Franchising and profitss

• Franchising


  A business model where a franchiser licenses its business model and brand to a franchisee in exchange for a recurring payment
• Franchised restaurants


  • Provide operational, training, layout and design assistance, location assistance, managerial expertise, group purchasing power, and identification of a well-known brand supported by advertising and promotion
  • Can easily get financing from lending institutions than independents
• Regional franchise


  A franchisee develops multiple outlets within a specific geographical area
• Food cost percentage


  Calculated by dividing the food cost for a period by the sales for that same period and then multiplying it by 100
• Many restaurant operators strive for a 40% food cost to make the restaurant more profitable
• Gross profit


  The selling price of an item less its food cost
• Labor costs


  Controlled by expressing them as a percentage of sales on a daily, weekly, or monthly basis and comparing the actual cost with the standard desired
• Many successful restaurants look at food costs and labor costs as a combined cost, setting a standard of 75% above which the combined cost must not increase
• Average guest check


  Calculated by dividing the total revenue received for a particular period by the total number of guests served during that period
• Breakeven point


  The point at which a business will make neither a profit nor a loss, calculated as fixed costs divided by contribution margin
• The contribution margin is average check less variable costs
• The breakeven number of customers is the fixed costs divided by the contribution margin per customer