Contribution margin analysis plays a central role in the restaurant industry for accurately determining the profitability of individual dishes and beverages. It shows how much each item sold contributes—or can contribute—toward covering (fixed) costs and helps you operate more profitably. Key aspects of the calculation include accurate cost of goods sold—that is, a clean and precise cost breakdown of your products—pricing for your products, and an analysis of variable and fixed expenses.
The goal of CMA is to determine an appropriate selling price for your products that takes as many variables as possible into account and helps you operate profitably in the long term. The selling price is composed of the following components:
As we’ve already learned, the calculation involves many variables. However, you don’t have to perform this calculation yourself—you can use Gastronovi Back Office instead. This does require some preparation, though, which involves some upfront work on your part.
The### cost of goods sold (ingredients used for each dish) is automatically retrieved from the system if a cost calculation has been created for all product groups, products, and ingredients. While this requires a significant amount of work initially, it is absolutely necessary to make the contribution margin calculation as precise as possible and to operate profitably using the DBK.
You can generate a forecast for all products, which calculates future sales based on sales figures from the last twelve months. This forecast can then be used in the contribution margin calculation to achieve more accurate results.
You also have the option to create or update the forecast for individual products only.
Note that any products priced at 0 euros or less that are part of a query or batch are not included in the forecast.
Under “Expenses,” enter all more or less fixed costs incurred each month (e.g., rent, utilities, electricity, internet). For variable expenses, such as personnel costs, you can analyze as many figures from recent months as you like and specify the lowest and highest monthly amounts for each, so that the system can calculate an average monthly value, which is then included in the contribution margin.* Click here for expenses: Expenses
You can retrieve personnel costs from the system, for example, if you use time tracking : Statistics
Once all expenses have been entered, you can calculate the contribution margin or contribution margin targets for the product groups based on the expenses (and, optionally, a forecast of products sold—depending on sales figures from the past twelve months).
The results of the calculation will be sent to you via email once it is complete. You will receive a detailed overview of all your product groups and the corresponding values. The system displays the share of each parent or child product group in total sales over the last 12 months, the number of items sold, and the calculated target per portion suggested by the system. Using this data and the system’s calculation, you can now set the selling prices for your products.
The calculation automatically overwrites all existing data in the product groups. You can then also adjust the targets manually for each product group:
Note that all products priced at 0 euros or less are ignored in the contribution margin calculation.
Once you’ve completed all preparations and calculated the contribution margin, you can assign an appropriate retail price to your products. The software will assist you in this process by taking into account all relevant factors, such as the contribution margin target and the cost of goods sold for the product category in which the product is classified.