What is, How to Calculate & How to Maximize Restaurant Return on Investment

Even if a restaurant starts a work of passion, your ultimate goal is to turn it into a viable business, that makes a considerable profit and withstands the test of time.

That’s why calculating and maximizing the restaurant return on investment is an important resource in running your business. It will help you keep track of your progress and come up with ways to ensure your restaurant brings in money.

What is restaurant return on investment?

There are many restaurant metrics that help you monitor your progress, and restaurant return on investment is one of the most important ones.

Restaurant ROI measures how much money you are making after your financial investment. To get a better perspective on the revenue you are generating, you can track ROI:

• Monthly
• Quarterly
• Yearly

You can also track ROI for specific areas of your restaurant business, such as:

• Launching a new menu item: is the money you spent creating a recipe, training employees, and acquiring ingredients worth it? How many sales did the new menu item bring in the first month?
• Marketing efforts: how much money did you spend on marketing campaigns compared to how much visibility, new clients, and returning clients did you gain?
• Expanding your restaurant with a patio: were the renovation costs lower than the sales brought in by the clients that chose to dine on the patio?

What is the average ROI in the restaurant industry?

The average return on restaurant investment can be different from business to business according to a couple of factors, such as business goals, size, location, marketing, and more.

A healthy restaurant usually starts reaching the break-even point and making a profit at the 3–5-year mark.

What is a good ROI for a restaurant?

In the USA, the average restaurant return on investment was 11.13% across four quarters in 2024. Most restaurants have a target average ROI of 15% to ensure they make enough profit to be able to remain open for years to come.

How to calculate restaurant ROI?

You can calculate your restaurant’s return on investment by using this simple formula:

Now let’s clarify how you can calculate each component of the formula.

You can easily find out your gross profit if you use:

• A POS system: the GloriaFood POS system comes with a powerful reports module that gives you access to relevant data like the total amount of sales, types of orders, most popular categories, and much more;
• An online ordering system: if you also sell your food online, an online ordering system, like the free one from GloriaFood will allow you to monitor the total number of sales, sales by type of order, number of returning clients, and a lot more.

Your total costs, often named operational costs, are the expenses you have to keep your restaurant running, such as:

• Labor
• Utilities
• Food costs
• Maintenance
• Subscriptions
• Taxes
• Marketing

Read more: How to Calculate & Reduce Restaurant Overhead Costs

Your initial investment is comprised of your start-up costs which include:

• Location costs
• Renovations
• Equipment
• Technology
• Permits and licenses
• Marketing
• Menu creation

How to maximize restaurant return on investment

If you’ve calculated your restaurant ROI’s and noticed it is under 10%, it is time to implement the following measures to maximize it:

1. Take advantage of free and cheap technology

If you want to maximize restaurant return on investment, you can’t go ahead and spend a lot of money on technology unless it can give you the results you desire. And sometimes, the free options are even better than the paid ones.

A good example of this is the online ordering system from GloriaFood. Trying to sell on third-party apps can be a hassle. You have to pay a lot of taxes, some even hidden, and you risk going unnoticed between hundreds of other food options.

Adding an online ordering system to your website gives you complete control over the ordering process. It guarantees people can easily place an order in just a few clicks, so clients are always satisfied with their orders. Not only is it free, but it also takes only 10 minutes to install:

It works best when paired with a sales-optimized website that leads customers to the menu button and other important information, such as promotions, address, and working hours.

If you don’t have a website, you can generate one for less than the price of a pizza with GloriaFood:

2. Ensure your website is responsive

Did you know that 77% of people check restaurant websites before visiting the establishment? And that 89% of dining research is done on mobile devices?

These statistics show you how imperative it is for you to have a responsive website that loads fast and adapts to every type of device, just like the one you get when you use our restaurant website builder.

Moreover, the GloriaFood website maker delivers you a website that is already SEO-optimized to help you rank high in searches where interested potential customers will easily find you.

3. Update your menu with profitable items

One of the best ways to maximize restaurant return on investment is to cut some of the bigger expenses, which, for most food establishments, are food costs.

To do so, try to add more items to your menu that you can sell at a price considerably higher than they cost to produce, such as:

• Pizza
• Burgers
• Fries
• Sides
• Popcorn
• Drinks

Read more: 7 Most Profitable Menu Items to Include in Your Restaurant Menu

Here are a few more ways you can engineer your menu to earn more:

• Make portions smaller: so they are still satisfying, but small enough that you can use fewer ingredients and save on food costs;
• Position expensive items near high-profit ones that are cheaper: people will be tempted to choose the item that costs less, bringing you more profit in the process;
• Allow people to customize their dishes: with a variety of sizes and toppings, for which you can charge extra. Use the free menu creator from GloriaFood to enable choices and add-ons.

4. Run periodic promotions

Adding promotions to your menu can help you:

• Attract new customers: if you create an offer only available for newcomers, such as 10% off the first order or free delivery;
• Get more return customers: when you make a discount that only becomes available after a customer places a set number of orders or spends a certain amount of money. For example, free dessert for three orders placed, or 20% off the next order after you spend $100;
• Increase average order value: attract groups to place big orders by offering discounts for large orders and create combo menus to encourage people to pay more.

If you’re searching for an easy way to set up a variety of promotions, try the Promotions module from GloriaFood. It will take you seconds to create an offer that will be visible at the top of your online menu where it can’t be missed.

5. Launch cost-effective marketing campaigns

Marketing is very important to get the word out about your restaurant and attract new clients, but if you want to maximize restaurant return on investment, you can’t spend all your budget on it.

First, you need to take advantage of free marketing options like:

• Filling in your Google Business Profile: with correct and updated information like working hours, link to website, link to menu, and many pictures of your food;
• Be constant on social media: post often and interact with your customers through messages and comments;
• Encourage positive reviews: ask happy customers to leave a great review. You can even offer them small incentives like a free dessert.

Afterward, choose to invest your money wisely in marketing efforts that deliver results, such as:

• Targeted paid ads: that are only shown to your target audience, so you get your money’s worth;
• Email campaigns: the Autopilot module from GloriaFood segments your customers according to their purchasing history and sends them email campaigns to prevent cart abandonment, encourage second orders, and re-engage clients.

6. Create standard operating procedures

If you don’t have standardized procedures in place, you may be losing money and not noticing it. For example:

• With no standard recipes, some clients can receive a bigger portion and others a smaller one, increasing your food cost and affecting customer satisfaction;
• If employees are not trained on how to prepare every menu item, ingredients may get lost in the process and turn into food waste;
• When servers don’t know how to handle upset customers, it may lead to negative reviews.

All these problems can be solved if you create a set of standard operating procedures, train your employees on them, and have people responsible for enforcing them.

Read more: An Easy Guide to Restaurant SOPs (Standard Operating Procedures)

7. Track other metrics to identify ways to cut costs

If you want to have a better overall view of how your business is doing and identify any type of problems, you need to monitor a variety of metrics, such as:

• Inventory turnover
• Restaurant Customer Lifetime Value
• Restaurant Profit and Loss
• Restaurant Revenue per Seat
• PAR levels

Final words

If you want to be a successful restaurant owner for years to come, it is imperative to track and always try new ways to maximize restaurant return on investment. If you notice that your return is not as high as you hoped, try out the tips in this article to increase your profit.