PROTECTING THE BOTTOM LINE

Gross sales and net sales are key metrics that restaurateurs must grasp to effectively manage their finances. Gross sales encompass the total revenue without any deductions, painting a broad picture of income. However, this number can be misleading without considering the net sales, which factor in specific deductions such as discounts, returns, and allowances. 

Net sales provide a clearer understanding of the actual revenue, reflecting the financial impact of various marketing strategies and special offers. For instance, if a restaurant offers aggressive discounts like 50% off to firefighters, free meals to employees, or extensive coupons, it may inflate gross sales while significantly diluting net profit. A loyalty app might require close monitoring to ensure that the rewards are balanced with profitability. 

In this book and in 99% of the restaurant industry, “sales”, “revenue”, “top line”, “volume”, etc. all refer to Net Sales.

You must walk a delicate line between attracting customers through discounts and maintaining a healthy bottom line. They must continuously evaluate their strategies, ensuring that they neither over-coupon nor create offers that are too aggressive, all without compromising the guest experience. By focusing on net sales and making informed decisions based on this more nuanced metric, restaurant owners can align their discounting strategies with their financial goals, maximizing profitability without losing sight of customer satisfaction.