Profitability · ~6 min read

Reading your products' margins and profitability

Having the numbers isn't enough: you have to know how to read them. Here are the three indicators that really tell you what to push, what to reprice and what to drop from the counter — explained without jargon.

When you start measuring food cost, you end up staring at a table full of numbers. The temptation is to look at just one — usually food cost percentage — and stop there. But a product with a great food cost % may barely matter to your bottom line, and a product with a “high” food cost may be the one keeping you open. You need three indicators, read together.

1. Food cost % — how “heavy” the product is

It's the ingredient cost divided by the selling price. A cream horn that costs €0.40 and sells for €1.50 has a food cost of 27%. It's the first check: it tells you whether the price is in balance with the cost.

A food cost % that rises over time is a warning bell: ingredients have gone up and the price has stayed still. It's the clearest signal that you need to reprice or rework the recipe.

But beware: food cost % on its own is misleading. A product with a very low food cost that you sell in few pieces matters less than one with a higher food cost that you sell by the ton. That's why you need the second number.

2. Contribution margin — what each piece leaves in your pocket

It's the price minus the cost: the euros that product contributes towards covering overheads and making you money. A product can have a “high” food cost % but a substantial per-piece margin — and vice versa.

Product	Price	Cost	Food cost %	Margin/piece
Cream horn	€1.50	€0.40	27%	€1.10
Large cake	€25.00	€9.20	37%	€15.80

The cream horn has a better food cost %, but the cake leaves 14 times as much in your pocket per piece. Which one “is worth it” depends on how many pieces you sell of each: and that's where the third number comes in.

3. Total contribution — what keeps the lab standing

It's the margin per piece multiplied by the quantities sold in the period. It's the most important number, because it answers the real question: which products actually generate the bulk of my earnings?

An 80/20-type rule almost always applies: a minority of products makes most of your margin. Knowing which ones changes where you put attention, promotions and production.

From numbers to decisions

Crossing the three indicators, every product falls into one of four situations:

Earns well and sells a lot → your workhorses. Protect them: make sure quality and availability stay high.
Earns well but sells little → opportunity. Value them: counter position, communication, maybe a small commercial push.
Earns little but sells a lot → the trickiest. Reprice or rework the recipe: a small tweak here, multiplied by the volume, moves a lot.
Earns little and sells little → candidates to leave the counter, or to rethink completely.

How you see it in ContoGusto

ContoGusto calculates these indicators for you and presents them in a profitability ranking: the products that earn the most and those that earn the least, side by side, with the margin percentage at a glance. You also see your lab's average margin and an alert on products dropping below the margin threshold you set. You don't have to build tables: the decisions are already within sight.

The point of it all: it's not about becoming an accountant. It's about knowing, every morning, where you're earning and where you're not — and acting accordingly. That's where the margin points to recover are.

See your products' profitability

Start again from: Importing sales from the cash register.