How to use this calculator
- Enter or choose food sales.
- Enter or choose beverage sales.
- Enter or choose food cost of sales.
- Enter or choose beverage cost of sales.
- The gross margin updates as you type. Use Copy result or Share to keep it.
Method
Gross profit = (Food sales + Beverage sales) − (Food cost + Beverage cost); Gross margin = Gross profit ÷ Total sales × 100
- Sales
- revenue excluding sales tax
- Cost of sales
- cost of the food or drink consumed, ideally from stock counts
Worked example
- Total sales = 60,000 + 20,000 = 80,000; total cost = 18,000 + 5,000 = 23,000.
- Gross profit = 80,000 − 23,000 = 57,000, and 57,000 ÷ 80,000 = 71.25%.
- Food: (60,000 − 18,000) ÷ 60,000 = 70%. Drinks: (20,000 − 5,000) ÷ 20,000 = 75%.
The restaurant keeps 71.25% of sales as gross profit: 70% on food and 75% on drinks.
What the result means
Gross margin only covers ingredients. Labour, rent and other overheads still have to come out of it, so track it alongside prime cost (cost of sales plus labour). A shift in sales mix towards drinks raises the overall margin even if neither margin changes.
Assumptions and limits
- Cost of sales covers only food and drink consumed; labour is excluded.
- This is not net profit.
Questions
Is gross margin the same as 100% minus food cost %?
For food alone, yes: a 30% food cost leaves a 70% gross margin. With drinks included, the combined margin is weighted by each category’s sales.
Why are drinks margins usually higher?
Drinks often need less preparation and have lower ingredient cost relative to price, but this varies by product and venue.