Restaurants always say that but that's cus they don't include owner salaries & bonuses, high management salaries & bonuses, marketing, and expansion expenses.
From what I remember (i had a neighbor who was a former high level manager at a restaurant) they'll basically run at 3% profit to account for slow periods/off seasons but anything above that gets pumped into expansion to new locations or bonuses for people high up in the groups.
So if they made like a 3% profit margin + $1m they'll divide up that $1m into bonuses for people high up in the company.
I hope that makes sense.
Edit: also "business trips" to somewhere nice on the company dime where they just go eat and drink at a bunch of different restaurants.
Restaurants still deal with a lot of cash transactions, so a good portion of that can go right under the table or into the owner's pocket so legal cash remains under the restaurant. Losses can be juked easy too cause it's hard to verify what food is sold and what sits and goes bad. A lot also scam grants and shit to get started.
Restaurants always say that but that's cus they don't include owner salaries & bonuses, high management salaries & bonuses, marketing, and expansion expenses.
Ah, with salaries/amortization true, but bonuses would be exactly profit margins I assume, or do they keep cash in restaurants name?
From what I remember (i had a neighbor who was a former high level manager at a restaurant) they'll basically run at 3% profit to account for slow periods/off seasons but anything above that gets pumped into expansion to new locations or bonuses for people high up in the groups.
So if they made like a 3% profit margin + $1m they'll divide up that $1m into bonuses for people high up in the company.
I hope that makes sense.
Edit: also "business trips" to somewhere nice on the company dime where they just go eat and drink at a bunch of different restaurants.
and it's deductible "market research" so it also lowers the company's tax bill
Restaurants still deal with a lot of cash transactions, so a good portion of that can go right under the table or into the owner's pocket so legal cash remains under the restaurant. Losses can be juked easy too cause it's hard to verify what food is sold and what sits and goes bad. A lot also scam grants and shit to get started.
If you put more profit on paper, you pay more in taxes. Of course they're going to operate such that their books come out to only a small margin.
Every small restaurant cooks the books fucking hard. Source: I've worked in small restaurants for a decade
Especially if you still have a significant amount of customers still paying cash.
Not like anyone was going to but I've had several owners make sure no one declared their tips come tax time
(For anyone who doesn't know, this lets the business report pay less in taxes, too.)