I have built up a business plan that has a 31.5% gross margin and a 6.02% Net profit. I am looking to see how these two numbers hold up compaired to Pizza industry standards.
What cost of goods are you accounting for in figuring your gross margin. Food and Labor or Food and Labor and ??. If only food and labor 31.5% is low. FLC s/be no more than 60% and probably closer to 55% which would leave you a gross margin of 40 -45%.
Food cost+paper+labor
Food paper and labor should certainly not be above 60%. With good sales volume under 50% is possible.
This is a tough question and volume changes so much of it. The standard business model is 30% COGS (Cost Of Goods Sold), 30% Labor, 30% Operational Expenses and (hopefully!) 10% profit.
I feel like labor is something that is often over looked, efficiency is the key to any successful operation and that labor can drop fast if you have things set up correctly and have a well trained staff. On high volume days, I can drop as low as 12% labor with me working in the kitchen, 20% without. The problem, which I have constantly struggled with, is consistency. I could probably run around 20% without me there pretty regularly…and I’m slowly getting there, but you have to have a tight schedule, especially before you open your doors and be sure every hour on the clock is being fully utilized.
I went over the numbers again, it just didnt seem right and I am glad i asked and thank you for the input everyone.
lowerd the labor and still have it ata reasonable place. looked at some other areas and double checked them as well. as it stand 40-45% gross profit is doable, and a 10% profit net sales looks doable as well. place is going to be pizza with some sandwiches, salads, and a few aps with a full bar.
Full bar changes things quite a bit. Mark-up is great, volume is generally good and it usually drives up food sales (or food sales drives up bar sales).
I would say always stick with 30% labor in your business plan. If you go lower…great! More money for you. But plan for 30%.
Also, are you including your payroll taxes and unemployment taxes (sorry…insurance) in that 30%?
Indie
“Also, are you including your payroll taxes and unemployment taxes (sorry…insurance) in that 30%?”
Yes all that is included.
I think I have asked this before but…
What does everyone include in food costs?
We lump all food, paper and beer cost into ours and we are at 36% It goes to 27% food and paper cost if I take out the beer. Do you include beer/aclcohol?
Also is this based off total sales or total sales minus sales tax?