Quote:
Originally Posted by jetskier
Direct margin is the price - cost of goods sold. Profit is defined by direct margin - indirect costs (staffing, rent etc...). What you are describing comes out of the direct margin. I described this correctly.
|
You described cost of goods sold in a way that will bankrupt a business owner. Labor is a part, usually a large part of cost of goods sold. Your model assumes that you take the ingredients at cost and not account for the labor to make the final product. That labor, which at a minimum for what we are talking about here includes, preparation, cooking, plating and serving. You then talk about a margin based on an incomplete cost. You can't just forget about direct labor and call it overhead. No wonder you think it is too expensive.