Tools for restaurant financial analysis – Part IV
By David Scott Peters
Restaurant Tip of the Week
The payback period is the number of years it takes to recover the initial investment and is calculated by counting the number of years it takes for the restaurant’s cumulative free cash flow to equal zero. Note that some investors require a faster payback for a riskier investment. The calculation is investment divided by the net profit.
Investment/Net profit = Payback period
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