From Rough Margin to Neat Margin: The Bottom Line Explained

Gross Revenue (Gross Sales) excluding VAT: This is the base. Be careful, VAT is not yours; you are only collecting it for the state.

Food Cost (Cost of Goods) = Gross Margin. This is what’s left to pay for everything else. Target: 70-75% of Revenue.

Personnel Costs (Payroll): Gross salaries + employer contributions + temporary/additional staff. Major expense. Objective: 30-35% of turnover.

EBE (Earnings Before Interest, Taxes, Depreciation, and Amortization) or EBITDA. It’s the operational performance of your restaurant before financing and depreciation decisions. It’s the key indicator of your business’s health. A good EBE in the restaurant industry is between 10% and 15% (sometimes 20% for very high performers).

Depreciation Expenses (equipment/works impairment) - Financial Expenses (loan interest) = Current Result.

Corporate Tax (IS) = Net Result (Net Margin). This is what remains in reality. In the restaurant industry, a net margin of 5% to 10% is acceptable.

Understanding this cascade allows you to know on which lever to act: Food Cost? Personnel? General Expenses?