What is the profit margin difference between dine-in and takeaway in restaurants?

What is the profit margin difference between dine-in and takeaway in restaurants?

What is the profit margin difference between dine-in and takeaway in restaurants?

There are two key statistics that restaurant businesses look at when discussing profit margins. What is the profit margin difference between dine-in and takeaway in restaurants ? Gross Profit margin % and Net Profit margin %. While Gross Profit margin % tends to be similar in relation to dine-in and takeaway. The Net Profit margin % is much higher for takeaway than it is for dine-in.

GROSS PROFIT MARGIN AND COST OF SALES

Gross profit margin is subtracting the cost of sales (food/drink purchases) from the sales or selling prices. Net Profit margin is after subtracting the overheads (i.e. rent, staff costs, electricity etc) from the Gross Profit margin. The % is calculated by expressing the $ profits as a percentage of the sales.

When setting prices for dine-in, restaurant managers calculate both the food costs and the overheads and set a price. That covers both of these costs as well as returning a sustainable profit for the owner. A typical breakup of sales proceeds for an established restaurant like Food costs 30%, Overheads 60% and Profit 10%.

OVERHEADS COSTS ARE BIGGEST PART OF COST OF SALES

Customers mistakenly equate the menu price with the cost of the food only, they generally accept the dine-in prices when buying takeaway. But the overheads, which are the biggest part of the dine-in prices, are significantly less for a takeaway order. Some additional packaging costs required for takeaway but these insignificantly compared to the savings made.

So while the gross profit margins are similar for dine-in and takeaway sales, the takeaway order delivers a higher net profit margin for the restaurant.

CONCLUSION

Furthermore, in terms of $ profit, takeaways increase the capacity of a restaurant by a factor that is many times its capacity to accommodate dine-in customers. i.e. a 50 seat restaurant may reach dine-in capacity with 100 people in one evening (2 sittings) but serve many more people than that with takeaway because takeaway customers not constrained by the limitation of seats. For this reason, I have always found that both net profit $ and % margins are higher with takeaway service than with dine-in service.

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