I am going to try guessing revenue of a popular neighborhood Japanese restaurant that I often get food from.

Total yearly revenue= revenue/month* 12

Revenue/month= # orders * average order revenue

average order revenue= total order value- restaurant cost

# orders= daily orders * 30

Daily orders= dine in orders+ phone orders

Dine in orders= hours of operation* orders /hours

Assumption: 

• Hours of operations= 11 AM- 10 PM
• Peak hours : 12-2 PM  and 6-8 PM
• Non Peak hours: 7 hours
• 100% dine in occupancy during peak hours
• 50% occupancy during non-peak hours
• The restaurant have a capacity of 50 tables.
• Average order value: $50
• Average order revenue= $30

Now, let’s do some math:

Dine in orders/day= 375 orders ( 25+100+100+100+50)

Pick up orders: 1 order/5 mins= 10 orders/ hour ( non-peak hour) & 20 orders/hour (peak hour)

Total Pick up orders: 150 orders (80+70)

Total orders : 525, ok assume: 500 orders/day

monthly revenue= 500*30*30= $ 450000

Total Annual Revenue= $45000*12=  $ 540,000

Clarification questions:

• Are we talking about revenues (total sales) rather than profit (total sales – total expenses)? Correct

• Can I assume that we’re on a regular year before Covid19? Yes

• Since I’m not familiar with the way waiters are compensated, can we ignore tips? Yes

• Would you like me to include takeaways and deliveries as well? Yes

My favorite restaurant is an Asian Fusion Restaurant.

Equation:

Yearly Revenues = [# of weeks the restaurant open] X [# of customers a week] X [Average Order Value] + [# of Special Events] X [Extra charge for a special event]

Assumptions:

# of weeks the restaurant open

• Every year there are 356/7=~51 weeks.

• I assume that every three years, the restaurant closed for renovations for 2 weeks- once in every 3 years -> 4.66 days for every year.

• In our country, there are about 5 days every year  in which restaurants are closed (holidays, memorial, special events)

• In total, there are 9.66 days in which restaurants are closed.

• I’ll assume that the restaurant is open for 49 weeks a year.

# of customers a week

• Sub equation: # of customers a week = # of customers in the restaurant a week + # of customers ordering delivery or takeaway a week.

• # of customers in the restaurant

  • There are about 10 seats around the bar, 50 seats inside the restaurant, and another 40 seats on the balcony. In total, there are about 100 seats.

  • The duration of a visit includes:

    • Sitting around a table and order – 5 min.

    • Waiting for the order – 10 min.

    • Eating and drinking in social (I assume that most customers come with company) – 30 min.

    • Ask for a bill and pay – 5 min.

    • In total – 50 min.

    • I assume that preparing a table for the next dinner, even during rush hours, takes 1 min, so it is neglectable.

  • If the restaurant is full, every seat can serve 1.2 people an hour, and on average, the restaurant can serve 120 people an hour.

  • The capacity of the restaurant during the week:

# of customers in the restaurant a week = sum of (capacity) X (number of hours) X (number of customers an hour) = 90% X 30 X 120 + 30% X 28 X 120 + 60% X 2 X 120 = 3,240 + 1,008 + 144 = 4,392

I assume that in any given time, the restaurant supports additional 15% customers out of the restaurant

# of customers ordering delivery or takeaway a week 4,392 X 15% = 659

Therefore, # of customers a week = 4,392 + 659 = 5,051

[Average Order Value]

• The restaurant is a premium restaurant. Therefore, I will assume that an average order will be 110 INS, around $35 US.

[# of Special Events]

• A special event is when the restaurant is closed only for special guests.

• I assume that the restaurant will have 3 special events a month, which are 36 events during a year.

[Extra charge of a special event]

Sub equation: [Alternative income during the time of the event] X [% additional charge]

• Such an event lasts on average 5 hours (incl. preparation and getting back to business).

• I assume that the restaurant will still serve takeaways and do deliveries in parallel.

• The alternative to such an event is 3 hours with 30% capacity+ 2 hours with 90% capacity , which are 30% X 3 X 120 + 90% X 2 X 120 = 108 + 216= 324 customers.

• I assume that the restaurant will charge at least 50% more for a special event, which is 50% X $35 X 324 =  $5,670.

Final calculation:

Yearly Revenues = [# of weeks the restaurant open] X [# of customers a week] X [Average Order Value] + [# of Special an year Events] X [Extra charge for a special event] = 49 X 4,392 X $35 + 36 X $5,670 = $7,532,280 + $204,120

Yearly Revenues = $7,736,400.

Sanity check, it seems reasonable.

Things that we can consider if trying to get even more profound:

• Kids and babies that take a sit.

• Having a separate calculator for eating in the restaurant and order.

• Celebration of small events where people usually spent more.