Contribution margin - the difference between sales price and purchase cost

What is it?

The contribution margin is the difference between the sales price and the purchase cost of an item. To work effectively with contribution margin, you should first carry out a careful cost analysis for each item. This includes identifying what your dishes and drinks cost to purchase compared with what guests pay.

Why does it matter?

By carefully analysing and improving the contribution margin, your restaurant can lift profitability even through challenging periods.

How can you improve it?

Focus on, and set concrete goals for, increasing the share of sales coming from items with a high contribution margin.