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Average Restaurant Profit Margin: What to Know as a New Owner

With nearly 200,000 fast-food restaurants in the U.S., it can be an enticing industry to join when you’re looking to get into the food business. The fast-food sector of the industry is developing, and some restaurant concepts, including as Wayback Burgers, are expanding their business model to provide quick service but with a greater experience level for the customer – also known as a fast-casual restaurant.

When the quality is elevated, profit margins can benefit in a food service business, and that can be a great outcome for a new restaurant owner. When evaluating restaurant options, pay close attention to how the business model addresses key factors that contribute to the bottom line of the restaurant operation. This will help you make the best choice in becoming a restaurant business owner.

A Look at Average Restaurant Profit Margins

This average profit margin for restaurant industry operators can be misleading because it doesn’t take into account restaurants that have unique features, such as being part of more than a single sector. For example, Wayback Burgers is a fast-casual restaurant that also offers catering.

In addition, Wayback Burgers has invested in certain factors to enhance our average restaurant profit margins, allowing us to implement smart decisions across the restaurant operation that drive efficiency. Here are some examples of how Wayback Burgers drives value to its franchise owners.

Factors That Impact Average Restaurant Profit Margins

There are some key factors in a restaurant business that contribute to the bottom line. Two of the major ones are labor costs and food costs. Being proficient in these areas matters, as they account for at least half your expense list.

Wayback Burgers Labor Commitment

Labor costs can comprise up to 30% of your expenses in a restaurant operation, In the Wayback Burgers franchise, the business model is built on a very efficient use of labor. That model has been tested and adjusted as new elements are introduced to the franchise (i.e., online ordering, 3rd party delivery orders, and self-ordering kiosks), and the labor positions are always being monitored as a key performance metric.

Wayback Burgers Food Cost Commitment

Food costs are significant expenses in the restaurant industry, which is why we monitor those costs very carefully. Wayback Burgers has secured food vendors that offer high-quality food at competitive prices, which contribute to our average restaurant profit margins. Our buying power as a franchise with 130+ locations helps us negotiate at a more competitive level than an independent restaurant or other franchises without the same strength in the industry.

More Profit-Focused Features at Wayback Burgers

As the restaurant industry continues to evolve, restaurants need to be on top of the changes that can have profit-margin impacts. For example, Wayback Burgers implemented the Wayback App in 2018, giving customers an easier way to order food, while franchise owners added curbside pickup and delivery as additional revenue generation streams.

The Wayback Burgers rewards system also provides customers with the opportunity to participate at different reward levels, earning points, enjoying double and triple point days, participating in special events and offers, and more.

Finally, the franchise reporting system allows us to track the performance of restaurants across the nation and pick up on any trends that might be further impacting the profit margins for all franchise owners. With so much data available, we can make important choices that improve the franchise ownership experience.

What Makes a Restaurant a Lucrative Investment?

When we meet with potential franchise owners, there can be some difficulty in comparing franchise options because everyone brings something different to the table. Some restaurants have massive square footage requirements, which increases their initial investment and overhead, and their focus is on attracting lots of customers every day. Another restaurant may have an extensive menu, which can be costly to manage with food waste, as they try to appeal to a broader customer base.

How Wayback Burgers Stands Out

Wayback Burgers does things a little differently. A few years ago, we actually made our footprint smaller because we found ways to do more with less space. Addressing restaurant startup costs helped us provide overhead savings for our franchise owners.

We also have a streamlined menu that allows us to offer diverse menu items while using the same high-quality products. We can take French fries, for example, and turn them into bacon cheese fries, chili cheese fries, or just regular fries. We have nine unique burger options – including craft-your-own – that all start with fresh, never frozen, ground beef. If we’re evaluating a potential menu addition (i.e., chili cheese tots or a sweet bourbon bacon burger), you’ll see it as a limited-time offer.

The Bottom Line

There is no cookie-cutter restaurant operation that you have to follow in order to be profitable, but there are some key factors that can lean toward more profit-generating results. When you are part of a franchise that has a good financial team combing through unit statistics every month, you know there is a dedicated commitment to the bottom-line results.

As you evaluate franchise options, be sure to look at the whole picture as opposed to just evaluating the startup costs or initial investment. The starting point can vary widely with franchises and doesn’t necessarily equate to the earning potential. For example, a high startup cost doesn’t necessarily mean high profits, and a low startup cost doesn’t automatically equate to low profits.

Explore Wayback Burgers

Being in the restaurant industry can be exciting when you have the right brand at your back. Wayback Burgers is a growing franchise with an initial investment of $550,000-$650,000. We offer a variety of venues, a strong marketing strategy, and the training and support you need to drive sales through your door, delivery, kiosk, online, and app.

Contact us for a conversation on becoming a Wayback Burgers franchise owner. Get to know us a little more, and let’s see if your goals and our goals are a fit.