Gross Profit Margin: Fill & Download for Free

As a business person who has owned both restaurants and fast food stores and who has been a keen student of both business models for over 20 years, my view is that the Gross Profit margin % and Net Profit margin % of a high end restaurant and a McDonalds store, are pretty much comparable.Now granted, each business model arrives at these % by quite different means, but the final result of each are comparable in that both business models produce a Gross Profit margin % of about 66%–67% of sales and a Net Profit margin % of about 8% to 9% of sales.In terms of Gross Margin %:A high end restaurant will spend far more on food costs than a McDonalds store due to quality ingredients, limited supplier discounts for small purchases and higher wastage due to customization and maintaining fresh ingredients, but they are equally able to charge the customer far more and so they can maintain an overall 66–67% gross profit margin.A McDonalds store can’t charge their customers anything like the price that high end restaurants can charge but then again their bulk buying power and lower quality ingredients coupled with the minimal waste produced from their standardized manufacturing processes, ensures that they too can maintain a Gross Profit margin % in the 66–67% range.In terms of Net Profit Margin %:A high end restaurant will generally need to spend about 32% of their sales revenue on the extra skills and labor required to give their customers that high-end experience but they can often save on rent (10% of sales) because a high—end restaurant is a destination business that patrons will go out of their way to frequent. So a prime retail location paying prime rent is not required. Between these two major expenses a high-end restaurant will outlay about 42% of sales.A McDonalds store on the other hand will save on labor costs due to their counter service system and the use of less skilled labor (27% of sales) but need to spend a greater % of their sales to locate in prime retail areas (15% of sales). All told, these two major expenses amount to 42% of sales which is very similar to a high end restaurant %.The net result of both models (after deducting other fairly standard business overheads) is a Net Profit Margin % of about 8–9% of sales for both business models. This Net Profit % (in the 5–10% of sales range) pretty much aligns with the net profit results that I was able to achieve from the many restaurants, fast food and cafe outlets that I have founded and managed.In seeking information that could support my own observations and experience, I was able to locate the following profit statement for a McDonalds from Janney that generally supports my own calculations . (Note: my net profit calculation adds back the non-cash depreciation and amortization to arrive at the 9% estimate)In terms of a high end restaurant I was able to locate the information published by the Australian Tax Office which collates the information from the Restaurants’s tax returns. (Note: A 33% Average cost of sales means a Gross Profit margin % of (100% - 33%) = 67% and the net profit is calculated by subtracting the 92% Average total expenses from 100% to produce a 8% net profit margin).My assumption are further supported by 2017 research done on the entire hospitality sector in Australia by IbisWorld which shows a Gross Profit margin % of 67.1% (100% - 32.9%) and a Net Profit margin % (with added back depreciation) at 10% (6.6% + 3.4%).So while the business models of a high-end restaurant and a McDonald’s store look vastly different in physical appearance, their underlying profit margin percentages are actually quite similar.

I've invested in a pub in the university town of Manipal, Karnataka. This is hence an India specific answer. I'm a sleeping partner and earn a share of profits.Here's an aerial view of the town for perspective.​​Bars have a very high profit margin. The range varies between 70% to 100% on sales (net).It really depends on the type of bar. A local bar in Kerala like the one below sells alcohol at a lower markup but increases table turnover since patrons are expected to finish their drinks and leave. Tables turnover as around 8 times a day. Overheads such as rent and salaries are much lower. Costs such as interiors are non existent.​​And then there's the posh, upmarket pubs like Aeir Lounge in Mumbai. Drinks are sold at a 400% markup to their cost price. The gross profit market on food is also high. However, patrons come for the experience and not just to get high. Table turnaround is about 3 times a day. Rent is exorbitant; salaries are substantial and a huge investment goes into interiors.​​Here's the bar I've invested in. That's my buddy Sarbashish in stripes and Sikander in white.​​I'm happy to answer more, maybe specifics? Drop your question in the comments.

A successful cafe in Australia would generally be achieving a turnover of $600,000+ per annum. i.e. more than $10,000 per week.According to the 2013–14 Australian Tax Office benchmarks, this type of cafe would be making a Gross Profit margin of 65% and a Net Profit Margin of 10%. Coffee shopsNote: 35% ‘average cost of sales’ means that the coffee shop is making 65% Gross profit margin. Similarly, a 90% ‘average total expenses’ means they make a 10% net profit margin.As the owner of over 15 cafes and coffee shops, I can attest to these figures.