Contribution Margin

Contribution Margin is the money left over after deducting Prime Costs (Cost of Goods + Labor) from revenue. It shows how much you have to cover operating expenses, overhead, and (ideally) profit. A good target is a 40% Contribution Margin to stay on track for covering fixed costs like rent, utilities, and services. If your Contribution Margin isn’t sufficient, it’s time to reduce Prime Costs or boost revenue.

EBITDA

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It’s a crucial metric for assessing a company’s profitability, especially in cash flow-heavy businesses like restaurants. EBITDA helps operators understand how much cash their core operations generate by stripping away finance charges and depreciation. This focus on operating income allows businesses to better control the factors that drive profitability.

Prime Cost

Prime Cost is the sum of Cost of Goods Sold (COGS) and direct labor costs. It’s one of the most important numbers for restaurant profitability. To maximize your chances of staying in the black, aim to keep Prime Cost below 60% of gross sales. This balance helps ensure that enough revenue is left to cover overhead, operating expenses, and profit.

Salamander

The Salamander refers to a type of open-front broiler used in commercial kitchens for tasks like browning and grilling. Its name comes from the mythical creature that was believed to live in and control fire—much like how a Salamander broiler harnesses high heat for quick cooking.

Sous Chef

The Sous Chef is second-in-command in the kitchen, working directly under the Head Chef. The term comes from French, where “sous” means “under” and “chef” means “chief.” In a French culinary tradition, the Sous Chef plays a key role in daily kitchen operations, often supervising food preparation and stepping in to manage the kitchen in the Head Chef’s absence.