The 30 30 30 Rule for Restaurants: Cost Control Guide

You're doing decent covers. Tables fill up on weekends. Staff seem happy enough. Then you look at your bank balance at the end of the month and wonder where it all went — every restaurateur knows this sinking feeling when the numbers don't add up despite a busy service.

The 30 30 30 rule for restaurants is a cost management framework that divides your revenue into three equal portions: 30% for food costs, 30% for labour costs, and 30% for overhead expenses — leaving 10% as profit. This guideline helps UK restaurant owners understand exactly where money goes, identify which cost category needs attention, and take action before small problems become financial crises.

What you'll learn:

• How the 30 30 30 rule breaks down each cost category
• Realistic UK benchmarks for food, labour, and overhead
• Why prime cost matters more than any single percentage
• Weekly actions to get your restaurant costs under control

This guide explains the 30 30 30 rule for restaurants: how each component works, what to aim for in today's UK market, and practical steps to improve your margins.

What Is the 30 30 30 Rule for Restaurants?

The 30 30 30 rule for restaurants is a framework that allocates revenue into three equal cost categories — 30% for food, 30% for labour, and 30% for overhead — while targeting 10% profit. This cost allocation guideline has been a hospitality industry benchmark for decades, helping UK restaurant owners quickly assess whether their business structure is financially sustainable.

Here's how the 30 30 30 rule breaks down:

If you're thinking "10% profit sounds low" — you're right to notice. Restaurant margins are thin, and a net profit margin between 3-10% is typically considered healthy for UK restaurants (Tenzo).

For example, a casual dining restaurant turning over £40,000 per month would aim for roughly £12,000 each on food, labour, and overhead — leaving £4,000 profit. If food costs creep to £16,000, that profit vanishes.

The 30 30 30 rule for restaurants isn't meant to be followed exactly — it's a diagnostic tool. If your numbers are wildly off target, you've spotted a problem before it becomes a crisis.

Breaking Down Each Component

Food Costs: The 30% Target

Food costs (also called Cost of Goods Sold or COGS) include everything you need to create your menu items: raw ingredients, beverages, condiments, and packaging.

UK benchmarks by restaurant type: Quick service typically runs lower food costs, casual dining sits in the middle range, and fine dining runs higher due to premium ingredients. Gastropubs vary depending on menu complexity. Source: XLent Foods

If you're running a casual dining spot and your food costs regularly hit well above target, you're likely overspending on ingredients, over-portioning, or facing significant waste. Using the 30 30 30 rule for restaurants helps you spot this early.

The calculation:

Food Cost % = (Total Food Cost / Total Food Sales) x 100

For example, if you spent £8,000 on ingredients last month and made £28,000 in food sales, your food cost percentage is around 29% — right in the healthy range.

Labour Costs: The Other 30%

Labour costs typically represent the second-largest expense for restaurants. This includes everyone from your head chef to your Saturday night pot wash.

UK benchmarks: Labour costs vary significantly by restaurant type — quick service runs lower, casual dining sits in the middle, and fine dining often runs higher due to skilled staff requirements. Source: Epos Now

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2025 reality check: Since April 2025, UK minimum wage for workers aged 21+ rose to £12.21 per hour (RotaCloud). This has pushed many restaurants' labour costs above the traditional target. Most UK hospitality operators have responded by raising prices and adjusting staffing hours (Restroworks).

If you're reading this thinking "I can't possibly hit the old labour targets anymore" — you're not alone. The 30 30 30 rule has become more of a guideline than a commandment.

Overhead: Everything Else

Overhead covers the costs of keeping your doors open regardless of how many covers you do. This is the category where costs can creep up without you noticing.

Typical overhead components: Rent, utilities, marketing, insurance, licenses, and technology. Rent should ideally stay below 10% of your sales. Source: Restaurant365

If you're paying £5,000 monthly rent, you need to be turning over at least £50,000 per month for that to make sense within the 30 30 30 rule framework.

Why the 30 30 30 Rule Needs Updating

Let's be honest: the original 30/30/30/10 split came from a different era. Today's restaurants face realities that textbooks didn't predict.

Modern challenges:

• National Insurance increases added significant costs to UK hospitality wage bills in 2025 (Mordor Intelligence)
• Food inflation ranks as the top concern for many UK restaurant operators (Apicbase)
• Energy costs have risen substantially in recent years, with some restaurants seeing utility costs climb significantly

The reality for many independent restaurants in 2025: costs have shifted and profit margins have tightened. The 30 30 30 rule for restaurants remains useful as a diagnostic benchmark, but adjust your expectations accordingly.

For example, a neighbourhood bistro owner who read the textbook 30 30 30 rule might panic seeing their labour above target. But in today's UK market, that could actually be competitive — they should focus energy elsewhere.

This isn't meant to discourage you. It's meant to give you realistic targets when applying the 30 30 30 rule for restaurants to your own business.

Prime Cost: Why This Number Matters Most

If you take one thing from this article, let it be this: focus on your prime cost.

Prime cost = Food costs + Labour costs

This single metric captures your two largest controllable expenses. Most successful restaurants keep prime cost below 60-65% of total revenue (7shifts).

When applying the 30 30 30 rule for restaurants, prime cost gives you the clearest picture. For instance, a pizza restaurant keeping food and labour combined around 60% is in healthy territory. But if food waste or scheduling inefficiency pushes that significantly higher, they've crossed into trouble territory.

If your prime cost creeps too high, your profit margin is almost certainly suffering. Every percentage point matters — small improvements compound over a year.

If you can't tell whether your high costs come from food waste or labour inefficiency, that's usually a sign you need better tracking systems before making changes.

Practical Steps to Control Your 30 30 30 Costs

If you're staring at spreadsheets thinking "where do I even start?" — here's a week-by-week approach.

Week 1: Know Your Numbers

You can't manage what you don't measure. This week, calculate:

• Your actual food cost % (use the last 3 months of data)
• Your actual labour cost % (including all payroll taxes)
• Your actual overhead % (every bill, subscription, and fee)

For example, a gastropub owner might discover their food cost is slightly high, labour is over target, and overhead is acceptable. That tells them labour scheduling is the priority fix.

If you don't have these numbers to hand, that's your first problem. Even a rough estimate helps.

Week 2: Target One Cost Category

Don't try to fix everything at once. Pick the category where you're furthest from target.

If food costs are too high:

• Audit portion sizes — small reductions across many covers add up significantly (Restaurant365)
• Review supplier pricing — when did you last negotiate?
• Check waste logs — what's going in the bin?
• Consider menu engineering — remove dishes with high cost and low popularity

If labour costs are too high:

• Match staffing to covers — track which shifts are overstaffed
• Cross-train staff to handle multiple roles
• Review scheduling efficiency — dead time costs money

If overhead is too high:

• Audit subscriptions — cancel anything not actively used
• Review energy usage — LED lighting, efficient equipment
• Renegotiate insurance annually

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Week 3-4: Implement Changes and Track

Make one change. Track the impact. Don't change everything simultaneously or you won't know what worked.

How Long Until You See Results?

This sounds great in theory. In practice, when you're down two staff and it's Saturday rush, cost control feels like a luxury.

Here's the realistic timeline:

• 2-4 weeks: You'll understand where your money goes
• 1-3 months: Targeted changes start showing in your numbers
• 6-12 months: Sustained improvement becomes your new normal

Many restaurants don't break even until year two or three (Toast). If you're newer than that, focus on survival before optimisation. If you're established and still struggling, the 30 30 30 rule gives you a framework to identify where to look.

Key Takeaway