According to the National Restaurant Association, small-business restaurants tend to have a pretax profit margin of only 3% to 5%. If you own a restaurant, here’s what you need to know about profit margins and some simple steps you can take to increase yours.
Profit margin basics
Profit margin is a reliable way to measure your business’s profitability. To calculate the pretax profit margin, divide operating income by revenue and then multiply the result by 100.
