In-person dining may be a restaurant’s bread and butter, but it’s far from its only sole source of revenue. To increase sales and build resilience, restaurants can diversify their revenue streams through offerings such as takeout, delivery, merchandise sales, meal kits, subscriptions and banqueting. Diversification not only provides restaurants with greater financial stability, but it helps them stand out in a competitive market by catering to various customer preferences in innovative ways.

What Is Revenue?

Revenue is the total amount of money a company earns during a set period of time. It is generated by the sale of its goods and services, less returns, discounts or allowances and does not include sales tax. For accounting purposes, revenue appears at the top of a company’s income statement. Tracking revenue provides decision-makers, such as business owners, executives and investors, with important insights into a company’s financial performance.

What Are Revenue Streams?

Revenue streams are the different ways that a business makes money from its customers, such as through the sales of products and services, subscription fees and licensing agreements. Many successful businesses rely on multiple revenue streams to bolster their top lines and head off risks associated with downturns. The revenue streams an organization pursues depends on the nature of the business, its target market and its operational capabilities. Understanding and managing revenue streams is critical for a company’s financial health and long-term stability.

What Are Restaurant Revenue Streams?

A restaurant’s main source of revenue comes from food and beverage sales, but can include catering, takeout and delivery, events, merchandise, and others. Dine-in service is the most lucrative revenue stream for many restaurants, but if restaurants learned anything from the COVID-19 pandemic, they need more than one source of income. Options include offering takeout, delivery and catering services; hosting special events, like cooking classes; selling groceries, wine club memberships, branded merchandise and take-home meal kits; and receiving royalties related to licensing agreements, franchise fees and other sources. These additional revenue streams also increase a restaurant’s flexibility and resiliency in the face of changing customer preferences, economic downturns and other unforeseen circumstances.

Key Takeaways

  • By diversifying their revenue streams, restaurants reduce dependencies on any one source of income.
  • This gives them a buffer against market fluctuations and, importantly, can increase their revenue.
  • Several factors can affect restaurant success, including its location, seasonal demand, table turnover time and the price of its food.
  • More than half of restaurant owners surveyed in 2024 said they plan to invest in back-office technologies, which can help organizations manage their revenue streams.

Why Consider Alternative Streams of Revenue?

The restaurant industry is constantly evolving — and the need to change can happen abruptly, as many restaurant operators quickly found out in 2020. During this period, restaurants significantly reduced their capacity or closed entirely, resulting in a $240 billion loss of revenue, according to the National Restaurant Association (NRA).

The takeaway? Reliance on a single revenue source — namely, dine-in service — can be risky or even fatal. But by pursuing additional income streams, restaurants can protect themselves against financial downturns, whether due to another health crisis, economic recession, inventory shortage or seasonal fluctuation. It also helps them meet changing customer expectations, such as the desire for takeout, delivery and meal kits.

By offering additional services, restaurant operators also can optimize their resources and potentially increase their returns on investment. For example, providing catering services allows them to make better use of their facilities, equipment and staff during off-peak hours. Ultimately, extra revenue streams help restaurants to build a resilient business model that can withstand challenges, adapt to changing market conditions and ensure long-term profitability.

What Factors Affect Restaurant Success?

Restaurant success depends on a variety of factors, each of which plays an important role in attracting and retaining customers. Five key elements are seasonality, location, capacity, table turnover and pricing and quality.

  • Seasonality: Restaurant revenue can fluctuate in accordance with the seasons, which impact tourism patterns, celebrations and local events. For example, some restaurants experience a surge in business in June due to weddings, or a slump in January, following the holidays, when diners tighten their budgets. Similarly, restaurants in tourist destinations will see a sharp increase or decrease in visitors depending on the time of year and where they are located.
  • Location: As the saying goes, location, location, location. Restaurants near shopping malls, tourist attractions or business districts, or those with convenient access to parking and public transportation, often attract higher foot traffic and, subsequently, higher sales, compared to out-of-the-way establishments. Similarly, restaurants with high visibility from major highways and pedestrian walkways also attract more spontaneous visits than those secluded on side streets.
  • Capacity: The seating capacity of a restaurant directly affects its revenue potential. Simply put, a small restaurant can accommodate fewer diners per day compared to large restaurants. Limited capacity can also create longer wait times, which may deter customers and thwart repeat business. However, while restaurants with greater capacity typically have higher revenue potential, they also have correspondingly higher expenses, such as for labor.
  • Table turnover: The rate at which tables are occupied and vacated by separate parties is known as table turnover. It is calculated by dividing the number of parties served by the number of tables available. High table turnover means a restaurant is serving more diners at any given time, which boosts revenue. It also indicates efficient service, which enhances the dining experience and increases the likelihood of patrons returning. Conversely, slow table turnover inhibits the number of customers a restaurant can serve and often causes long wait times.
  • Pricing and quality: The price and quality of a restaurant’s food and drinks greatly influence customer perception, satisfaction and loyalty. These aspects become even more critical during times of economic uncertainty, when consumers are more cautious about their spending habits. Indeed, nearly half of consumers surveyed by the NRA said they are taking a wait-and-see approach about spending. At the same time, however, restaurant owners are facing their own financial pressures: In the survey, nearly all restaurant operators indicated that higher labor and food costs were creating issues — with 38% reporting that their businesses were not profitable in 2023. Striking the right balance by pricing meals to attract customers while still turning a profit is important, as is making sure a kitchen’s ingredients are fresh and the quality of prepared meals is considered worthy of the prices a restaurant charges.

10 Restaurant Revenue Streams

Great food, excellent service and a welcoming atmosphere are three hallmarks of a successful restaurant business. But for long-term viability, restaurants must also understand and tap into a range of revenue streams if they are to remain profitable and grow.

1. Dining in

According to the NRA, nine in 10 adults enjoy going to restaurants. In-person dining — assuming it offers a pleasing atmosphere and high level of service — is often a restaurant’s main revenue source. When customers pay a visit, restaurants have the opportunity to upsell appetizers, desserts and drinks that complement the main course, increasing the average size of the check. Ultimately, by providing a delicious, memorable dining experience, restaurants can encourage repeat visits and build a loyal customer base.

2. Takeout and Delivery

Accelerated by the pandemic, takeout and delivery have become popular revenue streams for restaurants of all types, from fast-food chains to high-end establishments. To maximize this type of revenue, restaurants can partner with popular food delivery apps, offer special deals for takeout orders and create menu items that travel well. Takeout and delivery services also can bolster sales for restaurants at times when dine-in traffic tends to be slow, such as during poor weather conditions.

3. Catering

Off-site catering helps restaurants reach a broader audience. Although some restaurants might not have the time or resources to start a full-blown catering service for large functions, such as weddings, they can still explore smaller opportunities, such as catering corporate lunches or birthday parties. Tips for building a successful catering business include creating a separate catering menu, working with local event planners and promoting services through targeted marketing.

4. Merchandise and Retail

Restaurants can diversify their revenue streams by selling branded merchandise, such as T-shirts, hats and mugs. This not only provides an additional source of income, but merchandise sales help raise brand visibility, potentially attracting patrons who are curious to try a new place after seeing its catchy slogan across the back of someone’s sweatshirt. Restaurants can also sell retail products, like sauces, spice blends and cookbooks, enabling loyal customers to enjoy their favorite flavors and recipes at home.

5. Meal Kits

From prepared date-night meals and drink and food pairings to cupcake decorating and make-your-own pizzas, meal kits have gained popularity in recent years as a convenient way for customers to enjoy restaurant-quality meals at home. Portioning and packaging meal kits can be done during off-peak shifts or after hours, so staff can focus on serving in-person customers during regular business hours.

6. Subscriptions

According to the NRA’s “2024 State of the Restaurant Industry” report, 81% of Generation Z adults, 79% of Millennials and 71% of Gen Xers would likely participate in a meal subscription program if one were offered. By implementing a subscription service, restaurants can create a steady and consistent stream of revenue. By offering special members-only benefits, such as early access to new menu items, restaurants also can create a sense of exclusivity and greater loyalty.

Moreover, by collecting and analyzing customer data from subscription plans, restaurants can gain valuable insights into subscriber preferences and behavior, enabling them to further personalize their offerings and potentially drive additional revenue.

7. Special Events

Hosting special events, such as wine tastings or themed dinners, can help restaurants attract new customers and boost revenue. These events can generate community buzz through word-of-mouth recommendations, raising the restaurant’s profile and providing the opportunity to showcase its creativity and culinary skills. Successful events can even lead to media coverage and social media exposure, further amplifying the restaurant’s reach and attracting a broader audience.

8. Cooking Classes

Offering cooking classes is another great way to draw in customers, create memorable experiences and bring in additional revenue. Whether it’s Cooking 101 or a more advanced training focused on a specific cuisine, cooking classes help restaurants make personal connections with customers, which, in turn, can increase brand loyalty and referrals. Classes can also be tailored to different audiences, such as classes for kids, couples or vegetarians.

9. Gift Cards

Selling gift cards provides restaurants with an immediate source of revenue that is also good news for cash flow. Gift cards, in general, encourage higher spending: Sixty-one percent of consumers spend more than a gift card’s value when redeeming it, according to a report from CapitalOne Shopping. By offering gift cards, restaurants can encourage current customers to share their love for the business with friends and family, while also providing an easy way for new customers to try out the restaurant.

10. Loyalty Programs

Loyalty programs are a powerful tool for increasing customer retention and driving repeat business. Rewarding customers with perks like discounts on meals or free appetizers after a specific number of visits, for example, can incentivize them to spend more money and visit more often. Generally speaking, 55% of adults worldwide say that offering points or reward systems are the top ways to keep them coming back, according to a report from Marigold in conjunction with Econsultancy.

Maximize Your Restaurant Earnings With NetSuite

Restaurants have many potential revenue streams at their disposal. Advanced technology solutions like NetSuite Financial Management can help restaurants expand and manage as many as they have. The solution streamlines financial processes, provide real-time visibility into performance and guides data-backed decisions that drive growth. The finance and accounting modules enable restaurants to efficiently manage cash flow, reduce manual errors and ensure regulatory compliance. By integrating with other business applications, such as inventory management and point-of-sale systems, NetSuite provides a unified view of the entire restaurant operation.

NetSuite also caters to the unique needs of restaurants, with features including recipe management, food costing and inventory tracking. With real-time reporting and analytics, restaurant managers can quickly identify trends, monitor key performance indicators and make informed decisions to improve profitability.

Relying solely on traditional dining room sales is no longer sufficient for a restaurant’s long-term success. By diversifying revenue streams — for example, by offering delivery and takeout, selling meal kits and subscriptions, or hosting special events — restaurants can tap into new market segments and adapt to changing diner preferences, all the while mitigating financial risks, driving revenue business growth, enhancing customer engagement and building a more resilient business model.

#1 Cloud
Accounting
Software

Free Product Tour(opens in a new tab)

Restaurant Revenue Streams FAQ

Where do restaurants make the most profit?

Restaurants often make the most profit from alcoholic beverages, such as wine, beer and cocktails, with markups as high as 400%. Restaurants also do well on meals with low-cost ingredients, just as breakfast items, pizza and soup.

How does a restaurant make revenue?

Restaurants make money from multiple sources, including food and beverage sales, online purchases, subscriptions and catering orders.

How profitable is the average restaurant?

The answer varies depending on the type of restaurant as well as its operational expenses. According to one report, the average restaurant profit margin in 2023 was 9.3%.

What is the revenue stream of a restaurant?

A revenue stream represents a single source of sales. In the restaurant industry, revenue streams include food and beverage sales, online ordering, catering, merchandise sales, meal kits and more.

What are the revenue drivers of restaurants?

The primary revenue driver for many restaurants comes from the sale of food and beverages to patrons dining at the restaurant. But restaurants often pursue other potential revenue sources, such as takeout and delivery services, hosting cooking classes and catering events.