What is gross profit and gross profit percentage? Find out more here on how to calculate a good gross profit percentage for a catering business.

1. What Is Gross Profit
The Basics
by Christopher Flatt
www.becomingachef.co.uk

2. Gross Profit Explained
•The Profit Made From Total Sales
•Subtracting The Costs Of The Products
•Selling 10 Burgers At £5 Each = £50
•Minus The Cost Of The Ingredients
•That Equals £20 The Gross Profit Is £30

3. •Gross profit can also be known as:
•Gross Margin
•Sales Profit
•Gross Income

4. •Once A Business Knows The Gross Profit It Is
Making It Can Then Be Turned Into A Gross
Profit Percentage To Find Out If The
Product Is Profitable Enough For The Business
To Sell

5. The GP% Calculation
•The Gross Profit Percentage Will Be 60%
•Which Needs To Be Around 75%
•To Become A Profitable Product
•Correcting The Prices, Reducing Wastage
•Using More Affordable Ingredients

6. Why Do Food Businesses Use A
Gross Profit Target %
•To Work Out If A Product Will Be Profitable
•Many Overheads And Costs To Consider
•Staff Wages, Electricity, Equipment, Insurance
•A Good GP% Target For A Food Business Can
Be Set At Around 75%

7. GP% Calculation
•A Cost Of A Menu Item Is £2,
•For A 75% Gross Profit We Use A Simple
Equation
•£2 X (4) = £8
•For A 75% GP We Need To Multiply Costs By 4
•Know The Product Is Profitable In Advanced

8. •The Gross Profit Is The Most Important
Figure To Calculate, And Items Should
Be Priced Accordingly