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Sales Tax

The Sales tax amount can vary from state to state, city to city and even county to county.  
In many locations the t
otal generated for the state and local sales taxes is double what the operator makes. 

*California Sales Tax 
base rate is 7.25. However many cities and counties add Local sales tax and fees. Some have sales tax rates high as 10.75%

All Restaurants are different with cost allocation. 

Labor cost.

All restaurants are different. Some can have higher labor cost and provide multiple positions for work opportunities. Some have lower labor cost and use machines to fill the need.

More Than Just the Hourly Rate

On top of the hourly rate of pay, Federal, State and Local employment taxes and workers comp insurance and benefits are significant expenses to each labor hour. The increase can be 7 – 10% or higher than the hourly rate

Food  Cost

The food and beverage cost will vary. Some restaurants may have much lower food cost especially when serving highly processed food items. Some have higher food cost due to higher quality and fresher food.

Beverage Costs

Beverage cost will vary. If there is a high amount of alcohol or soda sales the margin may be better.


Supplies will vary by type of restaurant, location and service model.


Rent is a significant expense for most restaurants and varies greatly based on size and location. Rent almost never goes down


Insurance varies depending on risk in the area of the location.


Utilities is an expense that never goes down and can change rapidly with weather.

Cost can go up faster than Restaurants can raise prices

Often, cost to the restaurant rise so quickly they cannot raise their prices to the consumer to cover the increase in cost. During this time the restaurant must absorb the expense and make less.


In tough times restaurants may have to take on debt to keep things going until the business climate improves. 

The above is presented for informational and discussion purposes only. Everyone should do their own research.
This is an example for an average restaurant based on information available to us at the time of publication.
Sales Tax numbers are based on California. 

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