How To Calculate Restaurant Overhead Rate

How to Calculate Restaurant Overhead Rate

1. Gather Overhead Expenses:

2. Calculate Total Overhead Expenses:

Add up all the overhead expenses listed above for a specific period, such as a month or year.

3. Determine Sales Revenue:

Calculate the total sales revenue generated by the restaurant during the same period. This includes all food and beverage sales, as well as any other revenue streams (e.g., merchandise sales).

4. Calculate Overhead Rate:

Divide the total overhead expenses by the total sales revenue. Multiply the result by 100 to express it as a percentage.

Formula:

Overhead Rate = (Total Overhead Expenses / Total Sales Revenue) x 100

Example:

Overhead Rate = (20,000 / 100,000) x 100 = 20%

Interpretation:

The overhead rate represents the percentage of sales revenue that is used to cover the restaurant's fixed and variable overhead expenses. A higher overhead rate indicates that a larger portion of sales revenue is being spent on overhead costs.

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