Piper is right on.
In general, its posted somewhere on this site, you can use the 5 PRIME as a rough guide.
- SALES (after sales taxes are removed)
- COGS (all costs of goods sold)
- LABOR (all labor costs)
4 EXPENSES (all other expenses, maintenance, banking, merchant, repair, rent, advertising, interest paid, etc…)
- PROFIT (earnings before EBITA) - Sales minus cogs+labor+expenses = profit
My goal is, of course, increase sales, achieve a 40% labor+cogs, reduce expenses to 10-15%.
When I first opened, labor+cogs were 95%, so as you can figure, big time RED numbers. This year, that combo is 43%. Big labor/cogs don’t mean bad management, but of course, indicates low sales. Big sales can hide a lot of bad management, but not low sales. If you know you’re doing well on labor + cogs, then you’ll also know YOU HAVE TO BUILD SALES! But don’t forget, if you want to increase your profit, CUT EXPENSES!!