What is a good EBITDA margin for a small business?

Most healthy small businesses run an EBITDA margin between 10% and 20%. Service businesses and SaaS often run higher (20–35%+), while restaurants and retail typically run 10–15%. CFO Grade compares your EBITDA margin to industry-specific benchmarks across 16 sectors.

What DSCR do lenders look for?

Most SBA and commercial lenders require a Debt Service Coverage Ratio (DSCR) of at least 1.25x. Construction surety bonds often require 1.5x or higher. A DSCR below 1.0x means your EBITDA does not cover your annual debt payments.

How does CFO Grade calculate the letter grade?

CFO Grade scores 24+ financial ratios across profitability, liquidity, leverage, and efficiency — weighted by industry. The composite score maps to a letter grade from A+ to F. The full methodology and benchmark sources are described in the report and the disclaimer page.

Yes. The full analysis, 24+ ratios, letter grade, and industry benchmarks are completely free with no signup. Optional paid features include a $9 PDF export and a $19 Pro Pass with AI-generated CFO memo and 30 days of unlimited PDFs.

Do I need to create an account?

No account is required. Your numbers stay on your device unless you explicitly opt in to anonymized peer benchmarking. Pro entitlements are bound to your device with a restore link you can email yourself.

Is CFO Grade financial advice?

No. CFO Grade provides educational insights for business owners and analysts. It is not financial, tax, legal, or investment advice. Always verify the output with a qualified professional before making business decisions.

Restaurants & food service

Financial health for restaurants — graded.

Prime cost, food cost, labor cost — the four numbers that decide whether your restaurant survives. CFO Grade reads your P&L and tells you exactly where you stand.

Free

Industry benchmarks

No signup

Worth quotingRestaurants with a prime cost above 65% rarely survive 24 months — the industry consensus 'do-or-die' threshold is 60% or lower.

Built for owners and analysts who say…

"Your prime cost looks fine, but cash is always tight.
"Banks ask for a DSCR and you don't know what yours is.
"You feel busy — but never sure if you're actually profitable.

What you'll get

Prime cost grade — A+ to F — against restaurant medians
Food cost & labor cost breakdown vs industry benchmark
DSCR check (the number SBA lenders care about most)
Plain-English CFO memo of what to fix next quarter

Common questions about restaurants & food service financials

What is a healthy prime cost for a restaurant?+

Healthy prime cost (food + labor as a % of sales) is 60% or below. 55–58% is excellent. Anything above 65% is a red flag — most operators who breach 65% don't recover without a major menu or pricing reset.

What is a good food cost percentage?+

Food cost of 28–32% of revenue is healthy for most full-service restaurants. Fast-casual can hit 25–30%. Pizza concepts as low as 20%. The exact target depends on your concept, but anything above 35% needs immediate attention.

How do lenders evaluate restaurants?+

Banks and SBA lenders look at DSCR first (target: 1.25× or higher), then prime cost, EBITDA margin (10–15% is healthy), and seasonality of cash flow. Construction-style sureties don't apply, but lenders do haircut SDE by 15–25% to normalize owner add-backs.

Why is my restaurant busy but cash-poor?+

Three common reasons: (1) prime cost above 60% — busy doesn't mean profitable, (2) low EBITDA margin (under 8%) eaten by rent and utilities, (3) DSO on third-party delivery (Uber Eats, DoorDash) tying up working capital. Run your P&L through CFO Grade to see which of the three is yours.