Tools for restaurant financial analysis – Part III

 In 1. David Scott Peters, The Numbers, Tip of the Day

By David Scott Peters

Restaurant Tip of the Week

Return on sales (ROS).

The ROS ratio indicates both the profitability and the risk level of the restaurant. The calculation is completed by dividing net profits by sales volume. When the ratio is low, the profitability is very sensitive to changes in operation cost and cost of goods sold fluctuations. Changes in the ROS reflect trends in the operational efficiency of the restaurant and can reflect trends in the market in general.

Net profit/Sales volume = ROS

David Scott Peters is a restaurant expert, coach, trainer and speaker, specializing in teaching independent restaurant owners how to use systems for increased sales and increased profits. He is the nationally acclaimed restaurant coach whose unique “SMART Systems” approach to boosting profits has earned him the title of, “The man who can walk into any restaurant in America and find $10,000 in undiscovered cash before he hits the back door – Guaranteed!” Visit for more. Learn more tips, tricks and secrets in David’s free five-part e-course, “How to Explode Your Restaurant Profits NOW!” Simply sign up to receive the e-course at

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