Restaurant profit margins are notoriously tight, which makes it important to not only run a tight ship but to figure out what type of restaurant is the most popular and profitable. After all, your goal of running a thriving restaurant will only come to fruition if you can get customers in the door – and are able to stay in the black. From fast food to pop-ups, we will break down the 9 most profitable and popular types of restaurants to help you get started.
Budget Branders works with food and beverages businesses of all sizes throughout the United States to help them get the custom disposable products that they need at prices and in quantities that work for them. We offer a full range of high-quality products, such as plastic cups, each of which can be printed with your restaurant’s name and logo. Using our products is a cost-effective way to expand your marketing efforts and boost your restaurant’s success.
Fast Food Restaurants
Fast food is convenient and tends to be lower cost, which makes it incredibly popular for busy customers. Menus at QSRs also tend to be consistent, which is great for people who like to know exactly what they are getting. While fast food is often unhealthy (think burgers and fries), these restaurants typically offer lower-calorie fare, such as salads or grilled chicken sandwiches.
Many people often have a nostalgic attachment to certain fast foods. Fast food restaurants are also a mainstay for road trips, in airports, and for special treats for kids. While some may decry the prevalence of fast food in American culture, these restaurants remain popular because they offer an inexpensive, quick way to get a meal on the table.
In addition to being popular, fast food restaurants tend to be profitable. The set menu means that there is usually less food waste, particularly because many ingredients come packaged and/or frozen. There is also less food prep required, which can cut labor costs significantly.
The average restaurant profit margin is just 3 to 5%. Fast food restaurants have a higher profit margin of 5 to 8%. Certain menu items – like fountain sodas – can bump the profit margins even higher for fast food establishments. These restaurants are often part of a national franchise, which can be an easier way to break into the business.
Fast Casual Restaurants
The main differences between fast food and fast casual restaurants are a higher price point, higher quality food, more opportunity to customize your order, and a more upscale dining experience. Customers love fast-casual restaurants because it feels more special than going to a chain like McDonald’s – and they can often get a wider variety of healthy food. These restaurants are more expensive but still affordable for many consumers.
Fast casual restaurants may offer fresher foods, but there is still a set menu for these restaurants – which leads to less food waste. Because much of the meal preparation can be done in advance and some of the food comes prepackaged, labor costs tend to be lower. The higher price point means that these restaurants often have larger profit margins. Like fast food restaurants, fast casual establishments are often franchises.
Casual Dining Restaurants
These restaurants appeal to many Americans because they offer the experience of dining out without the formality or high prices of fine dining restaurants. The service tends to be quick enough that it is a good choice for a weeknight meal, but nice enough that it can work for a special occasion. Casual dining restaurants include both national chains as well as independently-owned restaurants.
Casual dining restaurants also tend to be profitable because they can charge more money per dish than fast food or fast casual places. They also tend to be more of a destination, so customers often spend more on items with higher profit margins like drinks and desserts. These types of restaurants tend to have fairly set menus and predictable busy and slow times, so food and labor costs can be better managed.
Contemporary Casual Restaurants
These restaurants are popular because they tend to stay on top of trends and social media strategies, which can attract younger Gen Z and Millennial clientele. For example, Maman in New York City offers a brunch menu inspired by the South of France served in a greenhouse wonderland of a restaurant.
Contemporary casual restaurants are profitable because they tend to attract a crowd once they become known as a “hot spot.” Many contemporary casual restaurants may have lines around the block for dishes that are offered at a higher price point than most casual dining restaurants. Smart marketing through social media can often ensure that the restaurant stays busy.
Americans consume $38 billion worth of pizza each year. Put simply: pizzerias are popular because people love pizza. Whether you have a pie delivered to your house or go out to a pizza shop for a meal, this dish is a favorite for a reason.
While there is a lot of competition in the pizza market, pizzerias are still profitable. The main reason that it is easy to turn a profit selling pizza is that the ingredients are relatively low cost. Prepping pizzas is usually not complicated, and the process can be standardized relatively easily. This makes pizza an ideal food for high output for delivery, pick-up, and dine-in orders.
Across the United States, cafes are popular for a variety of reasons. They can serve as a place to meet with friends, somewhere to work, or a convenient place to grab a cup of coffee and a breakfast sandwich. They are often located near places that tend to have a lot of people, like a busy downtown area or a college campus.
Cafes often have higher profit margins than restaurants because their main focus is usually on beverages, which have a much higher profit margin than food. Beverages also require less labor to prepare, so a cafe owner usually doesn’t have to hire as many employees. With a limited menu of food and shelf-stable ingredients for many beverages, food waste is often minimal.
Pop-up restaurants are popular among diners because it allows them to experience a new concept. They may also be attracted to the somewhat secretive and temporary nature of the venture, with a strong desire to check out a restaurant before it goes away. If a pop-up restaurant is popular enough, it may make the transition to being a traditional brick-and-mortar restaurant.
Because pop-up restaurants are temporary, they have fewer of the expenses that traditional restaurants have, such as a long-term lease or mortgage. Owners can keep costs low because they are not running a full restaurant operation.
Customers like ghost kitchens because it gives them another option for ordering food. They may also offer new or different cuisines than typically offered in an area. With the growth in popularity of take-out and delivery services during the pandemic, ghost kitchens have been a trend that consumers seem to love.
Ghost kitchens are profitable because they distill a restaurant down to the basics: a kitchen, ingredients, cooks, and delivery drivers. Owners don’t have to spend money on furniture, decor, or even front-of-house staff. Instead, they can focus on online orders, which often have a higher profit margin.
Food trucks are popular because it’s often a good way to sample different cuisines. They also offer a great alternative to the standard fare that may be found at a festival or at lunch restaurants in a downtown area. The service is usually quick, and the price points tend to be lower than what you’d pay in a sit-down restaurant.
For entrepreneurs, food trucks are often incredibly profitable because the start-up costs are low and the ongoing expenses are typically less than what you would spend to run a restaurant. Food trucks have limited menus, so there usually isn’t a lot of food waste. Because space is tight in a food truck, staffing is also minimal. Finally, food trucks can go to where the business is, which allows owners to rake in profits from events that they might otherwise miss out on if they had a traditional restaurant.
Grow Your Restaurant Business with Budget Branders
At Budget Branders, we understand the pressures that come with running an independent business. Our goal is to help restaurants get the custom disposable products that they need at prices that fit within their budget. Our products are also offered in quantities that make sense for restaurants that can’t afford to buy (or store) tens of thousands of cups or paper bags at a time.