Food serviceCommercial contract bandWeek of 30 March 2026

Restaurant Propane Price Per Gallon

Restaurants use propane for ranges, fryers, broilers, steamers, water heaters, and increasingly for outdoor patio heating and pizza ovens. Commercial pricing sits below residential because of volume and route economics. This page covers what a typical food-service operation actually pays.

Restaurant commercial contract, typical

$2.01to$2.54/ gallon

Reference: US residential EIA $2.674 (week of 30 March 2026). Restaurant contracts typically 5 to 25% below this range.

Where restaurants use propane

The dominant restaurant propane application is the commercial cooking line. A typical mid-size restaurant (50 to 150 seats) burning propane for cooking uses roughly 1,200 to 4,000 gallons per year. The split across equipment is approximately: 40 to 60% for the range and broiler, 15 to 25% for deep fryers, 10 to 20% for steamers and combi-ovens, 5 to 10% for hot water, and the balance for ancillary equipment (warmers, chafers, salamanders). A pizza restaurant with a gas-fired pizza oven shifts the split toward the oven (which can be 40% of total gas use alone).

Outdoor restaurant use of propane has expanded dramatically since 2020. Patio heaters for outdoor dining are typically rated at 40,000 BTU per hour (one gallon of propane delivers roughly 91,452 BTU, so a patio heater consumes about 0.4 gallons per hour at full output). A restaurant with eight patio heaters running four hours per evening across a 120-day spring-and-fall outdoor season consumes 1,500+ gallons for patio heating alone. Some larger establishments have moved from 20lb cylinder rotation to permanent propane plumbing for the patio.

Why restaurants pay less than residential

A typical restaurant qualifies for the light-to-medium commercial tier (5 to 25% below residential walk-in pricing) for the standard reasons.

Volume: 1,500 to 5,000 gallons per year is a commercial-tier volume in a propane dealer tier sheet. A residential customer at 800 gallons per year is one tier down.
Single-stop delivery economics: A restaurant typically has a 250-gallon or 500-gallon tank, often above-ground at the rear of the building. One stop, large fill (often a full 400 gallons), faster than a residential partial-fill schedule.
Signed contract: Most restaurants are on annual or multi-year supply agreements with a named pricing formula (cost-plus on a benchmark, fixed seasonal, or capped).
Predictable usage profile: A restaurant's gas consumption is essentially independent of weather (unlike residential heating). That makes inventory planning easier for the dealer and reduces the dealer's carrying cost.

Contract structures for restaurants

The contract structure choice matters more for restaurants than is sometimes appreciated. Three structures dominate.

Cost-plus seasonal

The restaurant pays Mont Belvieu spot (or a named regional rack) plus a fixed differential. The differential typically runs 55 to 95 cents per gallon for a 2,500-gallon-per-year operation. The buyer carries full price risk: if Mont Belvieu rallies 20 cents in a month, so does the restaurant's next delivery. Common for restaurants with strong purchasing discipline and willingness to manage budget volatility.

Fixed-price annual

The restaurant locks in a per-gallon price for the year on an estimated annual volume. The dealer absorbs the price risk. Premium of 8 to 18 cents per gallon over likely cost-plus equivalent. Favoured by restaurants with thin margins where a propane price spike could materially affect operating profit (small independents in particular).

Multi-year cost-plus with cap

Hybrid: pay cost-plus, but with a ceiling that the dealer absorbs if the market blows past it. Cap premium of 15 to 30 cents per gallon over straight cost-plus. Useful for chain operations that want budget certainty without giving up downside opportunity.

Negotiation levers for restaurants

Restaurants often accept the first quote a propane dealer offers, which leaves money on the table. The levers that work:

Annual volume commitment in writing: Even if you cannot guarantee the volume, a best-efforts commitment in writing often shifts the dealer to a better tier.
Tank ownership instead of lease: A 500-gallon ASME tank costs roughly $2,000 to $2,500 installed. Owning the tank rather than leasing removes the lease amortisation from the per-gallon price (typically 5 to 12 cents per gallon).
Auto-fill instead of will-call: Lets the dealer optimise the delivery route. Worth 4 to 8 cents per gallon.
Multiple competitive bids: Three quotes is the standard. The propane retail business is fragmented (3,500+ US dealers) and prices vary meaningfully even within a single market.
Pay-on-delivery rather than 30-day: Some dealers will offer 2 to 4 cents per gallon for cash-on-delivery (or ACH same-day) rather than standard net-30 invoicing.

Outdoor heating: a meaningful new propane segment

The post-2020 expansion of outdoor dining has structurally added propane demand to the restaurant segment. Patio heating consumes propane at a high rate (a typical mushroom heater is 40,000 to 50,000 BTU per hour, or roughly 0.4 to 0.55 gallons per hour at full output). An eight-heater restaurant patio running 4 hours per evening, 4 evenings per week, 30 weeks per year consumes 1,500 to 2,100 gallons of propane on patio heating alone, on top of indoor kitchen consumption.

Permanent propane plumbing for outdoor dining (running gas line to the patio with quick-disconnect fittings for the heaters) costs more to install than the 20lb cylinder rotation but pays back quickly for any restaurant running more than 30 cylinders per year. The plumbing approach also unlocks better per-gallon pricing because the propane is delivered bulk to the main tank rather than purchased through the cylinder exchange premium (see the camping propane page for the cylinder premium math).

Restaurant propane vs natural gas

Where natural gas is available, restaurants typically choose natural gas for the cooking line because the per-BTU cost is lower (see the propane vs natural gas page). Propane is chosen when natural gas is unavailable (rural locations, properties off the gas main), intermittently needed (outdoor patio heating, food trucks, temporary installations), or where natural gas service connection cost is prohibitive (a property 50 feet off a gas main with a $15,000 connection cost may justify propane on capital cost alone).

Equipment efficiency considerations

Modern commercial propane cooking equipment runs significantly more efficient than the previous generation. Energy Star-rated commercial fryers can recover 50% more efficiently than 1990s equipment; convection ovens running on propane achieve 70%+ combustion efficiency. For a restaurant making a long-term equipment decision, the efficiency gain on newer equipment can offset 20 to 30% of the propane consumption that would be expected from older equipment. The propane usage per cover (per guest served) varies by cuisine but typically runs 0.05 to 0.15 gallons of propane per cover for a mid-volume operation.

FAQ

How much propane does a typical restaurant use per year?

A 50 to 150 seat restaurant burning propane for the cooking line typically uses 1,200 to 4,000 gallons per year. Pizza-oven and high-volume fryer operations can use considerably more. Outdoor patio heating adds another 500 to 2,500 gallons depending on heater count and operating season.

Should a restaurant lease or own the propane tank?

Ownership pays back in 3 to 5 years at typical consumption, but ties the restaurant to the installation. A 500-gallon ASME tank costs $2,000 to $2,500 installed. Tank ownership removes the lease amortisation from the per-gallon price (5 to 12 cents per gallon).

Is patio heating worth running in winter?

Operationally yes if customer demand justifies. A typical patio heater at 40,000 BTU per hour can maintain 50 to 60 degrees in a 100 square foot zone at 40 degrees ambient. Beyond freezing it becomes difficult to keep guests comfortable without enclosed structures.

What contract structure is best for a small restaurant?

Fixed-price annual is the lowest-stress option for most small operators, accepting a small premium for budget certainty. Larger operations or multi-unit chains often run cost-plus with caps for the optionality.