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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