Contribution Margin
Revenue minus variable costs (food and hourly labor), representing the dollars available to cover fixed costs and generate profit.
Related Terms
Gross Margin
Sales revenue minus cost of goods sold, representing the profit available to cover labor and other operating expenses. Expressed as a percentage.
Variable Costs
Expenses that fluctuate with sales volume, primarily food costs, hourly labor, and packaging. Expressed as a percentage of sales.
Break-Even Analysis
Calculation of the sales volume required to cover all fixed and variable costs, the point at which a restaurant becomes profitable.
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Industry consultant John Gordon's March 2026 assessment is blunt: there are no visible catalysts to shift the current conditions facing restaurant operators. With $1.55 trillion in projected sales masking flat traffic, 1,000+ chain closures, and margin compression on every front, the first half of 2026 is shaping up as a grind.
Industry Analysis