What are fixed costs for a restaurant?

Restaurant fixed costs are expenses that stay the same regardless of sales volume, including rent, management salaries, insurance, loan payments, licenses, software subscriptions, and base utilities.

Is labor a fixed or variable cost in a restaurant?

Both. Salaried staff like managers and head chefs are fixed costs because they're paid regardless of sales. Hourly staff scheduled based on expected volume are variable costs. Splitting labor this way makes labor cost far more actionable.

Restaurant Fixed Costs vs Variable Costs — Complete List & Examples

Q: What percentage of restaurant costs are fixed?

Typically 20-35% of total costs are fixed for most restaurants, with rent alone often 6-10% of sales. The rest — food, hourly labor, card fees, packaging — scales with sales volume.

Every restaurant expense is one of two kinds: costs that arrive whether you sell anything or not, and costs that scale with every cover. Knowing which is which is the foundation of break-even analysis, pricing, and survival in a slow month.

The difference in one sentence

Fixed costs are what you pay to exist; variable costs are what you pay to serve. Rent arrives on the 1st whether you did 200 covers or 2,000. The chicken on plate #201 only costs you money if you sell plate #201.

Complete list of restaurant fixed costs

Fixed Cost	Notes
Rent / lease payments	Usually the largest fixed cost — typically 6–10% of sales for a healthy restaurant
Management & salaried staff	GM, head chef, admin — paid regardless of volume
Insurance	Property, liability, workers' compensation
Loan & equipment financing payments	Buildout loans, kitchen equipment leases
Licenses & permits	Trade license, food safety, liquor license, municipality fees
Software subscriptions	POS, accounting, scheduling, reservation platforms
Base utilities	The portion of electricity/water you'd pay even when closed
Depreciation & amortization	Non-cash, but real — equipment wears out
Marketing retainers	Agency fees, fixed ad commitments (not per-order ads)
Waste collection & pest control contracts	Flat monthly service contracts

Complete list of restaurant variable costs

Variable Cost	Notes
Food & beverage cost (COGS)	The biggest variable cost — typically 25–35% of sales
Hourly labor	Servers, line cooks, runners scheduled to expected volume
Credit card processing fees	Usually 2–3% of every card transaction
Delivery aggregator commissions	15–30% per order — a major variable cost for delivery-heavy concepts
Takeaway packaging	Scales directly with order count
Usage-based utilities	Gas and electricity above your base load
Cleaning & operating supplies	Napkins, chemicals, gloves — scales with volume
Per-order marketing	Aggregator ads, promo discounts, loyalty redemptions

The gray zone: semi-variable costs

Some costs don't fit neatly in either bucket. Utilities have a base load (fixed) plus usage (variable). Labor is the classic case — and the most useful one to split properly:

Is labor fixed or variable?

Both, and the split matters. Your GM's salary is fixed — it arrives every month regardless of covers. Your Friday-night server lineup is variable — you scheduled it because you forecast a busy night. Treating all labor as one number hides the difference between a structural cost problem (too much fixed labor) and a scheduling problem (too much variable labor for the sales you actually did). Our labor cost formula guide covers this split in detail.

Why the split matters

1. It sets your break-even point

Break-even analysis runs entirely on this split: fixed costs divided by your contribution margin (what's left of each sales dollar after variable costs) equals the sales you need to stop losing money.

Example

Monthly fixed costs: AED 60,500
Variable costs: 58.5% of sales
Contribution margin: 41.5%
Break-even: 60,500 ÷ 0.415 = AED 145,783/month

Run your own numbers in the break-even calculator.

Open Break-Even Calculator →

2. It tells you how to respond to a slow month

When sales drop, variable costs drop with them — that's automatic. Fixed costs don't. A restaurant with high fixed costs (expensive lease, big salaried team) bleeds fast in a downturn; one with a leaner fixed base can ride it out. This is why "what are my fixed costs?" is the first question to ask when stress-testing a concept.

3. It shapes growth decisions

Adding delivery increases variable costs (commissions, packaging) but barely touches fixed costs — so it's low-risk incremental revenue. Signing a bigger lease does the opposite: it raises the fixed base and therefore the break-even, permanently. Understanding which type of cost a decision adds tells you how much risk it carries.

What percentage of restaurant costs are fixed?

For most full-service restaurants, fixed costs run 20–35% of total costs, with rent alone typically 6–10% of sales. The remaining 65–80% — food, hourly labor, fees, packaging — scales with volume. If your fixed costs exceed 35% of total costs, you're carrying structural risk: a modest sales dip can flip you from profitable to loss-making faster than a variable-cost-heavy peer.