The 30/30/30 rule is a quick sanity check on a restaurant P&L: roughly 30% food cost, 30% labor cost, and 30% other expenses (operating plus occupancy), leaving about 10% as net profit. It is a benchmark to compare against, not a target to engineer to.
If you’ve spent any time studying restaurant financials, you’ve probably come across the 30/30/30 rule. It’s one of the most widely cited budgeting frameworks in the industry, and for good reason, it gives operators a simple, memorable way to think about where their money should be going.
After 15+ years in restaurant finance, I’ve found this rule to be a genuinely useful starting point. Not because it’s perfect for every concept, it isn’t, but because it forces you to think about your cost structure in the right buckets. Here’s how it works, when it breaks down, and what metrics to graduate to once you’ve internalized the basics.
What Is the 30/30/30 Rule?
The 30/30/30 rule is a budgeting framework that allocates your restaurant’s revenue into three roughly equal buckets:
30% to food cost, everything you spend on ingredients, beverages, and consumable goods that go into what you serve.
30% to labor cost, all-in compensation including wages, payroll taxes, benefits, and workers’ compensation.
30% to operating expenses, rent, utilities, marketing, insurance, repairs, technology, supplies, and everything else it takes to keep the doors open.
That leaves roughly 10% as profit, your reward for managing all three buckets well.
Think of it as a quick diagnostic. If any one bucket is dramatically out of line, you know exactly where to start digging.
The 30% Food Cost Bucket
Food cost is the percentage of revenue you spend on the raw ingredients that become menu items. It includes proteins, produce, dairy, dry goods, beverages (including alcohol), paper goods for takeout, and any other consumable that goes into or alongside what you serve.
The 30% benchmark is a blended average across the full menu, including beverages. In practice, this number varies significantly by concept:
Quick-service restaurants (QSR): Often run 25–28% food cost because of simpler menus, high volume, and strong purchasing power.
Casual dining: Typically lands at 28–32%, depending on the protein mix and how aggressively the menu is engineered.
Fine dining: Regularly runs 33–40% because of premium ingredients, smaller portion economics, and the expectation of quality.
Bars and beverage-heavy concepts: Can run as low as 18–22% on the beverage side, which pulls the blended food cost down if you have a strong bar program.
Managing food cost comes down to four levers: menu pricing, portion control, purchasing discipline, and waste reduction. If you’re consistently above 33% in a casual or QSR environment, start with a detailed food cost calculation to find out where the leakage is happening. Most operators I’ve worked with find that 2–4% of their food cost is controllable waste they didn’t know they had.
For a deeper dive on bringing this number down, see our guide on how to lower food cost in a restaurant.
The 30% Labor Cost Bucket
Labor cost in the 30/30/30 framework means all-in labor, not just hourly wages. It includes:
Wages and salaries for all hourly and salaried employees, including management. Payroll taxes (FICA, FUTA, SUTA), which typically add 7.5–8% on top of gross wages. Benefits, health insurance, paid time off, meal discounts, and any other employee benefits. Workers’ compensation insurance, which varies by state but typically runs 2–5% of payroll. Any contract labor or staffing agency fees.
When you add all of this up, the true cost of an employee is typically 20–30% higher than their gross wages alone.
Like food cost, the 30% target varies by concept:
QSR and fast casual: Typically 25–30%, with lower average wages but higher headcount relative to sales during peak periods.
Casual dining: Usually 28–33%, with a mix of tipped and non-tipped employees.
Fine dining: Can run 33–38% due to higher skilled positions, more management layers, and lower revenue-per-labor-hour during prep-intensive services.
The key metric within this bucket is sales per labor hour (SPLH). If your SPLH is declining, your labor cost percentage is going to rise regardless of what you’re paying people. For a complete breakdown, see our guide on what percentage labor cost should be in a restaurant.
The 30% Operating Expenses Bucket
This is the catch-all bucket, and it’s where many operators lose visibility. The 30% target includes everything that isn’t food or labor but is required to operate. Here’s how it typically breaks down:
Rent and occupancy: 6–10% of revenue. This is your single largest fixed cost. The old rule of thumb is to keep rent under 8%, but in high-traffic urban locations, operators sometimes accept 10% if the sales volume justifies it. This also includes CAM charges, property taxes (if passed through), and any percentage rent clauses.
Utilities: 2–3% of revenue. Gas, electric, water, sewer, and trash. Older buildings and equipment-heavy kitchens skew higher. Energy management is one of the easiest wins most operators ignore.
Marketing: 1–3% of revenue. This includes digital marketing, local advertising, loyalty programs, social media, and any agency fees. Newer restaurants or those in competitive markets may spend more during ramp-up.
Insurance: 1–2% of revenue. General liability, property, liquor liability, umbrella policies, and employment practices liability insurance.
Repairs and maintenance: 1–2% of revenue. HVAC service, plumbing, equipment repair, pest control, and general upkeep. Deferred maintenance is a silent killer, it always costs more later.
Supplies and smallwares: 1–2% of revenue. Cleaning supplies, paper products, kitchen smallwares, uniforms, and office supplies.
Technology and POS: 1–2% of revenue. POS system fees, online ordering platforms, reservation systems, accounting software, and any SaaS subscriptions.
Credit card processing: 2–3.5% of revenue. This one sneaks up on operators. With more guests paying by card and delivery platforms taking their cut, processing fees have become a significant line item.
Licenses, permits, and professional fees: 0.5–1% of revenue. Liquor licenses, health permits, accounting fees, and legal costs.
Add it all up, and you can see how 30% fills quickly. The operators who stay in control here are the ones who read their P&L line by line every month and question every expense that creeps above its historical range.
The 10% Profit Target
If you hit 30/30/30, you’re left with roughly 10% operating profit. Is that realistic?
For a well-run independent restaurant, 10% net profit is achievable but above average. Industry data consistently shows that the average restaurant profit margin runs between 3–9%, with many operators landing in the 5–7% range. Chains and multi-unit operators with scale advantages sometimes push into the 12–15% range on a 4-wall basis.
The point of the 10% target isn’t to guarantee that number, it’s to create a framework where profit is the planned outcome, not the leftover. Too many restaurant operators treat profit as whatever is left after paying everyone else. The 30/30/30 rule flips that: you budget for profit first and manage the three cost buckets to protect it.
When the 30/30/30 Rule Breaks Down
No framework is universal, and the 30/30/30 rule has real limitations depending on your concept:
Ghost kitchens and delivery-only concepts have minimal front-of-house labor and no dining room occupancy costs, but they pay 15–30% in delivery platform commissions. Their cost structure looks nothing like 30/30/30.
Fine dining restaurants often run 35%+ food cost and 35%+ labor cost, which means the operating expense bucket and profit margin get compressed. They make up for it with higher check averages and beverage margins.
Bar-forward concepts might run 20% food cost because of high-margin beverage sales, which gives them room to spend more on labor or entertainment.
High-rent urban locations can see occupancy alone eat 10–12% of revenue, blowing up the operating expense bucket before you’ve paid for anything else.
Counter-service concepts often have labor costs in the 22–26% range, which means more room in the profit bucket, if they manage food cost and occupancy well.
The 30/30/30 rule works best as a diagnostic for traditional full-service and casual dining restaurants. Once you move outside that box, you need to understand the specific economics of your model.
Beyond the Rule: Better Metrics for Managing Your Restaurant
The 30/30/30 rule is a great starting point, but operators who want to truly manage by the numbers should graduate to more precise metrics:
Prime cost (food + labor combined) is the most important metric in restaurant finance. If your prime cost is under 60%, you’re in good shape. Over 65%, and you’re going to struggle to make money regardless of how well you manage everything else.
4-Wall EBITDA strips out corporate overhead and tells you whether an individual location is generating cash. For multi-unit operators, this is the metric that separates profitable locations from ones that are dragging down the portfolio.
Contribution margin by menu item goes beyond food cost percentage to show you the actual dollars each dish contributes after food cost. A 35% food cost item that sells for $28 generates more gross profit than a 25% item that sells for $12.
The 30/30/30 rule gets you thinking in the right framework. Tracking the right KPIs weekly is what turns that framework into actual financial control.
Start With the Right Financial Foundation
Understanding the 30/30/30 rule is the first step. Implementing it means having the right financial tools to track where every dollar goes, and catching it quickly when any bucket drifts out of range.
The Restaurant Finance Toolkit includes P&L templates, food cost calculators, labor cost trackers, and budget worksheets built specifically for restaurant operators. They’re the same tools I’ve used to help restaurants go from guessing to knowing exactly where they stand financially.
Get the Restaurant Finance Toolkit →
Related reading: How to Read a Restaurant P&L Statement, Restaurant KPIs: The 12 Numbers Every Operator Should Track Weekly, and The Best Restaurant P&L Template for Independent Operators.