I have many restauranteur friends in my country, and their profit ranges between 50% to 60%. I have trouble believing that in the USA their profit margins are so crappy. I bet there's a lot of stuff going on under the table (pun intended).

Gross or Net ? - 50% gross profit is common, I doubt you could find any developed country where 50% net profit was the norm for restaurants.

Net. I didn't say this thinking the US should have similar percentages though. This is attributed to the fact that labor costs in my country is easily one third to one half as expensive as labor in the USA. Perhaps there is also less overhead in getting ingredients. I'd understand a 10% ~ 20% percentage net yearly profit, having most restaurants in the lower bracket of course, but 4% or 5% seems extremely low to me.

It's not about labour/ingredient costs, but rather the competitiveness of the market. A healthy competitive market drives profit margin to the lowest sustainable point.

Supermarkets often have profit margins as low as 3-4%.

The question is how many failing unprofitable restaurants are included in those stats. We all know the average new restaurant doesn't last long and hemorrhages money.

I was ignorantly assuming they meant gross. You're right.