Restaurant Margin Calculator
Calculate item gross profit, margin, and variable cost ratio.
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How restaurant margin is calculated
Restaurant gross margin shows how much of a menu item's selling price remains after direct unit costs. It is not net profit, but it is a useful first check for menu pricing, food cost control, and promotion planning.
Enter the selling price and unit cost to see the unit gross profit, margin, and variable cost ratio. The calculation is useful for meals, drinks, add-ons, delivery items, and new menu ideas.
Formula or logic
- Unit gross profit = Selling price - Unit cost
- Gross margin = Unit gross profit ÷ Selling price × 100%
- Variable cost ratio = Unit cost ÷ Selling price × 100%
Example
If a menu item sells for 180 and the ingredient plus packaging cost is 72, the unit gross profit is 108 and the gross margin is 60%.
Common questions
Is a higher margin always better?
Not always. A higher margin helps, but sales volume, rent, labor, delivery fees, and customer price sensitivity also matter.
Should packaging be included in unit cost?
Yes, if packaging increases with each order, it should usually be treated as a unit cost.
Is gross margin the same as net profit?
No. Gross margin excludes direct unit costs only. Net profit also deducts rent, payroll, marketing, taxes, depreciation, and other operating costs.