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%.