Reviewed by: Kal Salem , CPA, PMP and Finance Consultant; MA in Accounting and BS in Supply Chain Management, Arizona State University
Restaurant owner salaries can vary widely. It depends on the type of restaurant you run, how large it is, and many other factors. Top earners can make more than $139,500 annually while others earn as little as $18,500. The amount varies from state to state and locale to locale but thankfully, there are plenty of things you can do to make your restaurant far more profitable.
How To Calculate Your Salary
As a restaurant owner, your salary will be based on two primary factors: operating costs and sales.
The more money your restaurant brings in and the less money it spends to stay operating, the higher your profit, and therefore salary, will be.
However, you can’t take every single penny of profit out of your business and pay it to yourself as a salary. After having paid their salary they use the remaining profits to reinvest in the business, pay off debts, or return to other investors. This can help the company grow.
What should a restaurant owner keep in mind about their salary?
Your salary will vary depending on the success of your business. The more money it makes, the more you can take in salary. Your restaurant's profits will depend on factors such as:
Location. A location in the heart of downtown with lots of foot traffic makes it easy to draw in customers. If you’re out far away from everything, you’ll see fewer customers and make less money.
Seasonality. Some restaurants see seasonal rises and falls in business. If you’re in a vacation town, you might see huge booms in the summer and very few clients in the winter.
How long you’ve been in business. Over time, as you establish your business, you’ll gain a loyal clientele and strong advertising through word of mouth. You can expect your business to grow more profitable as you’ve been open for longer.
Operating expenses. You can earn huge revenues and have little profit if you spend all your money on operating costs. Keep expenses low to keep profits, and your salary high.
Types of Restaurant Owner Jobs
Restaurant owners can be involved in their businesses in many different ways.
Franchise owner. Franchise owners buy a franchise from a larger corporation and run it according to corporate guidelines. These owners can take an active or passive role in their business.
Owner-operator. Owner-operators own the business but also take an active role in running it, working as management, cook, waitstaff, or other essential roles. This can help you earn more by keeping staffing costs lower.
Investor. Investor owners are more passive, relying on hired staff to keep the restaurant running and checking in only once in a while. This means less work than being an owner-operator, but higher staffing costs.
What Responsibilities Do Owners Have?
Restaurant owners, even if they don’t take a very active role in the daily running of their business handle many different tasks. You may wish to stipulate what role you will take as a restaurant owner in your business plan. See how to write a business plan for a restaurant for more details.
Here are some examples of the various tasks completed by restaurant owners:
Creating the restaurant concept. Owners come up with the style and menu for their restaurant.
Hiring and supervising staff. Owners make the final hiring and firing decisions and are also responsible for making sure staff do their jobs well.
Managing finances. As the owner, it’s up to you to make sure your restaurant makes enough money to keep operating and pays its suppliers and employees.
Coordinating suppliers. Owners figure out where to buy supplies from and make sure that the restaurant stays stocked.
Marketing the business. The best restaurant in the world will have no customers if no one has ever heard of it. Owners advertise and market to help draw in customers.
How To Decide How Much You Get Paid?
If you own a restaurant, that means you’re the boss. You have the power to choose who to hire and how much everyone gets paid, including yourself.
It’s important to make sure that your salary is enough for you to live on. However, you don’t want to go too far and take all of the money out of your business.
According to the National Federation of Independent Businesses, most profitable companies have owners that take less than 50% of the profits for their salary. They use the remaining profit to repay debt or investors, upgrade the business, spend it on advertising, or buy new equipment.
Tips To Increase The ROI Of Your Restaurant
If you want to boost your restaurant’s income, and your salary, try these tips. You might also wish to explore how to increase restaurant sales.
Redesigning the Menu from Time to Time. Variety is the spice of life, so giving clients a new menu, while saving some old favorites, can keep them coming back.
“Chef Special” And “Today’s Special”. For more frequent variety, you can use specials to give people a reason to visit regularly. This is also a good way to take advantage of supplier discounts on certain products.
Customer Is Always Right. Keep your customers happy and they’ll keep coming back, so do whatever you can to make customers feel like they’re welcome.
Keep Your Menu Simple And Easy. Complicated menus can be overwhelming for both customers and your staff. A streamlined menu is easier for customers to understand and makes it easier to buy supplies and train cooks.
On-The-Job Training Facilities. A well-trained staff can keep your business running smoothly and limit waste, so have facilities on-site to train your employees.