The salaries of restaurant owners can vary widely and are determined by a variety of factors. The location, size, amenities and offerings of the restaurant all play a role in operating costs and the salaries restaurant owners are likely to draw. While there are many advantages to this role – particularly being your own boss and making all of the major business decisions – it can also be a risky venture, especially in the first few years of operation.
Operational Factors Impacting Salary
Before opening a restaurant, a business person typically drafts a business plan in advance of seeking the financing necessary to buy or start a restaurant. Part of this plan will cover anticipated costs including start-up expenses, equipment, supplies, staff recruitment and training and overhead operating costs. Part of the overhead will include the restaurant owner’s salary. While an owner can draw a salary in whatever way he or she chooses, in many instances, especially with a start-up venture, a restaurant owner will take a percentage of profits as a salary to ensure the operation remains financially viable.
Location Factors Impacting Salary
Much like in real estate, restaurant success is often based on location. As such, an eatery located in a small rural community isn’t likely to enjoy the same type of financial success as a main street restaurant in a major metropolitan area. Accordingly, restaurant owners in different locations will have vastly different earning potential. Other factors that influence the financial success and resulting salary of the owner include:
- Types of food and beverage served
- Number of staffers on the payroll
- Amenities, such as sommelier, tableside prep or live entertainment
- Price points of menu items
Franchise operations may have more predictable earning levels than independent restaurants. The upside of franchise ownership is that you’re operating under an established brand. The downside is there are few operational pivots you can make to change up the business model if profits start to decline.
After all outside factors are taken into consideration, the average restaurant owner makes a salary in the neighborhood of $60,000 per year, though there’s a significant range in that figure, from about $29,000 to $153,000. Some restaurant owners may make more money via bonuses or profit sharing. Experience also plays a role. Those with 10 or more years of experienced tend to be at the higher end of the earning range. This is due primarily to the fact that experienced restaurant owners have learned the most effective ways to keep overhead costs low and to troubleshoot dips in the economy and corresponding declines in patronage.