Gross profit margin

Gross profit is what remains after you subtract the cost of the goods you sold from the sales those goods generated, and the margin is that figure as a percent of sales. It is the mirror image of Food cost percentage: if food and beverage cost runs a median of 32.0% / 32.4% of sales, the gross margin on those sales is roughly the rest of the dollar. It measures how much each sale contributes before any of the running costs of the restaurant are paid.

Gross profit is the pool everything else comes out of: labor, Occupancy cost, utilities, marketing, and finally profit. That is why it sits upstream of the net 3-5% net margin most operators actually take home. Protecting gross margin is mostly about the two things that quietly erode Cost of goods sold (COGS), vendor price creep and waste, and if you let either drift the margin thins before you feel it in the bank.

Invoice and inventory platforms (MarginEdge, Restaurant365) track cost of goods against sales continuously, so a margin slip surfaces in days rather than at month-end, and waste tracking (Winnow) protects the margin by cutting what you paid for and binned, reporting food-cost savings of 2-8% food-cost savings. See inventory and food cost.