4 ms·
What I learned in food service is that a general formula is 30% food cost, 30% labor, 30% overhead, 10% profit. If things are running well, you take home some m
by wiredfool 16y ago
What I learned in food service is that a general formula is 30% food cost, 30% labor, 30% overhead, 10% profit. If things are running well, you take home some money at the end of the day. The margin for error isn't huge.
- mtr 16y agoSo assuming that these customers didn't buy anything over $13, her COGS should have been $13 * 0.3 = $3.90. This also ignores the fact that there are people who paid $6 for the coupon and never redeemed it. Now lets assume that some people didn't redeem the coupon and that her COGS is a bit lower, so COGS = revenue. As labor and overhead are 'fixed', she shouldn't have lost any money as long as these weren't existing customers who decided to use the coupon. If 100% of her existing customers used the coupon she certainly would have seen her profits hurt. If 100% of these people were new to the business, she wouldn't have made/lost any money on each transaction, but she would have obtained a lot more exposure. So before deciding to do one of these deals a business owner needs to have a clear handle on their costs, the expected mix of new/existing customers, and the expected revenue from the new customers over some reasonable length of time.