# Restaurant profit margins by type: tax data, chain filings and a worked P&L

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*By Maple Team · Published 2026-09-26*

Restaurant profit margins from IRS tax data and chain 10-K filings, each with its method and year, plus a worked P&L you can copy.

IRS data for tax year 2023 shows restaurant and bar sole proprietors kept 3.4 cents of net income per dollar of sales, before paying the owner a wage. Food service corporations kept 5.7 cents in 2022. Chains that report a restaurant-level margin put it between 13.6% and 22.5% in their latest filings, before head-office costs. Which figure fits you depends on what you count.

This guide gives each figure with its source, year and method, then works through a made-up restaurant's year so you can build your own. It names no "typical" margin, because the sources below measure different things. Food and labor are the two largest costs in every source below, and our [labor cost percentage guide](https://maple.inc/blog/restaurant-labor-cost-percentage) shows how to count it.

## What does IRS tax data show about restaurant margins?

The IRS Statistics of Income division publishes estimates drawn from a sample of business tax returns. Net margin below is net income less losses, divided by receipts; the division is ours.

    Group and tax year Returns Receipts Net margin Share with no net income
  Sole proprietors: restaurants (full and limited service) and drinking places, 2023 653,372 Sole proprietor receipts: $77.2 billion Sole proprietor net margin: 3.4% ($2.6 billion) Sole proprietors with no net income: 42%
  Same group, only those with net income, 2023 376,535 Profitable sole proprietor receipts: $58.7 billion Profitable sole proprietor margin: 13.6% ($8.0 billion) None, by definition
  Corporations: food services and drinking places, 2022 310,215 Corporate total receipts: $617.6 billion Corporate net margin: 5.7% ($48.1 billion of net income less $12.8 billion of losses) Corporations with no net income: 42%
  Same corporations, only those with net income, 2022 178,944 Profitable corporate receipts: $480.7 billion Profitable corporate margin: 10.0% None, by definition

The sole proprietor rows come from the IRS [nonfarm sole proprietorship tables](https://www.irs.gov/statistics/soi-tax-stats-nonfarm-sole-proprietorship-statistics) for 2023, released in March 2026. The corporation rows come from Table 1 of the IRS [corporation complete report](https://www.irs.gov/statistics/soi-tax-stats-corporation-income-tax-returns-complete-report-publication-16) for 2022, released in September 2025. The two groups differ in size: the sole proprietors average about $118,000 in receipts each, and the corporations about $2 million, a figure that includes large chains.

A sole proprietor's net income is also the owner's pay. The owner's own hours do not appear as a wage, so that 3.4% also has to pay for the owner's work.

## Where does a small restaurant's money go?

The same IRS release breaks the sole proprietors' 2023 deductions into lines. As shares of receipts, by our division:

    Line on the tax return Share of receipts, 2023
  Cost of sales, total (food and drink purchases, labor in cost of sales, materials, stock change) Cost of sales: 37.5%
  Of which, purchases Purchases: 28.2%
  Salaries and wages Salaries and wages: 16.1%
  Payroll, including labor counted in cost of sales Payroll: 18.8%
  Rent on business property Rent: 5.5%
  Utilities Utilities: 3.6%
  Net income less losses Net: 3.4%

Tax figures follow tax rules, such as depreciation schedules, so expect your own books to differ line by line.

## What do public restaurant companies report, by type?

Chains publish results in their annual 10-K filings. Most report a margin at the restaurant level, before head-office costs, depreciation, interest and tax. Each company defines its measure, so compare them with care.

    Type Company and fiscal year Restaurant-level figure, as defined in the filing Net income as a share of revenue
  Fast casual Chipotle, 2025 Chipotle restaurant costs: food and packaging 29.6%, labor 25.1%, occupancy 5.2%, other operating 14.7% of revenue, leaving 25.4% by our subtraction Chipotle net: 12.9%
  Quick service, burgers Wendy's, 2025 Wendy's U.S. company-operated restaurant margin: 14.2% (13.6% worldwide), after food, labor, occupancy and advertising Not comparable: most Wendy's revenue comes from franchising and ad funds
  Casual dining, steakhouse Texas Roadhouse, 2025 Texas Roadhouse restaurant margin: 15.5% of restaurant sales Texas Roadhouse net: 6.9%
  Casual dining, Italian Darden's Olive Garden, fiscal 2026 Olive Garden segment profit margin: 22.5% Darden net, all brands: 9.1%
  Casual dining, steakhouse Darden's LongHorn Steakhouse, fiscal 2026 LongHorn segment profit margin: 18.6% Included in Darden's figure
  Fine dining Darden's Ruth's Chris, Capital Grille and Eddie V's, fiscal 2026 Darden fine dining segment profit margin: 17.7% Included in Darden's figure

Sources: Chipotle's [2025 10-K](https://www.sec.gov/Archives/edgar/data/1058090/000105809026000009/cmg-20251231.htm), Wendy's [2025 10-K](https://www.sec.gov/Archives/edgar/data/30697/000003069726000009/wen-20251228.htm), Texas Roadhouse's [2025 10-K](https://www.sec.gov/Archives/edgar/data/1289460/000110465926021292/txrh-20251230x10k.htm) and Darden's [10-K for the year ended May 31, 2026](https://www.sec.gov/Archives/edgar/data/940944/000094094426000025/dri-20260531.htm). Texas Roadhouse spent 35.0% of restaurant sales on food and drink and 33.3% on labor, more than Chipotle on both.

A franchisor's margin tells an operator little. McDonald's [2025 10-K](https://www.sec.gov/Archives/edgar/data/63908/000006390826000035/mcd-20251231.htm) reports a 46.1% operating margin, and says franchised restaurants supplied about 90% of its restaurant margin dollars. Those fees are mainly rent and royalties based on a percent of franchisees' sales. The filing does not report the franchisees' own margins.

## How do you work out your own margin? A worked year

Every figure below is made up for one full-service restaurant. Replace each with your own from the POS, payroll and bank statements.

    Line Made-up amount for the year Share of sales
  Sales, after discounts and before sales tax Sales: $1,200,000 Sales: 100%
  Food and drink cost Food and drink: $372,000 Food and drink: 31.0%
  Labor, with payroll taxes and benefits, owner excluded Labor: $396,000 Labor: 33.0%
  Rent and occupancy Occupancy: $96,000 Occupancy: 8.0%
  Utilities Utilities: $42,000 Utilities: 3.5%
  Card processing Card fees: $30,000 Card fees: 2.5%
  Supplies, smallwares and repairs Supplies and repairs: $48,000 Supplies and repairs: 4.0%
  Marketing Marketing: $18,000 Marketing: 1.5%
  Software, phones and subscriptions Software: $12,000 Software: 1.0%
  Restaurant-level profit Restaurant-level profit: $186,000 Restaurant-level: 15.5%
  Accounting, legal, licenses and insurance Admin: $36,000 Admin: 3.0%
  Depreciation of equipment and build-out Depreciation: $30,000 Depreciation: 2.5%
  Loan interest Interest: $12,000 Interest: 1.0%
  Owner's pay for the hours the owner works Owner's pay: $70,000 Owner's pay: 5.8%
  Net profit before income tax Net profit: $38,000 Net: 3.2%

Food and labor together, often called prime cost, come to $768,000, or 64.0% of sales. Leave out the owner's pay and the same restaurant shows $108,000, or 9.0%. That is the figure a sole proprietor's tax return would show, which is one reason small-restaurant margins look higher or lower depending on who is counting.

Two changes show how thin the margin is. If food cost rises by two points of sales ($24,000) and nothing else moves, net profit falls to $14,000, or 1.2%. If instead menu prices rise 3% and guests buy the same items, sales reach $1,236,000. Food cost stays at $372,000, now 30.1% of sales, and card fees rise to $30,900. Net profit becomes $73,100, or 5.9%. The price example assumes no guest orders less; check your item sales after any price change.

## What should you check each month?

1. Build the table above from last month's figures, and keep owner's pay on its own line.
2. Work out food and drink cost from purchases adjusted for stock on hand at the start and end of the month.
3. Compare labor cost with the same month last year, using the method in the labor cost guide.
4. Divide card fees by card sales to get the rate you actually pay.
5. List every subscription on the software line and cancel the ones nobody used.
6. Price your ten best-selling items against their current ingredient cost.
7. Compare restaurant-level profit with net profit; the gap is what the business costs to run above the restaurant.

If staff time on the phone is a cost you want to cut, count it before you buy anything. Maple's [Voice plan](https://maple.inc/pricing) for answering is $150 a month billed monthly or $85 billed yearly, and Pro, which adds phone orders into supported POS systems, is $350 or $220. Put any such fee on the software line and judge it against the hours it saves.

*Published by Maple, which sells AI phone answering and ordering to restaurants. This AI-assisted guide combines IRS Statistics of Income tables for sole proprietors (2023) and corporations (2022) with 10-K filings from Chipotle, Wendy's, Texas Roadhouse, Darden and McDonald's, and an original worked year. Every figure in the worked year is made up. Margins in the tables are our division of the published figures. The guide names no target margin and makes no claim about any restaurant's results.*

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