Disclosure: This article is written by Shaun McManus, founder of SmartPubTools and creator of the Restaurant Console. All operational claims reflect genuine experience at Teal Farm Pub, Washington.
Key Takeaway
Restaurant GP% formula: (Revenue − Cost of Sales) ÷ Revenue × 100. UK targets: food GP% 65–70%, drinks GP% 65–75%, combined GP% 63–68%. The most common mistake is calculating against gross revenue including VAT — this overstates your GP% by approximately 17%.
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Gross profit percentage (GP%) is the single most important operational metric in restaurant management. It tells you how much of every pound of revenue remains after the direct cost of producing food and drink. The UK industry target is 63–68% combined GP%. If you’re below this, you’re either over-spending on ingredients, under-pricing your menu, or both.
What Is the Restaurant GP% Formula?
The formula in plain English:
GP% = (Net Revenue − Cost of Sales) ÷ Net Revenue × 100
Worked example: Your kitchen takes £8,500 in food revenue (net, ex-VAT) in a week. Your food purchases total £2,890. GP% = (£8,500 − £2,890) ÷ £8,500 × 100 = 66%. That’s within the target range.
Cost of Sales means the direct cost of producing what you sell — food ingredients and drink purchases only. It does not include labour, rent, energy, or overheads. Those are covered separately in your P&L.
What Are UK Restaurant GP% Targets?
| Category | Target GP% | Acceptable Range | Below This = Problem |
|---|---|---|---|
| Food GP% | 65–70% | 62–72% | Below 60% |
| Drinks GP% | 65–75% | 62–78% | Below 60% |
| Combined GP% | 63–68% | 60–70% | Below 58% |
These targets come from BBPA and BII benchmark data for UK hospitality. Your actual target depends on your format: a high-volume pub kitchen can run at 65% food GP; a fine dining restaurant with premium ingredients may target 60–62% and compensate with higher spend per cover.
The VAT Trap: Why Most Operators Overstate Their GP%
This is the most common error I see. Many operators calculate GP% against their gross till receipts — including 20% VAT. This inflates the revenue figure and makes your GP% look better than it actually is.
Example: Your till shows £10,200 food revenue for the week. Your actual net revenue (ex-VAT at 20%) is £8,500. If your food cost is £2,890, your GP% calculated two ways:
Wrong (using gross): (£10,200 − £2,890) ÷ £10,200 = 71.7% — looks excellent.
Right (using net): (£8,500 − £2,890) ÷ £8,500 = 66% — still good, but not 72%.
Always strip VAT before you run any GP% calculation. The Restaurant Console’s Pricing Engine and Weekly Report modules calculate exclusively on net-of-VAT figures.
What Is the Relationship Between Food Cost% and GP%?
They are inverses of each other. If your food cost% is 32%, your food GP% is 68%. If your food cost% is 40%, your food GP% is 60%.
Food Cost % + Food GP% = 100%
The UK food cost target for restaurants is under 32% of net revenue. This gives you a food GP% of 68% or better. Many operators find it easier to think in food cost% terms because it links directly to purchasing and portioning decisions. Either metric is valid — just be consistent.
What Causes Restaurant GP% to Fall Below Target?
Over-ordering and waste. Stock that isn’t sold is a 100% cost with zero revenue. Tight par level ordering with weekly stock checks is the first fix. The Stock module in the Restaurant Console calculates auto-order quantities based on par levels and current stock.
Portion inconsistency. A kitchen serving a 280g steak instead of 220g as specced is losing 27% of that dish’s margin on every plate. Weighed portioning and kitchen specification sheets are non-negotiable at scale.
Menu prices not updated for supplier cost increases. Food inflation in the UK has been significant. If your chicken breast cost £3.20/kg two years ago and now costs £4.10/kg but your menu price hasn’t moved, your GP% on every chicken dish has dropped by roughly 5–7 percentage points.
Staff meals and wastage not tracked. Staff meals, spoilage, and error plates are a real cost. They should be tracked separately in your food cost calculation, not ignored.
The Pricing Engine in the Restaurant Console calculates GP% per dish and per drink, and the Weekly Report shows combined GP% with RAG (red/amber/green) status versus your target — automatically, every week. £97 one-time — see what’s included →
Author
By Shaun McManus | Last Updated: May 2026
Shaun McManus is the licensee of Teal Farm Pub, Washington, Tyne and Wear, operating since March 2023. He has 15+ years in hospitality management across pubs and restaurants. He built the Restaurant Console to manage his own operation and released it for independent operators across the UK. His pub runs at 15% labour cost against the 25–30% UK benchmark.
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Frequently Asked Questions
What is a good GP% for a UK restaurant?
The UK industry target is 63–68% combined GP%. Food GP% target is 65–70% and drinks GP% target is 65–75%. Below 60% combined GP% and most independent restaurants will struggle to cover their overheads and generate profit.
How do I calculate GP% for my restaurant?
GP% = (Net Revenue − Cost of Sales) ÷ Net Revenue × 100. Always use net revenue excluding VAT. Example: £8,500 net revenue minus £2,890 food cost = £5,610 gross profit. £5,610 ÷ £8,500 × 100 = 66% GP%.
What is the difference between food cost percentage and GP percentage?
They are inverses: Food Cost% + GP% = 100%. If your food cost is 32% of net revenue, your food GP% is 68%. If food cost is 40%, food GP% is 60%. The UK food cost target is under 32%, giving a food GP% of 68%+.
Why is my restaurant GP% lower than expected?
Common causes: calculating against gross revenue including VAT (which inflates GP% by ~17%), over-ordering and food waste, portion inconsistency in the kitchen, and menu prices that haven’t kept pace with supplier cost increases.
How often should I calculate restaurant GP%?
Weekly. Monthly GP% is useful for accounts but too slow for operational decisions. Weekly GP% lets you catch a bad food cost week — bad stock delivery, waste event, price change — before it compounds into a bad month. The Restaurant Console calculates it automatically every week.
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