The Average Salary of a Restaurant Owner
Growth Trends for Related Jobs
The restaurant industry is thriving, with sales representing 4 percent of the total gross domestic product. Nearly half of all food dollars spent in the U.S. are spent in restaurants, where consumers opt to let someone else do the cooking. For those working in the hospitality industry, all of this consumer interest translates to jobs as well as lucrative business ownership opportunities for enterprising entrepreneurs. For restaurant owners, salaries depend on the type of business as well as its success.
Restaurant owner salaries can vary, but generally they’re in the $60,000 per year range.
The life of a restaurant owner can be fulfilling, but it's important to know that you're essentially serving as CEO of your own business. The key to making money in the restaurant business is that you have the business acumen necessary to run things efficiently. You’ll need to know how to manage your restaurant’s finances and find ways that you can improve profitability. Restaurants can be high-pressure environments, so it’s also important that you know how to remain calm and problem solve in even the most stressful situations. Customer service skills are a top priority with restaurant ownership, especially if you’ll be involved in day to day operations. You’ll be the one dealing with the most disgruntled customers, and it’s important that you have the skills necessary to smooth things over.
At minimum, you'll need a high school degree to become a restaurant owner or manager, but a college degree can give you an edge over the competition. Applicable degrees include business, restaurant management, culinary arts or hospitality.
If you’re interested in making money in the restaurant business, it will help to fully understand the industry. Many restaurant owners have a passion for the business, perhaps developed through years of working in various restaurants. Some come into restaurant ownership after culinary school or through having a general love of cooking. However, none of that is a definite prerequisite. The primary responsibilities of a restaurant owner involve hiring the right people and setting them up so they can be successful.
Starting a business from scratch can be risky. Business owners must line up financing and take the risk of things falling through. For that reason, many entrepreneurs consider opening a franchise instead. With a franchise, you get the support you need, including guidance from corporate. You’ll also be starting a business with a recognized name in an area that has been approved as having the potential for good sales. If you start a Subway in an area that doesn’t have one, for instance, corporate has probably already checked into whether that area is a viable location.
As with many business owners, some restaurant owners opt to give up a restaurant owner salary in exchange for putting profits back into the business. This is especially true of smaller businesses, where owners have structured the business to allow them to forego a paycheck. If you have set your restaurant up as an S corporation, however, you’ll need to take a salary and hold out the same payroll taxes you withhold for your other employees.
Years of Experience and Salary
According to PayScale, the national average for restaurant owner/operators is $60,936 per year. An entry-level restaurant owner can go as low as $58,000, while an owner/operator with 10 to 20 years of experience would see a salary closer to $75,000. Indeed pulls in information from a smaller pool of respondents, finding an average salary of $48,937. The highest-paid owners oversee pizza restaurants at $60,000 a year, while the lowest-reported salary was Beef O’Brady’s at $24,515 per year.
Although there isn’t a national average specific to franchise owners, some owners have reported their salaries to Glassdoor. Operating a Domino’s Pizza franchise can get you six figures, but a Papa Murphy’s pays closer to the overall restaurant owner average at $47,000 to $50,000. A franchise owner’s salary is set by corporate, so if you go this route, you won’t have the freedom to choose how much you should take each year.
If you want the benefits of running a restaurant without the pressure to keep it profitable, a manager position may be a better option. According to PayScale, the average restaurant manager salary is $44,287 per year. The top-reported salaries were for Darden Restaurants, which owns Olive Garden, Longhorn Steakhouse and Cheddar’s, among others. Cracker Barrel, Red Lobster and Chili’s also had fairly high salary reports. All of these were in the $50,000 range or above.
The average restaurant manager salary can also refer to the position of general manager, which is commonly used in many franchise chains. The average general manager salary, as reported to PayScale, is $47,838. Buffalo Wild Wings and Applebee’s had the highest-reported salaries, going as high as $70,000. A manager may decide to spend a few years getting experience running a restaurant before branching out and opening his own place.
If you’re running your own restaurant, your restaurant owner salary will depend on the amount left over after you’ve paid all your expenses for the month. If you have nothing left at the end of the month, you won’t be able to take a salary. Restaurant profit margins can vary from 0 to 15 percent, but the common average is between 3 and 5 percent. The variation has more to do with the chosen niche and the location, so it’s important to do careful research before getting started.
Restaurant profits depend largely on the number of seats you fill on a given night. You’ll need to be able to bring enough money in every night to justify your monthly operating expenses, including rent and utilities along with food and labor costs. You can tweak your work schedules, operating hours and menus once you’ve seen how much traffic you’re getting, but you’ll still need to win customers to keep things moving from one month to the next.
One reason the average restaurant manager salary is in the same range as a restaurant owner’s is because the manager handles day to day operations. A good manager can make or break a new business. However, some owners choose to forego the manager and run things themselves, which could help increase profit margins so that an owner can take home a slightly larger salary. It’s important to know, though, that running a restaurant can be an around-the-clock job, with workers calling in sick and customer volumes being unpredictable. You’ll need to carefully track your daily figures so from one year to the next you’ll be able to make sure you have enough resources to cover the customers you’ll have.
When you’re reviewing the average restaurant owner salary, it’s also important to research the basic job qualifications. You don’t necessarily have to have years of experience working in a restaurant, but it can help. Primarily, if you’re seeking investment dollars or approval by a franchise operation, you’ll need to be able to demonstrate leadership experience. If you’ve run a business or led a team to positive results, you’ll have an edge over others interested in the position.
Job Growth Trend
As with many other careers, those interested in entering the field want to know the future career path. However, restaurant owners are like any other business owner in that starting and growing a successful establishment becomes the biggest goal. A restaurant owner may find that her career takes her from running a well-known franchise to opening her own small bistro, then later moving on to a larger restaurant in a more populated part of town.
For restaurant managers, though, making money in the restaurant business sometimes brings similar career moves to owners. She may start at a smaller restaurant and move her way up to much larger, higher-stress environments as her career progresses. Alternatively, she might start as a local bar owner and then move to assistant general manager and later to general manager or owner. The leadership skills she learns as a restaurant manager could translate to other types of businesses as well, especially within the hospitality industry.
As the second-largest employer in the U.S., the outlook for jobs in the restaurant industry is always strong. By 2027, the industry is expected to add 1.6 million jobs.
- RSM: Top Trends in the Restaurant Industry to Watch in 2018
- Rewards Network: When Should Restaurant Owners Pay Themselves?
- PayScale: Average Owner / Operator, Restaurant Salary
- Indeed: Restaurant Owner Salaries in the United States
- Glassdoor: Franchise Owner Salaries
- PayScale: Average Restaurant Manager Salary
- PayScale: Average General Manager, Restaurant Salary
- Toast Restaurant Blog: What Is the Average Restaurant Profit Margin?
- Study.com: Be a Restaurant Owner: Education Requirements and Career Info
- National Restaurant Association: Restaurant Careers
Stephanie Faris is a novelist and business writer whose work has appeared on numerous small business blogs, including Zappos, GoDaddy, 99Designs, and the Intuit Small Business Blog. She worked for the State of Tennessee for 19 years, the latter six of which were spent as a supervisor. She has written about business for entrepreneurs and marketing firms since 2011.