My Restaurant Is Always Full But Not Making Money

The short version

A full house doesn't pay the bills. What pays the bills is contribution margin per plate—what's left after you subtract food cost, labor, and all the little costs that touch each order. If you're selling high-volume items with thin or negative margins, you're just running an expensive charity. Traffic is the easy part. Unit economics is where restaurants actually die.

The painful reality: busy ≠ profitable

Most struggling restaurant owners point to their dining room as proof they're doing something right. "We're slammed every night," they say. "We do 200 covers on a Saturday. How are we not making money?"

The answer is painfully simple: every one of those 200 covers is generating less profit than it costs to produce and serve. You're not running a restaurant. You're running a high-volume, low-margin operation that's slowly bleeding you dry while everyone around you thinks you're killing it.

Here's the math that operators miss: if your average check is $22 and your contribution margin per plate is $4 after food cost, labor, and direct costs, you need to serve a lot of plates just to cover your fixed costs. But if your average check is $22 and your contribution margin is actually negative $1.50 because your food cost is 35%, your labor is 38%, and you're giving away sodas and sides to "make people happy," then every single customer is costing you money.

Volume doesn't fix that. Volume accelerates it.

Where the profit actually goes: the usual suspects

When you're busy but broke, the money is leaking somewhere. It's not mysterious. It's not bad luck. It's one of these four problems—or all of them at once.

1. Your menu is priced for 2019

When was the last time you actually updated your menu prices based on current vendor costs? Not when you reprinted the menu. Not when you changed the font. When did you sit down, recalculate every recipe card using today's ingredient costs, and adjust your prices to protect margin?

If the answer is "more than six months ago," your menu is lying to you. Vendor prices don't stay still. Your chicken went from $2.80/lb to $3.60/lb. Your produce distributor quietly bumped every item by 8–12%. Your dairy went up. Your oil went up. Everything went up—except your menu prices.

Example: you priced your chicken sandwich at $14 when chicken was $2.80/lb, targeting 28% food cost. That's $3.92 in food cost. But now chicken is $3.60/lb, and your actual food cost per sandwich is $5.04. Your food cost percentage on that item is now 36%—and you never noticed because you're too busy to check.

Multiply that across your entire menu. If 20 items drifted by 5–8 points each, your overall food cost is in the mid-30s instead of the high-20s, and you've lost 6–8 points of gross margin on every dollar of sales.

2. You're selling the wrong items

Not all menu items are created equal. Some are high-volume with decent margins (Plowhorses). Some are high-margin but don't sell (Puzzles). Some are high-volume and high-margin (Stars). And some are just dead weight—low volume, low margin, taking up space on your menu and in your mise en place (Dogs).

If you don't know which category each item falls into, you're guessing. And guessing is expensive.

Here's what happens: you're selling 80 orders of your $12 burger every night, and it has a 32% food cost and requires 6 minutes of labor per plate. Meanwhile, your $24 steak—which has a 26% food cost and takes the same amount of labor—only sells 12 orders per night. You're pushing volume on the wrong item.

Your servers upsell the burger because it's popular. Your kitchen preps for burger volume. Your menu design puts the burger front and center. And every single shift, you're leaving $400–600 in margin on the table because you're not steering traffic toward your high-margin items.

3. Labor is eating you alive

Labor is the other half of prime cost, and it's the one most operators ignore until it's too late. You're busy, so you think your labor percentage should be fine. But labor doesn't automatically scale with revenue. You have to manage it.

Here's the trap: you schedule the same crew for a Tuesday lunch (60 covers, $1,400 in sales) that you need for a Friday dinner (180 covers, $4,200 in sales). On Tuesday, your labor is 42% of sales. On Friday, it's 28%. The average looks okay—but the reality is you're bleeding margin on slow shifts and barely making it back on busy shifts.

Add in overtime. Add in managers working 65 hours a week because you're understaffed in leadership. Add in the fact that nobody's tracking labor-to-sales ratios by daypart or forecasting labor against projected covers. You're just "hoping it works out."

Spoiler: it doesn't work out. Labor creeps into the high 30s, and when you combine it with a drifting food cost in the low 30s, your prime cost is 68–72%. At that point, you're working for free.

4. The little costs that don't scream

Beyond food and labor, there are a dozen smaller costs that chip away at what's left. None of them will kill you on their own. But together, they're the difference between breaking even and actually making money.

• Credit card processing fees: 2.5–3.5% of gross sales. On $50k/month, that's $1,250–$1,750 going to your processor. Most operators never audit their effective rate.
• Third-party delivery commissions: 15–30% per order. If you're not adjusting your delivery menu prices to account for commission, you're subsidizing DoorDash with your margin.
• Packaging costs: $0.60–$1.20 per to-go order. On 40 delivery orders per night, that's $800–$1,400/month in packaging you forgot to price into the menu.
• Waste and spoilage: 4–10% of food purchases. On $15,000/month in food costs, 6% waste is $900/month—or $10,800/year—just walking out the back door.
• Comps and voids: Managers giving away food to "fix problems" or "keep customers happy" without tracking it. If you're comping 3–5% of sales and not logging it, you've got a $1,500–$2,500/month leak.

Add them all up. Credit card fees, delivery commissions, packaging, waste, and untracked comps can easily eat 8–12% of gross sales before you even get to rent, utilities, and fixed costs. That's margin you thought you had—but don't.

The unit economics breakdown: what each plate needs to deliver

Let's break down what a $20 entree actually needs to look like to be profitable. This is the math that separates busy restaurants from profitable ones.

On paper (the fantasy):

Menu Price: $20.00
Food Cost @ 28%: $5.60
Labor (allocated): $4.00
Contribution Margin: $10.40 (52% of price)

That $10.40 needs to cover rent, utilities, insurance, marketing, payment processing, repairs, debt service, and profit. If your fixed costs are 30% of sales and processing fees are 3%, you've got about $3.80 left. That's $3.80 per plate to cover the owner, the unexpected repair, the tax bill, and everything else.

In real life (the reality):

Menu Price: $20.00
Food Cost @ 34% (portion drift + vendor increases): $6.80
Labor (allocated): $5.20 (overstaffing + overtime)
Packaging (to-go order): $0.85
Delivery Commission @ 25%: $5.00
Contribution Margin: $2.15 (10.75% of price)

Now you've got $2.15 left to cover everything else. Your rent alone is probably $0.30 per dollar of sales. Your utilities, insurance, marketing, and card processing fees eat another $0.25. You're down to $0.05–$0.10 per plate. One untracked comp, one extra minute of labor, one portion that's a little heavy—and you're negative.

This is why you're busy and broke. Your unit economics are broken. And more volume just accelerates the problem.

How to fix it: the 4-step audit

If you want to know exactly why your full restaurant isn't profitable, you don't need a consultant or a six-month project. You need four numbers and four hours of focused work.

Step 1: Calculate your true prime cost

Pull your most recent P&L. Add up your total Cost of Goods Sold (food + beverage) and your total Labor (wages + payroll taxes + benefits). Divide that by your total sales.

Prime Cost % = (COGS + Labor) ÷ Total Sales

If you're over 60%, you're in trouble. If you're over 65%, you're in crisis. Your goal: get under 55%. The difference between 65% and 55% on $50,000/month in sales is $5,000/month—or $60,000/year—in margin you're currently giving away.

Step 2: Run a menu engineering matrix

Pick your top 20 menu items by volume. For each one, calculate:

• Recipe cost: What the ingredients actually cost today (not six months ago).
• Menu price: What you're charging.
• Contribution margin: Menu price minus recipe cost (and minus labor if you want to get fancy).
• Sales volume: How many you sold in the last 30 days.

Plot them on a 2×2 matrix: popularity (x-axis) vs. profitability (y-axis). Now you know which items are making you money (Stars), which ones are high-volume but low-margin (Plowhorses), which ones are high-margin but nobody orders (Puzzles), and which ones are just dead weight (Dogs).

Make decisions: promote the Stars, reprice or reduce portions on the Plowhorses, reposition the Puzzles, and kill the Dogs. If you do nothing else, this exercise will show you exactly which items are funding your losses.

Step 3: Track actual vs. theoretical food cost for one week

Theoretical food cost is what your recipes say you should be spending based on what you sold. Actual food cost is what you actually spent on invoices. The gap is your variance—the money you lost to waste, theft, portioning errors, or inventory shrinkage.

Pull one week of sales data from your POS. Multiply each item sold by its recipe cost. Add it all up. That's your theoretical food cost. Now pull your invoices for that same week. That's your actual food cost.

Variance = (Actual Food Cost - Theoretical Food Cost) ÷ Sales

If your theoretical food cost is 28% but your actual food cost is 34%, you've got a 6-point variance. On $50,000 in monthly sales, that's $3,000/month in margin you're losing to operational sloppiness. Find it. Fix it.

Step 4: Audit your non-COGS variable costs

Pull your P&L and find these line items:

• Credit card processing fees (should be 2.2–2.8% of sales)
• Third-party delivery commissions (15–30% of delivery sales)
• Packaging and disposables ($0.60–$1.20 per to-go order)
• Comps and promotional discounts (should be under 2% of sales)

Add them up. If these variable costs are eating more than 6–8% of sales, you've found another leak. Fix your delivery menu pricing. Negotiate your card processing rate. Track your comps. Make packaging a line item in your recipe cost cards.

Where the RPS tools plug in

Diagnosing the problem is step one. Fixing it requires the right tools. Here's how the RPS system fits:

• Prime Cost Calculator: Track your food + labor weekly. See your prime cost percentage in real time and adjust before the month closes. Available on the calculators page.
• Recipe Cost Card: Build accurate, up-to-date cost cards for every menu item. Know exactly what each plate costs so you can price with confidence. Start with the recipe cost card tool.
• Menu Engineering Matrix: Plot your items by popularity and profitability. Decide which items to push, reprice, or kill. Use the menu engineering calculator.
• Actual vs. Theoretical Food Cost Tracker: Compare what you should've spent vs. what you actually spent. Find the variance and fix the leak. Available in the profit toolbox.
• Delivery Margin Calculator: Factor in platform commissions, packaging, and tips. See if third-party delivery is actually profitable or just busy. Check the delivery margin tool.
• Break-Even Calculator: Know exactly how much revenue you need to cover your fixed costs. Stop guessing. Use the break-even calculator.

For operators who want the full system built and maintained automatically, the Live Menu Engine wires your recipes, vendor pricing, and delivery platforms into one live system that updates your menu pricing as costs move. No more guessing. No more drift.

Simple next step you can take this week

Don't try to fix everything at once. Pick one high-impact move and execute it cleanly:

• This week: Calculate your prime cost percentage using your most recent P&L. If it's over 60%, you know exactly where to focus.
• Next week: Pick your top 10 items by volume and recalculate their recipe costs using current vendor prices. Compare to your menu prices. Update pricing on the 3–5 items with the biggest margin gaps.
• Week three: Run a menu engineering matrix. Plot your items by popularity and profitability. Make 3 decisions: promote your Stars, reprice or cut portions on your Plowhorses, and kill 1–2 Dogs.

If you do nothing else and just tighten your top 10 items, you'll see the impact in your next P&L. The math doesn't lie. Traffic won't save you. Margins will.