Professional juicer machine
Professional juicer machine
Although it may take 3 to 5 years for your café, juice bar, or supermarket deli to break even—you must stay apprised of your financial metrics. This includes understanding how and why you need to know your cost of goods sold (COGS), the difference between gross profit vs net profit, and your overall profit margin. Let’s dive into what your operating profit margin formula is and how it works.
Profit margin is also referred to as your operating income, operating earnings, return on sales (ROS), and Earnings Before Interest and Tax (EBIT). It measures what you’re making after expenses are deducted from your revenue.
It’s exciting when you see your food and juice sales increasing, but increased sales don’t always translate to increased profitability. Calculating your profit margin informs you of whether more money is going out than coming in. This margin should be analyzed on a monthly basis, in search of areas of opportunity. For example, reducing your expenses, negotiating vendor contracts, or adjusting your menu cost structure.
Calculating your operating margin isn’t the same as calculating your gross margin. It’s also essential to understand and calculate your net profit vs gross profit. Combined, these 3 metrics (aka. profit ratios) empower you to make informed financial decisions. They also keep your investors and stakeholders apprised of your performance.
Understanding the difference between operating, gross, and net margins is a funnel of sorts—you deduct more on the way down.
Gross margin
Gross profit informs you of whether you’re making or losing money on individual juices and menu items. It’s calculated by subtracting your total revenue from your cost of goods sold (COGS). This includes all food items and ingredients, as well as disposable items required for serving, takeout, and delivery. Your full labor line is not included in gross profits, but you must factor in prep and cooking time. One of the reasons restaurants choose Zumex juicers is to reduce prep and completion time.
Operating margin
Your operating earnings are determined by deducting all operational expenses from your revenue, except for interest, taxes, non-operating expenses, and assets (Depreciation & Amortization). It is calculated by deducting your COGS, rent, utilities, labor, and all overhead costs from your total revenue. This number informs you of your monthly, quarterly, and annual profit.
Net margin
Net margin or net sales is your bottom line. Where operating margins don’t deduct interest, taxes, and non-operating expenses, net margin deducts everything
Linking your POS to bookkeeping software automates your operating income calculation. It also calculates all profit ratios and creates custom reports. This allows you to analyze the line items and categories on your weekly, monthly, quarterly, and annual PNL.
Before you can calculate your operating income margin, you must calculate your operating profit.
This is calculated by subtracting your food and beverage sales from your:
Sales – COGS – Operating Expenses – Depreciation & Amortization = Operating Profit
Now it’s time to determine your income margin. This is calculated by dividing your operating profit by your total revenue.
Operating Profit / Total Revenue = Operating Profit Margin
Yes! The higher your income percentage the lower your risk. In the food and beverage industry, a margin of 3% to 5% is standard for full-service sit-down restaurants. As a fast-casual and takeout café or juice bar, you should aim for closer to 6% to 9%.
That said, expect your margin to fluctuate by season. The more defined your high and low season, the more your margin will fluctuate. So, in addition to monitoring your current month, quarter, and year—compare each month, quarter, and year to the previous year at the same time.
For example, if your juice bar is in the Midwest, your margin may be lower when the weather is colder. By expecting a higher margin from November through March, you can proactively plan and project. You also won’t be surprised if your margin drops below 3%.
At Zumex, we understand the importance of efficiency and quality in your juice bar operations. Our juicers are designed to reduce prep time and maximize juice yield, helping you keep costs low and quality high. By integrating our innovative juicing solutions, you can streamline your operations and boost your profitability.
By leveraging Zumex technology, you can achieve a higher operating profit margin, ensuring your juice bar remains profitable and competitive.
For more insights on how Zumex can help your business thrive, try our ROI calculator. Discover the potential boost to your annual profits by incorporating a juicer. Visit our website or reach out to our sales team today.
