Author Topic: I Want My Money!!  (Read 3003 times)

0 Members and 1 Guest are viewing this topic.

Offline gabaghool

  • Lifetime Member
  • *
  • Posts: 513
  • Location: GLASTONBURY, CT
Re: I Want My Money!!
« Reply #25 on: December 11, 2013, 06:16:03 PM »
Ahh....i see youve done it....thanks.

Its a lot more of an eye opener than most people think....I remember the first time an long time old timer told me that.......at first, I was like all put off....untill I THOUGHT about it and realized that he was right. 

YOU DEPOST CASH, NOT PERCENTAGES.


Offline gabaghool

  • Lifetime Member
  • *
  • Posts: 513
  • Location: GLASTONBURY, CT
Re: I Want My Money!!
« Reply #26 on: December 11, 2013, 06:20:41 PM »
AGAIN, this is very, very simplified.....cause you have to take how many of each item is sold also.....see, this isn't as easy a business as it seems.......

Offline Chicago Bob

  • Lifetime Member
  • *
  • Posts: 12473
  • Location: Durham,NC
  • Easy peazzy
Re: I Want My Money!!
« Reply #27 on: December 11, 2013, 07:34:03 PM »
16oz NY Strip. Menu price: $20. Food cost:  $9. Food cost% = 45%. Profit = $11.
Hamburger. Menu Price = $9. Food cost: $3. Food cost% = 33%. Profit = $6.

The hamburger has a 27% "better" food cost but 45% lower profit.

I don't know about you, but I'll sell the steak to every customer that walks in the door. Run a food cost that the rule-of-thumb says is too high, and laugh all the way to the bank.
You're awesome dude...I appreciate your patience.
"Care Free Highway...let me slip away on you"

Offline Tscarborough

  • Lifetime Member
  • Global Moderator
  • *
  • Posts: 3765
  • Location: Austin, TX
    • Pizza Anarchy
Re: I Want My Money!!
« Reply #28 on: December 12, 2013, 09:26:19 PM »
Not only that, but the OH on a burger is about 3 times what it is on a steak.

Offline pythonic

  • Registered User
  • Posts: 2606
  • Age: 37
  • Location: Crest Hill, IL
  • Pizza......its what's for dinner!
Re: I Want My Money!!
« Reply #29 on: December 12, 2013, 11:08:33 PM »
Are there any situations where a business' financial statement is public record.....like say, maybe if they got their business through an SBA minority loan or something like that? Sure wish I cold take a peek at the income statements of a couple pizza joints in my area.

You can.  Find a place that is selling their pizza joint and a lot of them will open their books for you.
If you can dodge a wrench you can dodge a ball.

Offline fazzari

  • Lifetime Member
  • *
  • Posts: 1003
Re: I Want My Money!!
« Reply #30 on: December 13, 2013, 10:45:35 PM »
Just want to muddy this a bit Bob.  Cost accounting (even though it is a necessity), if not interpreted correctly can force managers to make wrong decisions.  And most of the time the problem is the allocation of costs to products sold.  I remember management consultants, who used to carry around little cards in their pockets with information regarding cutting prices on products.  It went something like this....did you know that if you are making 4% profit and you cut your prices 10 percent, you would have to increase sales x% to make the same amount of profit.  I'm not saying the information was wrong....but I think it ends up being the wrong way to look at things.

There is a term called "contribution Margin"....I think this is the "ideal" term and the "ideal" concept to learn if you really want to understand business.  The contribution margin is the amount of money left when you subtract totally variable costs from sales.  In a pizza business, the totally variable costs are food and maybe boxes.  So, the contribution margin "contributes" to the payment of all of your fixed costs and ultimately (hopefully?) a profit.  The reason that this is important to understand (in my opinion), is because it let's you know how valuable one more sale is, or it let's you know how much a lost sale harms the bottom line.  Every sale you make or lose affects the bottom line (in one way or another) by the contribution margin amount.
In regards to finding your most profitable product, it is not enough to know what the contribution margin of each product is....there is another factor..time.   For instance, a cheese pizza will have a different contribution margin than a loaded pizza....but which is most profitable.....how about figuring out how many cheese pizzas you can make and bake in an hour in comparison to the number of loaded pizzas and then checking the contribution margin per hour per product.  By knowing these kinds of things, you will know for instance which product to discount to increase sales. 
Also Bob, if you can get a handle on what your fixed costs are and you know what your contribution margin is, it is simple math to figure out how much sales you need to break even.

The hard part is figuring who your customers are, and knowing why they will buy from you....and how much will they pay.

John

Offline Chicago Bob

  • Lifetime Member
  • *
  • Posts: 12473
  • Location: Durham,NC
  • Easy peazzy
Re: I Want My Money!!
« Reply #31 on: December 13, 2013, 11:17:42 PM »
Thank you John....that is premo info my man!
"Care Free Highway...let me slip away on you"