💡Before anything else, make sure you have activated the connection with your POS system.
Theoretical Gross Margin
This represents the expected margin on each sale. It is calculated based on the theoretical cost prices of products and recipes, which themselves are determined by the theoretical cost prices of ingredients and their theoretical purchase prices.
Therefore, the theoretical margin reflects the margin you should achieve on your sales, according to these estimates.
How is this theoretical gross margin calculated?
The theoretical gross margin is calculated by subtracting the theoretical cost price of the products sold from the total revenue.
Example:
Let’s assume you have a salad recipe with a cost price of €2.50, and you have sold 10 salads at €11 each.
Revenue: 10 × €11 = €110
Cost price: 10 × €2.50 = €25
Margin: €110 − €25 = €85, which corresponds to a 77% margin
Real Gross Margin
This corresponds to the theoretical margin on product sales, adjusted for declared losses and inventory losses, all divided by your net revenue (excl. VAT).
To obtain an accurate real margin, it is important to correctly enter all purchases into Yokitup and to perform accurate inventory counts.
Example:
Using the same salad recipe costing €2.50, and the sale of 10 salads at €11 each. After the inventory count, an inventory loss of €15 is recorded.
Revenue: 10 × €11 = €110
Cost price: 10 × €2.50 = €25
Inventory loss: €15
Margin: €110 − €25 − €15 = €70, which corresponds to a 64% margin
What Does a Theoretical Gross Margin That Is Too High or Too Low Mean?
First, it is essential to check which products may be distorting your theoretical gross margin.
To do this, go to the “Analysis” module, then “Sales”. Select the site and the current month.
You will easily spot which products are directly affecting your theoretical gross margin, as any anomaly will appear in red.
It is important to note that if the cost price is incorrect, it is likely that an inconsistent price was entered during goods reception. This will distort the final product’s cost price and, consequently, your theoretical gross margin.
What Does a Real Gross Margin That Is Too High or Too Low Mean?
This margin is also affected by losses. Make sure your loss entries are accurate, including those resulting from inventory counts.
It is therefore important to review your inventories: high losses indicate discrepancies between your theoretical stock and your actual stock.
For a better understanding and deeper analysis of these discrepancies, feel free to consult our guide 👉 better understand and analyze inventory variances.