Article on profit margin with value menus

[Crono]

Fresh made bread
Sliced turkey breast
Mayo
Tomatoes
Lettuce
Peppers
Onions

Is it identical to Subway? No. Is it better tasting? Yes. Is it cheaper? Yes. Is it more convenient? No.
Thus concludes Crono's definition of "value"*.


*Note: Your definition of value may difference from that of Crono's. Crono is not responsible for this difference. Crono also enjoys making his own pizza, and taking long walks on the beach.

 

[Gunbuster]

So even on items in the "value" menu everyone on the list still made a profit even after fixed costs. I get a tasty cheap burger or sub and they keep people employed and the lights on. Sounds like everyone wins.


I'm so sick of the current corporate math they always do. "we didn't make as much profit as we expected so we lost money"

 

[The Boston Dangler]

Beyond the approximate 60-cent cost of the ice cream, a spoon and a cup, store operators also pay another $1.15 per scoop for rent, utilities and labor, estimates one store owner in Wisconsin.

i'm calling bullshit on that.

 

[ElFenix]

Originally posted by: compuwiz1

Yep

a jar of mayo
a jar of mustard
pickles
onions
olives
peperoncini

All that shit adds up. Plus I will not eat 6 sandwiches in a week, so some of my meat and most of my vegatables would go to waste.

i don't know what grocery store you shop at, but at mine i can order as few slices as i would like at the same cost per oz as if i get a lot. lettuce lasts a good long while if you keep it right (i wrap mine with a paper towel in a plastic bag, keeps water from accumulating in 1 place so it doesn't rot as quickly). tomatoes you can buy one or two at a time. pickles, olives, peperoncini, mayo, and mustard take a long time to go bad.

 

[DrPizza]

Originally posted by: compuwiz1

Originally posted by: Slew Foot

Originally posted by: compuwiz1

Originally posted by: Crono
Subway - "To make the footlong turkey sub, the ingredients cost $1.65 at a New York location. "

I like their subs, but they've never been a good value, even with $5 footlongs.

How not a good value? Try going to the grocery store and buying all the ingredients. You can't make it yourself that cheap.

6 pack of hoagie rolls = $3
2 lbs deli meat= $10
1 head lettuce= $1
Some tomatoes= $1
1/2 lb cheese= $3

6 sandwhiches for $18
and youre probably getting better quality stuff too.

You just made my point. You can't buy precisely the right amount of stuff for 1 sandwich for $5. For the convenience, a $5 sub is a good value.

I can see someone trying this and looking like a dork :laugh:

Just because I can't buy the individual components and assemble them for less than a completed item would cost, doesn't automatically make it a "good value." It would cost at least triple (probably more than that) the cost of any vehicle on the road to assemble it yourself by purchasing all the individual parts. That doesn't automatically mean that every vehicle on the market is a good value simply because you can't assemble it yourself for the same amount of money.

Personally, though, I think whether it's a "good value" or not depends on your local market. In my area, subway subs suck compared to many of the local places. Saturday, my wife and I picked up a sub at a local store. $6.99 for a whole sub. Whole sub = TWENTY-FOUR inches long. Compared to Subway, that's 30% cheaper. AND, the subs have MORE meat & cheese than you'll find on a Subway sub - (which are the more expensive ingredients.) That sub was lunch on Saturday & lunch today.

So, using my local market as a comparison, Subway's subs suck for value. (edit: and suck for taste/quality) However, when I'm traveling, I recognize that in many locations, Subway subs are going to be one of the "lowest risk" items that I can pick up in a hurry. Tolerable taste, consistent from store to store, and in many areas, good price compared to local offerings. "Low risk" = not gambling on a meal at an unknown establishment.

 

[puffff]

Originally posted by: Ns1
Pretty retarded since owners shouldn't be factoring in rent/labor/utes in their profitability calculations.

They are basically fixed costs and as long as revenue > variable cost, they should just keep selling the damn things.


To the math some guys are spouting above:
I don't want to eat 12 sandwiches in a goddamn week.

I thought it was going to be a good article until I saw they were factoring operating costs, and then claiming "Profit of roughly 6 cents a burger". It's totally misleading.

Profit per burger = Selling price - cost for ingredients and packaging.
It should not include fixed costs.

 

[Eli]

Originally posted by: puffff

Originally posted by: Ns1
Pretty retarded since owners shouldn't be factoring in rent/labor/utes in their profitability calculations.

They are basically fixed costs and as long as revenue > variable cost, they should just keep selling the damn things.


To the math some guys are spouting above:
I don't want to eat 12 sandwiches in a goddamn week.

I thought it was going to be a good article until I saw they were factoring operating costs, and then claiming "Profit of roughly 6 cents a burger". It's totally misleading.

Profit per burger = Selling price - cost for ingredients and packaging.
It should not include fixed costs.

WTF?

Business 101 fail.

 

[Ns1]

Originally posted by: Eli

Originally posted by: puffff

Originally posted by: Ns1
Pretty retarded since owners shouldn't be factoring in rent/labor/utes in their profitability calculations.

They are basically fixed costs and as long as revenue > variable cost, they should just keep selling the damn things.


To the math some guys are spouting above:
I don't want to eat 12 sandwiches in a goddamn week.

I thought it was going to be a good article until I saw they were factoring operating costs, and then claiming "Profit of roughly 6 cents a burger". It's totally misleading.

Profit per burger = Selling price - cost for ingredients and packaging.
It should not include fixed costs.

WTF?

Business 101 fail.

He's pretty much correct.

 

[Praxis1452]

Originally posted by: Eli

Originally posted by: puffff

Originally posted by: Ns1
Pretty retarded since owners shouldn't be factoring in rent/labor/utes in their profitability calculations.

They are basically fixed costs and as long as revenue > variable cost, they should just keep selling the damn things.


To the math some guys are spouting above:
I don't want to eat 12 sandwiches in a goddamn week.

I thought it was going to be a good article until I saw they were factoring operating costs, and then claiming "Profit of roughly 6 cents a burger". It's totally misleading.

Profit per burger = Selling price - cost for ingredients and packaging.
It should not include fixed costs.

WTF?

Business 101 fail.

You're thinking of net profit.

 

[Born2bwire]

Originally posted by: compuwiz1

Originally posted by: astroidea

Originally posted by: miri

Originally posted by: Slew Foot

Originally posted by: compuwiz1

Originally posted by: Crono
Subway - "To make the footlong turkey sub, the ingredients cost $1.65 at a New York location. "

I like their subs, but they've never been a good value, even with $5 footlongs.

How not a good value? Try going to the grocery store and buying all the ingredients. You can't make it yourself that cheap.

6 pack of hoagie rolls = $3
2 lbs deli meat= $10
1 head lettuce= $1
Some tomatoes= $1
1/2 lb cheese= $3

6 sandwhiches for $18
and youre probably getting better quality stuff too.

footlong = 2 sandwiches

6 sandwiches for $15

winnar
and you have to factor in the condiments too

Yep

a jar of mayo
a jar of mustard
pickles
onions
olives
peperoncini

All that shit adds up. Plus I will not eat 6 sandwiches in a week, so some of my meat and most of my vegatables would go to waste.

That's the big reason why it never adds up when you do it yourself. Sure you can get the materials cheap, but not in a quantity that allows them to remain fresh over the period of consumption. I ended up buying subs from the grocery store. You can get ones that are decently packed but generally a little cheaper per food amount when compared to a chain restaurant.

Hell, last summer I basically baked all my own bread but fresh bread doesn't last more than a day and most of the sub places now bake their own bread (or bread like substance).

 

[ElFenix]

Originally posted by: Born2bwire

Hell, last summer I basically baked all my own bread but fresh bread doesn't last more than a day and most of the sub places now bake their own bread (or bread like substance).

i live in one of the most humid spoil inducing places on in the US and i don't have a problem with fresh bread baked at home spoiling in a day. are you and compuwiz just leaving stuff on the counter uncovered?

 

[God Mode]

mcgangbang

 

[TwiceOver]

When I worked for BK a standard medium sized soft drink cost $0.13 for soda, syrup, cup, lid, straw, and labor. Also the Whopper Jr. Value Meal had the highest profit margin of just under $3 on a menu price of $3.83