How We Measure a Restaurant: The Four Numbers That Decide Profit

“These people know every detail” is something an operator should conclude from how you think, not from what you assert. So rather than describe our method in the abstract, here it is, given away: the four numbers we read every restaurant by, how each is measured, and why it is the right signal. If you take nothing else from this site, take these — they will make you a sharper operator whether or not we ever work together.

We measure a restaurant on four axes. Two of them decide whether the model can work at all; the other two catch where it leaks and whether the investment ever pays back. None is exotic. The discipline is in reading them honestly, together, and weekly.

Axis 1 — Food cost, and the variance behind it

Food cost as a share of sales is the number everyone watches — but the percentage alone misleads. What we read is the variance: the gap between theoretical food cost (what your costed recipes say the food should have cost, given what you sold) and actual food cost (what the P&L shows you really spent). A restaurant can run a fashionable percentage and still bleed through a wide variance, or run a higher percentage with the two numbers close and be in firm control. The gap is the signal, and it points straight at its cause — portioning, waste, yield, theft, un-costed specials. (The full method is in food-cost control.)

Axis 2 — Labour as a share of sales

Labour is the second-largest controllable line, and the right reading is labour as a percentage of sales, measured against forecast covers by daypart. The common failure is scheduling to comfort rather than to demand, so the wage line drifts with nobody watching. Read weekly, a drift above target is a signal to act, not a number to discover at month-end. (The Labour Productivity tool reads exactly this — sales per labour hour.)

Food and labour together form prime cost — and this is the single most important thing we measure. The two lines trade against each other by concept, so the constraint that decides profitability is their sum, and a prime cost above the mid-60s as a share of revenue is, as a working rule, a model under structural strain. Axes 1 and 2 are not two separate readings; they are the two halves of the one number that decides the most.

Axis 3 — Delivery economics

Delivery added revenue for almost everyone and quietly compressed margin for many, so we read the true margin by channel, not the blended top line. A dish profitable on the table can lose money through an aggregator once commission takes its cut. The signal here is whether delivery is adding contribution or hollowing it out — and the answer changes how you price and engineer the delivery menu, and how much volume you want through a third party at all. (More in delivery and aggregator economics.)

Axis 4 — Payback

The first three axes read an operating business; the fourth reads the investment. Payback is the capital put in against the time and contribution it takes to earn it back — the launch-and-structure lens that the cost-of-opening work feeds. It is governed by the two numbers that decide every opening: the rent-to-revenue ratio and the working capital to carry the ramp. A business can be operationally healthy on the first three axes and still be a poor investment if the payback never arrives — which is why we read it alongside, not instead of, the operating numbers.

How the four interlock

Axis	What we read	Why it is the right signal
Food cost	Theoretical-vs-actual variance	The gap, not the headline %, reveals the leak
Labour	Labour as a share of sales, vs covers	The second half of prime cost
Delivery economics	True contribution by channel	Whether the channel adds margin or hollows it
Payback	Capital vs time-to-recover	Whether the investment, not just the operation, works

Prime cost (axes 1 + 2) decides whether the model can work; delivery economics (axis 3) catches a modern leak the P&L blends away; payback (axis 4) asks whether the whole thing was a sound investment. The discipline that holds all four is the same: a weekly profit-and-loss the owner actually reads, turning four numbers from a post-mortem into a steering wheel.

Read your own, in two minutes

You can read all four yourself with costed recipes, an honest P&L and a weekly count — and the free Restaurant Profit Leak Audit does a first pass in about two minutes, taking revenue, food, labour, rent and delivery commission and returning your top three likely leaks with an estimated monthly impact. Where GGB adds value is depth and execution — installing the controls that keep the numbers in range, and rebuilding the structure when one is broken beyond an operating fix. If you would like that, the Turnaround door is where to start.