High Revenue Doesn't Always Mean Profit: How to Tell the Difference
Packed house and high revenue is great. But if you don't know your net margin, you might be working hard for a number that doesn't matter.
Revenue ≠ Profit
High monthly revenue sounds great. But how much is left after ingredients, rent, wages, utilities, and everything else? The amount that remains — that's what you actually earn.
Costs That Are Often Forgotten
Equipment depreciation (espresso machines, AC, furniture), maintenance, ingredient waste, discounts and promos, and non-standardized portions. These all erode margins without showing up as obvious daily expenses.
One Number That Matters: Net Margin
Revenue minus all costs (including the "hidden" ones), divided by revenue. This is the percentage you actually earn from every dollar that comes in. Track this number monthly.
Practical Steps
Track all expenses — not just the big ones. Review food cost per product (not just the average). And most importantly: build the habit of looking at margins in your reports, not just revenue.