Free Profit Margin Calculator
for Restaurants
Enter a cost and a selling price to get your gross margin, markup, gross profit, and food cost percentage at once. See exactly why margin and markup are not the same number. No signup required.
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Enter a cost and a selling price to see your margins.
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Dishboard shows gross margin and profit on your whole menu, and updates them when ingredient prices change.
Margin vs markup: the difference that trips people up
Both describe the same dollar of profit, but measured against a different base. Margin is profit over price. Markup is profit over cost. Here is the same $5 cost at a few prices:
| Cost | Price | Gross profit | Margin | Markup |
|---|---|---|---|---|
| $5.00 | $8.00 | $3.00 | 37.5% | 60% |
| $5.00 | $10.00 | $5.00 | 50% | 100% |
| $5.00 | $15.00 | $10.00 | 66.7% | 200% |
| $5.00 | $20.00 | $15.00 | 75% | 300% |
If a supplier or a pricing rule of thumb tells you to mark items up 200%, that is a 66.7% margin, not 200% profit. Always confirm which number you are working with before you set prices.
Reading your results
Gross margin
The share of the selling price you keep after ingredients and packaging. This pays for labor, rent, and profit. 65 to 72% is a common per-dish target for restaurants.
Markup
How much you add on top of cost to reach the price. Useful when you price from a cost-plus rule, but never quote it as if it were margin.
Gross profit and food cost %
Gross profit is the dollar amount per serving. Food cost % is margin's mirror image: the two add to 100. A $10 dish at 70% margin keeps $7.00 gross profit and runs a 30% food cost.
Frequently asked questions
- What is the difference between margin and markup?
- They use the same dollar profit but a different base. Gross margin is profit as a share of the selling price. Markup is profit as a share of the cost. A dish that costs $5 and sells for $10 has $5 profit: that is a 50% margin (5 / 10) but a 100% markup (5 / 5). Quoting markup as if it were margin is the most common pricing mistake in food businesses.
- What is a good gross margin for a restaurant dish?
- Most restaurants aim for a 65 to 72% gross margin per dish, which is the same as a 28 to 35% food cost. Coffee and bar drinks often run higher (75 to 85% margin). Premium dishes with costly proteins can run lower and still be profitable if the price supports it. Gross margin is before labor and overhead, not your bottom-line profit.
- Is gross margin the same as food cost percentage?
- They are mirror images. Food cost % plus gross margin % always add to 100. A 30% food cost is a 70% gross margin. Restaurants traditionally speak in food cost; finance and retail speak in margin. This calculator shows both so you can use whichever your team prefers.
- Does this margin include labor and overhead?
- No. This is gross margin: selling price minus the cost of ingredients and packaging. Labor, rent, and utilities come out of the gross profit. Net (bottom-line) restaurant margins are typically only 3 to 9% of revenue after everything is paid.
- How do I increase my gross margin?
- Three levers: raise the price, lower the recipe cost (portion size, sourcing, yield), or shift the mix toward higher-margin items. Small price moves matter most. On a 30% food cost dish, a 5% price increase raises gross profit more than a 5% cut in ingredient cost, because price has a bigger base.
- How do I convert markup to margin?
- Margin = markup / (1 + markup). A 100% markup is a 50% margin. A 200% markup is a 66.7% margin. To go the other way, markup = margin / (1 - margin). Enter a cost and price above and the calculator shows both at once.
Dig deeper
See margins on your whole menu
Dishboard calculates gross margin and profit for every dish and keeps them current as costs change. Free, no card required.