-5% of sales, so even small mistakes in spending can wipe out most of your profit.
A restaurant budget is simply a plan for your money. It helps you decide, in advance, how much you expect to bring in and how much you can afford to spend on food, labor, rent, and everything else it takes to keep the doors open. Think of it as a clear, organized snapshot of your numbers.
Step 1. Gather Your Numbers Before You Start
Before you build a budget, you need to know what you're working with. Guessing leads to frustration later. The first step is simple - gather your key numbers so your budget is based on reality, not hope.
Start with sales. Pull at least the last 3-6 months of sales from your POS. If your business is seasonal, grab a full year if you can. Look at total sales, but also notice patterns - busy days, slow days, lunch vs. dinner, weekday vs. weekend. These patterns will help you set better targets later.
Next, collect your fixed costs. These are the bills that don't change much from month to month -
- Rent or mortgage
- Insurance
- Internet and phone
- Software and subscriptions (POS, timekeeping, scheduling, inventory, music, etc.)
- Loan payments or equipment leases
Then gather your variable costs, the ones that move up and down with sales -
- Food and beverage invoices
- Paper goods and disposables
- Hourly labor for front and back of house
- Delivery app commissions and fees
Pull this information from invoices, payroll reports, bank statements, and your accounting or POS system. If some numbers are messy or incomplete, use your best reasonable estimate and mark it so you can refine it later.
Finally, put everything in one place - a simple spreadsheet, a legal pad, or a notebook. The format doesn't matter. What matters is having all your numbers visible. When your information is gathered and organized, building a budget becomes much easier and faster, and your decisions become more grounded in facts instead of gut feeling.
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Step 2. Set Realistic Sales Targets
Once you know your past numbers, the next step is deciding what you want your sales to be. This isn't about dreaming up a big number. It's about setting a clear, realistic target that you can use to plan labor, food orders, and spending.
Start with your historical sales. Look at the last 3-12 months and find the average monthly sales. Then look at patterns - were certain months higher because of holidays, patio season, or local events? Were some months always slower? Use this to set a base line.
From there, decide how much you reasonably expect sales to change. For example -
- If you're stable but not growing, you might plan for sales to stay the same.
- If you're seeing steady improvement, maybe plan for a small increase, like 3-5%.
- If you're in a tough period, it may be safer to plan on flat or slightly lower sales.
Once you pick a monthly sales target, break it down -
Monthly - Weekly (divide by 4 or by the actual number of weeks)
Weekly - Daily (based on which days you're open and usual busy/slow days)
This gives you something you can use in the real world. For example, if your weekly target is $28,000 and you know Fridays and Saturdays are your big days, you might aim for $7,000 on those days and lower targets on Mondays and Tuesdays.
Sales targets matter because they connect directly to your budget. Labor hours, food prep, and even marketing plans should be sized to match your expected sales - not guessed week by week. With clear targets, you can staff, order, and spend with a plan instead of hoping it works out.
Step 3. Estimate Your Main Costs
Now that you have your sales targets, it's time to estimate what it will cost to hit those numbers. This step turns "I hope we make money" into "Here's what we can afford to spend." You'll focus on a few main cost buckets - food, labor, and overhead.
Start with food and beverage costs (COGS). Look at your past invoices and compare them to your sales for the same period. Divide total food and beverage cost by total sales to get your food cost percentage. For example, if you spent $12,000 on food and did $40,000 in sales, your food cost is 30%. Use that percentage as a starting point. If your goal is to improve, you might aim to shave it down slightly over the next few months.
Next is labor. Include hourly staff, salaried managers (converted to a monthly or weekly number), and any benefits or payroll taxes if you track those. Divide total labor cost by total sales for the same period to get your labor percentage. Many restaurants aim for labor in a certain range, but the exact target depends on your concept and service style. Use your real numbers first, then decide what "better" looks like.
Then, estimate your overhead -
- Rent or mortgage
- Utilities (gas, electric, water)
- Insurance
- Licenses and permits
- Technology and software
- Cleaning services or linen
- Other recurring fees
Most of these are fixed or close to fixed, so you can plug in the actual amounts.
The key idea is this- you're turning your history into a set of targets. If you know you usually run 30% food cost, 28% labor, and 20% overhead, you can use those as the foundation of your budget. Later, you'll turn these estimates into clear spending limits you can manage week by week.
Step 4. Set Spending Limits and Targets
With your sales targets and cost estimates in place, it's time to turn them into clear spending limits. This is where your budget starts to feel real. Instead of thinking "our food cost should be around 30%," you'll know, "this month we can spend up to $X on food."
Start with your sales target. Let's say your monthly sales goal is $80,000. Using the percentages you estimated earlier, you can translate that into dollar limits -
- Food and beverage (for example, 30%). $24,000
- Labor (for example, 28%). $22,400
- Overhead (for example, 20%). $16,000
You don't have to use these exact numbers - they should reflect your own restaurant - but this is the idea. These dollar amounts become your maximum planned spending in each category.
Next, break those monthly limits into weekly targets so they're easier to manage day to day. If you plan on four weeks in a month -
- Food budget per week. $24,000 / 4 = $6,000
- Labor budget per week. $22,400 / 4 = $5,600
If your sales are uneven across weeks (for example, some weeks include holidays or events), adjust the weekly limits to match your expected sales.
Then, get more specific -
- For food, think in terms of weekly order targets based on your sales forecast.
- For labor, think in terms of total hours and dollars you can schedule for each week and each role (servers, cooks, hosts, dish, etc.).
Put all of this into a simple budget table with columns for -
- Category (food, labor, rent, etc.)
- Monthly budget
- Weekly budget
- Actual spend (you'll fill this in as you go)
These spending limits are not there to punish you or your managers. They're guardrails. They give you and your team a clear picture of what "on budget" looks like, so you can make smarter decisions about scheduling, ordering, and promotions before the money is spent - not after it's gone.
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Step 5. Track Weekly So You Don't Get Surprised
A budget only works if you keep an eye on it. Checking numbers once a month is usually too late. By then, the money is already spent and you're just explaining what went wrong. Weekly tracking helps you catch problems early, when small changes can still fix them.
Start with a simple weekly routine. Pick the same day each week - many restaurants use Monday or Tuesday. On that day, gather -
- Last week's total sales from your POS
- Food and beverage purchases from invoices
- Total labor cost from your timekeeping or payroll system
- Any other major expenses that hit that week
Then compare these numbers to your weekly budget targets. For example -
- If your weekly food budget is $6,000 and you spent $6,800, you're $800 over.
- If your labor budget is $5,600 and you spent $5,200, you're $400 under.
You don't need a long report. A simple "budget vs. actual" table works -
1. Sales - Target vs. Actual
2. Food cost - Target vs. Actual
3. Labor cost - Target vs. Actual
4. Key overhead items (if any big ones hit that week)
When you see a gap, ask a few basic questions -
- Did sales fall below target? Why?
- Did we over-order food or see more waste?
- Did we schedule more hours than needed?
- Did any one-time costs hit (repairs, equipment, etc.)?
The point is to understand the story behind the numbers while there's still time to react. If you notice food cost creeping up two weeks in a row, you can tighten prep, adjust par levels, or revisit portions before the end of the month. If labor is high on slow days, you can adjust upcoming schedules.
Weekly tracking turns your budget from a document you file away into a tool you actually use. It keeps you in control and reduces those "How are we this busy and still short on cash?" moments.
Step 6. Adjust Quickly When the Numbers Drift
Even with a solid budget, your numbers will drift. Sales will be higher or lower than expected, food prices will change, and schedules won't always match the plan. That's normal. What matters is how quickly you respond when things start moving off track.
When you review your weekly numbers, look for red flags -
- Food cost higher than your target
- Labor percentage creeping up
- Sales coming in below plan for more than one week
- Big, unexpected expenses hitting your cash flow
Instead of panicking, focus on small, practical adjustments.
If food cost is over budget -
- Check waste logs and prep lists - are you making too much of certain items?
- Look at portion sizes and plate builds - are they consistent?
- Review your menu mix - are guests ordering low-margin items more than expected?
- Talk to vendors about price changes or alternative products.
If labor is too high -
- Compare scheduled hours to actual sales - are you overstaffed on slow shifts?
- Adjust future schedules based on patterns you're seeing, not just habits.
- Reduce early clock-ins and late clock-outs.
- Look for ways to cross-train staff so fewer people can handle more tasks during slower periods.
If sales are below target -
- Shift your labor and ordering to match the lower volume.
- Consider simple promotions that don't hurt your margins (upselling, add-ons, combo offers).
- Make sure your hours and staffing match when guests actually come in.
The key is speed. Don't wait until the end of the month to act. If you see a problem this week, make a change next week. Even small moves - cutting a couple of hours on slow days, tightening prep, or adjusting orders - can protect your bottom line.
Your budget isn't there to judge you. It's there to give you an early warning system so you can steer the business back on course before the damage is done.
Step 7. Review Monthly and Plan the Next Month
Weekly check-ins keep you out of trouble. A monthly review helps you step back and see the bigger picture. This is where you ask, "Is our budget still realistic?" and "What do we need to change for next month?"
At the end of each month, gather -
- Total sales for the month
- Total food and beverage cost
- Total labor cost
- Key overhead expenses (rent, utilities, tech, major repairs)
Then compare budget vs. actual for each category. For example
1. Sales - Planned $80,000 / Actual $76,000
2. Food - Budget $24,000 / Actual $25,500
3. Labor - Budget $22,400 / Actual $21,800
Look for patterns, not just one-off issues -
- Are you consistently over on food cost?
- Are certain weeks always heavy on labor?
- Are slow months hurting cash more than expected?
Next, write down 2-3 specific actions for the coming month. Keep it simple and clear, like -
- "Lower food cost by tightening prep on low-volume days."
- "Adjust weekday schedules by cutting 10 labor hours per week."
- "Review menu pricing on three low-margin items."
You don't need to overhaul everything at once. Small, steady improvements are easier to stick with and track.
Finally, update your budget if your reality has changed. If sales are consistently higher or lower than you planned, adjust your targets and spending limits so your budget matches what's really happening in your restaurant.
If you want this process to be easier, consider using tools that pull data together for you instead of chasing reports from multiple systems. Platforms like Altametrics can help connect timekeeping, scheduling, sales, and labor so you can see your numbers in one place, spot problems faster, and keep your budget on track without spending hours in spreadsheets. To learn more about Altametrics, click "Schedule a Demo" below.
Frequently Asked Questions
What numbers do I need to start a restaurant budget?
- Past sales from your POS
- Food and beverage invoices
- Payroll or timekeeping reports
- Rent, utilities, insurance, software, and other regular bills
Start with what you have. You can improve the detail over time.