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Profit Margin Concessionaires Strive to Receive to Cover Their Expenses

A concessionaire is the holder of a concession or grant, especially for the use of land or commercial premises or for trading rights. This term is also usually used to refer to one who operates a refreshment stand at a recreational center.

In talking about profit margin, one is invariably referring to the degree at which a company or a business activity makes money. This is done essentially by dividing income by revenues. Expressed as a percentage, profit margin indicates how many cents of profit has been generated for each dollar of sale.

A good profit margin is weighed against the average for other businesses in that same industry due to the fact that some industries, such as concessionary stands, have naturally higher profit margins because they require so little overhead.

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In accounting and finance, a profit margin is a measure of a company’s earnings (or profits) relative to its revenue. The three main profit margin metrics are gross profit margin (total revenue minus cost of goods sold (COGS) ), operating profit margin (revenue minus COGS and operating expenses), and net profit margin (revenue minus all expenses, including interest and taxes).

A business’s profit margin measures what percentage of revenue the business keeps after settling outgoing expenses. You can calculate profit margin to see profitability for a specific time period in your business.

In short, your profit margin or percentage lets you know how much profit your business has generated for each dollar of sale. For example, a 40% profit margin means you have a net income of $0.40 for each dollar of sales.

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Tracking a company’s profit margin can help you monitor the company’s health and so you can make better business decisions in the future. Not to mention, it can help you flag and resolve financial issues more quickly. And, a good profit margin can make your business more attractive to investors.

A typical gross profit margin excludes overhead expenses, such as utilities or rent. Gross profit margin is one of the simplest profitability metrics because it defines profit as the income remaining after you account for cost of goods sold.

Typically, the gross profit margin equation is used to determine the profit margin of a single service or product, allowing you to see the amount of revenue you keep on each item. It is not usually used for calculating the profit margin for the business as a whole. You can use gross profit margin to tell you which items are the most and least profitable.

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You may be asking yourself, “what is a good profit margin?” A good margin will vary considerably by industry, but as a general rule of thumb, a 10% net profit margin is considered average, a 20% margin is considered high (or good), and a 5% margin is low. Again, these guidelines vary widely by industry and company size, and can be impacted by a variety of other factors.

What profit margin do concessionaires strive to receive to cover their expenses?

Going by the definition of a profit margin, concessionaires want to make sure they are covering their expenses including employees to meet their profit margin goals.

When it comes to concessionaires and what they are supposed to earn as their profit margin so they can break even, studies have shown that they need to make about 80% profit to cover expenses.

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Various items in a typical concession stand can bring in different range of profit. For instance, soft drinks – syrup based have higher profit margin than bottles or cans. Bottles and cans are also a safety issue which make them not to sell much. A concessionaire can use the profit gotten from the sale of soft drinks to cover other products have lower profit margins.

But in all, for a concessionaire to cover their expenses, they should strive to make up 80 percent in profit.