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To ensure a healthy profit margin, a restaurant must manage five buckets, from the “Prime Cost” (food, beverage and labor costs) to “Overhead” (everything that is not food, beverage and labor) and Common Area Maintenance (building, taxes and insurance).
Gross Revenue is the sales revenue generated by selling food, beverages, and merchandise plus additional gains, i.e., income from a transaction that doesn’t come from regular business operations. This includes the cost of ingredients, rent, equipment, depreciation, interest and taxes, repairs, wages, utilities, and maintenance.
To calculate a recipe's ingredients cost, use the formula: Cost of Ingredients = [Cost of Ingredient Purchased/Quantity of Ingredient purchased] x Quantity Needed In Recipe Food Sales Your food sales allow you to gain insight into which dishes bring in the profits and determine which items on your menu aren't as profitable.
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