October 31, 2025
Operating a profitable restaurant involves more than just preparing quality food. It requires a clear understanding of your revenue streams and cost structures. According to the National Restaurant Association, the foodservice industry is forecast to reach $1.5 trillion in sales by the end of 2025.
That scale presents opportunity—but also fierce competition and tighter margins.
In this blog, we will explore practical methods for calculating your restaurant's revenue, identifying key performance metrics, and implementing strategies to improve profitability. Whether you are a seasoned restaurateur or just starting out, these insights will help you take control of your financial health.
In brief:
Revenue is the total income generated by your restaurant from all sources before any expenses are deducted. It includes money earned from food, drinks, services, and any other offerings that contribute to your business.
These are the standard revenue streams:
Tracking all your revenue streams is key to running a profitable restaurant. iOrders offers a commission-free online ordering system with a flat delivery fee, allowing you to keep more of your revenue. By partnering with logistics providers like Uber Direct, iOrders ensures reliable delivery under your brand. Book a demo today to increase your restaurant’s profitability.
Suggested Read: How to Become a Successful Restaurant Owner: Your 6-Step Plan
Figuring out your restaurant’s revenue is one of the most important things you can do to keep your business on track. Knowing exactly where your money’s coming from allows you to make smarter decisions and spot areas for improvement. It’s not as complicated as it sounds.
You need to follow these few key steps to get you there:
Start by keeping an eye on your sales. By tracking how much you are bringing in each day, week, and month, you will get a clear picture of your restaurant’s performance.
Revenue isn’t just about food sales. You have got to include everything: drinks, delivery, catering, and any extra services. Bring it all together for a full picture of your income.
Here’s the simplest way to calculate your revenue:
Revenue = Number of Customers × Average Order Value (AOV).
It’s that easy. Just multiply how many customers you serve by how much they spend on average.
Once you have got a handle on your revenue, you can start making smarter decisions. But knowing your revenue is just the start. Next, we will look at key metrics that show how profitable your restaurant really is.
Profit is the money left over after you have covered all your expenses, and it’s what keeps your business alive and growing. Unlike revenue, which is the total amount of money you bring in from sales, profit tells you how much of that revenue is actually making it to the bank.
To get a clear picture of your restaurant’s profitability, you should track key metrics regularly. Let’s break down the most important ones.
Profit margin is a simple way to understand how much profit you are making from your revenue. It’s a percentage of your revenue that’s left over after covering costs. A healthy profit margin indicates your restaurant is well-positioned to grow.
Formula for calculating profit margin:
What it tells you: If you are spending too much on food, labor, or overhead costs, this number will drop, indicating you need to make adjustments.
COGS refers to the cost of the food and drinks you sell. This is one of the most important metrics because it directly affects your profit margin. You want to keep COGS as low as possible without compromising on quality.
Formula for calculating COGS:
What it tells you: High COGS means you are spending too much on ingredients, which could eat into your profits. It’s key to regularly review your food costs and look for ways to optimize them.
Labor is a significant expense for restaurants, so tracking labor costs is critical for profitability. This metric shows how much you are spending on wages compared to how much you’re earning in sales.
Formula for calculating labor cost percentage:
What it tells you: High labor costs might indicate that you're overstaffed or not scheduling efficiently. Keeping this number in check is vital for profitability.
AOV is a key metric that shows the average amount each customer spends. By increasing AOV, you can improve your overall revenue without increasing the number of customers.
Formula for AOV:
What it tells you: A higher AOV means your menu is priced well, or customers are buying more items. You can increase AOV by upselling or offering combo deals.
Now that you understand these key profitability metrics, it’s important to know what factors impact your Average Revenue Per Order. This metric can be influenced by a range of factors, from pricing strategies to promotions.
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When it comes to maximizing revenue, every order counts. Increasing the overall revenue is not just about raising prices. It’s about optimizing several factors that can influence how much a customer spends.
As Michelin-starred chef Pierre Gagnaire once said, “A good meal has a lot of value but a small profit margin.”
This highlights the challenge in balancing quality, customer experience, and profitability, where even the smallest adjustments can make a significant difference in your bottom line.
You need to consider the following to improve your revenue range:
Strategically adjusting your menu prices can directly affect the revenue value. Be mindful of how price increases may influence customer behavior, and balance pricing with the value you're offering.
Training your staff to upsell higher-margin items (like beverages, sides, or desserts) can increase order values. Cross-selling complementary items also encourages customers to spend a bit more.
The way your menu is laid out can encourage customers to choose higher-priced items. Use item placement, design, and descriptions to subtly guide customers toward more profitable choices.
Offering larger portion sizes or family-style meals can increase the total order value, especially for groups. Just make sure the cost of these items doesn’t outweigh the increased sales.
Offering combo deals, special promotions, or loyalty rewards can drive higher AOV by incentivizing customers to buy more.
Providing excellent service, a comfortable environment, and personalized attention encourages repeat visits and larger orders. Satisfied customers are more likely to spend more.
Increasing your average order is not just about pushing for higher prices; it’s about offering more value, creating a better customer experience, and being smart with pricing and promotions.
These strategies provide actionable ways to increase profitability and reduce unnecessary expenses. The next step is ensuring that you can track and act on the data for these strategies. iOrders enables real-time tracking of sales, customer behavior, and operational metrics through its integrated systems. This is explained better in the next section.
Suggested Read: What Is a Soft Opening and How to Plan One
Running a restaurant requires making smart decisions that drive revenue. That's where iOrders comes in. iOrders is a commission-free platform designed to help restaurants refine their operations and increase profitability. By eliminating third-party fees and providing powerful analytics, iOrders helps restaurant owners take control of their revenue.
These are a few features to improve your overall revenue:
Say goodbye to hefty commission fees. With iOrders, restaurants can accept orders directly through their own website or mobile app, keeping 100% of the revenue. This model has led to a 288% increase in revenue for many establishments, as per data collected over 12 months.
You can improve customer convenience with a branded online ordering system. Customers can place orders via your website or by scanning a QR code. Restaurants have seen a 244% increase in monthly orders by using iOrders
Offer delivery without the overhead. iOrders integrates with third-party logistics providers like DoorDash Drive or Uber Direct. They charge only a flat delivery fee, allowing you to retain more profit.
Reach your customers effectively with personalized marketing campaigns. iOrders' managed services help you engage customers and increase sales through targeted promotions and insights.
These programs encourage repeat business by rewarding loyalty, thereby increasing customer retention rates. By tracking customer behavior, iOrders allows you to tailor rewards to individual preferences, further enhancing engagement and driving sales.
iOrders uses data-driven insights to help restaurants create targeted marketing campaigns that engage customers effectively. With smart campaigns, you can proactively reach out to customers with personalized promotions based on their ordering history.
With iOrders’ AI-powered review system, you can easily manage and respond to customer feedback across multiple platforms. The system automatically analyzes customer reviews and generates personalized responses that align with your restaurant’s brand voice. This helps improve your online reputation, address customer concerns quickly, and maintain a positive relationship with your audience.
We offer a fully customizable white-label mobile app, giving restaurants a branded platform for customers to place orders directly. This app consolidates the customer experience, making it easier for them to order, pay, and track their orders.
Here’s how one restaurant owner described the impact:
“Working with iOrders has been a fantastic experience. They handled everything—from building our website to managing delivery drivers—so we could focus on what we do best: cooking great food. Since integrating iOrders, we’ve seen a significant boost in revenue, thanks to the simplicity of managing orders and engaging customers through one seamless platform.” — Raj Patel, Restaurant Owner
And he’s not alone. iOrders has helped power 300+ restaurants fulfill 1 million orders. We are a growth partner built for restaurants that want full control, faster execution, and measurable impact across every ordering channel.
Revenue generation is the lifeblood of any restaurant, and understanding how to optimize it can make all the difference. From improving average revenue per order to optimizing operations, every small change can significantly impact your bottom line.
iOrders provides the tools you need to take control of your restaurant’s revenue. With commission-free ordering, data-driven insights, and customizable features, it helps restaurants maximize profitability while providing a flawless customer experience.
Ready to take your revenue to new heights? Book a demo with iOrders today and start optimizing your restaurant’s operations.
To calculate the break-even point, you'll need to know your fixed costs (e.g., rent, utilities) and variable costs (e.g., food, labor). The break-even point is the level of sales at which your total revenue equals your total expenses, meaning you're not making a profit but not losing money either.
Key financial reports include the Profit & Loss (P&L) statement, which tracks revenue and expenses, and the Cash Flow statement, which shows how cash moves in and out of your business. Regularly reviewing these reports helps you stay on top of costs, identify trends, and make informed decisions to improve profitability.
The food cost percentage is calculated by dividing your total food costs by your total food sales and multiplying by 100. This percentage helps you understand how much of your revenue is spent on ingredients and food preparation, allowing you to adjust pricing or reduce waste if necessary.
Increasing revenue without raising prices can be done by improving customer service, introducing new menu items, upselling, offering loyalty programs, and enhancing the dining experience. You can also focus on increasing repeat customer frequency through targeted marketing or promotions.
Using a Point-of-Sale (POS) system is the most efficient way to track daily sales in real-time. Additionally, tracking cash flow, monitoring daily receipts, and keeping an eye on peak hours can help you stay on top of daily revenue. Automation tools like iOrders can also provide real-time insights and simplify this process.
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