What is EBITDA for a restaurant, and why should you track it?

EBITDA stands for earnings before interest, tax, depreciation and amortisation. For a restaurant, it answers one simple question: after every cost of running the business, what is left?

What it counts

• Your net sales from every channel: dine-in, takeaway, your own ordering and each delivery platform.
• Less each platform's commission and fees.
• Less the costs that grow with orders, such as packaging and card fees.
• Less food, staff, rent and your other running costs.
• Less your head office costs, shared across branches.

What it leaves out, and why

It leaves out loan interest, tax, and the slow wearing down of your kitchen equipment and fit out. Those depend on how you financed the business, not on how well it runs this month. Leaving them out lets you compare one branch with another, and one month with the next, fairly.

Why owners track it

• It shows whether a branch earns its keep, once every running cost is counted.
• It shows whether growth is real. Sales can rise while EBITDA falls, if the extra sales come with a big platform cut or higher costs.
• It is the figure banks, investors and buyers of restaurant businesses look at first.

Track it by branch and by month. A total for the whole business can hide a branch that loses money.