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TryOwning · Foundations · Concept 2
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Margins: where each dollar goes · 14 min

Margins: where each dollar goes

A burger place keeps a few cents of each dollar. A software company keeps a lot more. The difference is where the costs sit.

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Ticket 01 · Warm-upTable 1

Warm-up: a gym's month

A quick one from the last lesson. A gym has 1,000example(example number: Simplified example: a small gym's members.) members, each paying $15/monthsec.gov ·2025. How much comes in each month?

What you know

Members
1,000example(example number: Simplified example: a small gym's members.)
Monthly dues
$15/monthsec.gov ·2025
$
Words to know

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Sources and every number (10 sources)

Sources

  • Planet Fitness, Inc. Form 10-K for the fiscal year ended December 31, 2025 · Planet Fitness, Inc. (filed with the U.S. SEC), 2025
  • McDonald's Corporation annual report (Form 10-K), fiscal 2025 · McDonald's Corporation, filed with the U.S. Securities and Exchange Commission, 2025
  • Adobe Inc. Form 10-K for the fiscal year ended November 28, 2025 · Adobe Inc. (filed with the U.S. SEC), 2025
  • Restaurant operators kept food cost ratios in check in 2024 (from the 2025 Restaurant Operations Data Abstract) · National Restaurant Association, 2024
  • The Kroger Co. Form 10-K for the fiscal year ended January 31, 2026 · The Kroger Co. (filed with the U.S. SEC), 2025
  • Elevated labor costs had a significant impact on restaurant profitability in 2024 (from the 2025 Restaurant Operations Data Abstract) · National Restaurant Association, 2024
  • Restaurant occupancy costs were more than 5% of sales in 2024 (from the 2025 Restaurant Operations Data Abstract) · National Restaurant Association, 2024
  • New Association report helps operators gauge their restaurant performance (2025 Restaurant Operations Data Abstract) · National Restaurant Association, 2024
  • Costco Wholesale Corporation Form 10-K for the fiscal year ended August 30, 2026 · Costco Wholesale Corporation (filed with the U.S. SEC), 2026
  • First Watch Restaurant Group annual report (Form 10-K), fiscal 2025 · First Watch Restaurant Group, Inc., filed with the U.S. Securities and Exchange Commission, 2025

Every number

  • 1,000example(example number: Simplified example: a small gym's members.) · Simplified example: a small gym's members.
  • $15/monthsec.gov ·2025 · Planet Fitness Classic Card monthly dues for new members, 2025.
  • $15,000example(example number: Worked out from the example members and the cited monthly price.) · Worked out from the example members and the cited monthly price.
  • $10.4Bsec.gov ·2025 · Rent paid by franchisees, fiscal 2025.
  • $9.7Bsec.gov ·2025 · Sales at the restaurants McDonald's runs itself, fiscal 2025.
  • $6Bsec.gov ·2025 · Royalties paid by franchisees, fiscal 2025.
  • 89%sec.gov ·2025 · Gross profit as a share of revenue, fiscal 2025 (the annual report's own figure).
  • 67.6%restaurant.org ·2024 · Worked out from the survey: what's left of each sales dollar after the median share spent on food and drink at counter-service restaurants, 2024.
  • 32.4%restaurant.org ·2024 · Food and drink as a share of sales: the median for counter-service restaurants, 2024.
  • 22.9%sec.gov ·2025 · Kroger's gross margin, fiscal 2025, as the annual report gives it.
  • $15example(example number: Simplified example: a burger and fries at a counter-service restaurant.) · Simplified example: a burger and fries at a counter-service restaurant.
  • $4.86example(example number: Simplified example: the survey's median food cost for counter-service restaurants, applied to the example price.) · Simplified example: the survey's median food cost for counter-service restaurants, applied to the example price.
  • $10.14example(example number: Simplified example: the example price minus food and packaging.) · Simplified example: the example price minus food and packaging.
  • $4.75example(example number: Simplified example: the survey's median labor cost for counter-service restaurants, applied to the example price.) · Simplified example: the survey's median labor cost for counter-service restaurants, applied to the example price.
  • $0.78example(example number: Simplified example: the survey's median occupancy cost for counter-service restaurants, applied to the example price.) · Simplified example: the survey's median occupancy cost for counter-service restaurants, applied to the example price.
  • $4.01example(example number: Simplified example: what's left of the example price after the other layers.) · Simplified example: what's left of the example price after the other layers.
  • $0.60example(example number: Simplified example: the survey's median profit for counter-service restaurants, applied to the example price.) · Simplified example: the survey's median profit for counter-service restaurants, applied to the example price.
  • 31.7%restaurant.org ·2024 · Labor as a share of sales: the median for counter-service restaurants, 2024.
  • 5.2%restaurant.org ·2024 · Occupancy as a share of sales: the median for counter-service restaurants, 2024.
  • 4%restaurant.org ·2024 · Income before taxes: the median for counter-service restaurants, 2024.
  • $23.8Bsec.gov ·2025 · Total revenue, fiscal 2025.
  • $2.6Bsec.gov ·2025 · Cost of revenue: mostly hosting and data centers, fiscal 2025.
  • $4.3Bsec.gov ·2025 · Research and development, fiscal 2025.
  • $6.5Bsec.gov ·2025 · Sales and marketing, fiscal 2025.
  • $1.7Bsec.gov ·2025 · General and administrative costs plus smaller items, net of other income, added up from the annual report, fiscal 2025.
  • $1.6Bsec.gov ·2025 · Provision for income taxes, fiscal 2025.
  • $7.1Bsec.gov ·2025 · Net income, fiscal 2025.
  • 30%sec.gov ·2025 · Net income divided by total revenue, fiscal 2025, worked out from the annual report.
  • 18%sec.gov ·2025 · Research and development as a share of total revenue, fiscal 2025 (the annual report's own figure).
  • 27%sec.gov ·2025 · Sales and marketing as a share of total revenue, fiscal 2025 (the annual report's own figure).
  • $1.40example(example number: Simplified example: what a bakery charges you for one muffin.) · Simplified example: what a bakery charges you for one muffin.
  • $3.50example(example number: Simplified example: your menu price for a muffin.) · Simplified example: your menu price for a muffin.
  • $2.10example(example number: Worked out from the example cost and price.) · Worked out from the example cost and price.
  • 150%example(example number: Worked out from the example cost and price: profit divided by cost.) · Worked out from the example cost and price: profit divided by cost.
  • 60%example(example number: Worked out from the example cost and price: profit divided by price.) · Worked out from the example cost and price: profit divided by price.
  • 0.7–1.8%sec.gov ·2025 · Net earnings divided by sales, worked out from the annual report.
  • $147.6Bsec.gov ·2025 · Kroger's sales, fiscal 2025.
  • $1Bsec.gov ·2025 · Net earnings attributable to Kroger, fiscal 2025.
  • 11.1%sec.gov ·2026 · Costco's gross margin on what it sells, fiscal 2026, as the annual report gives it.
  • 20%example(example number: Simplified example: a store-wide sale.) · Simplified example: a store-wide sale.
  • $7.50example(example number: Simplified example: half of the example order.) · Simplified example: half of the example order.
  • $3.75example(example number: Simplified example: the deal site keeps half of what the guest pays.) · Simplified example: the deal site keeps half of what the guest pays.
  • $62,100example(example number: Simplified example: a month at a small café, about a hundred and fifteen guests a day at the example check.) · Simplified example: a month at a small café, about a hundred and fifteen guests a day at the example check.
  • $14,345example(example number: Simplified example: the cited food-and-drink share applied to the example sales.) · Simplified example: the cited food-and-drink share applied to the example sales.
  • $2,132example(example number: Simplified example: Square's published in-person rate applied to every example check.) · Simplified example: Square's published in-person rate applied to every example check.
  • $24,000example(example number: Simplified example: the crew and a manager for a month.) · Simplified example: the crew and a manager for a month.
  • $7,000example(example number: Simplified example: rent and the other costs of the building.) · Simplified example: rent and the other costs of the building.
  • $12,600example(example number: Simplified example: utilities, insurance, repairs, software, marketing and supplies.) · Simplified example: utilities, insurance, repairs, software, marketing and supplies.
  • $400example(example number: Simplified example: a month's interest on an equipment loan.) · Simplified example: a month's interest on an equipment loan.
  • $60,477example(example number: Worked out: every example cost added up.) · Worked out: every example cost added up.
  • $1,623example(example number: Worked out: example sales minus every example cost.) · Worked out: example sales minus every example cost.
  • 2.6%example(example number: Worked out from the example monthly report: profit divided by sales.) · Worked out from the example monthly report: profit divided by sales.
  • 76.9%example(example number: Worked out from the example monthly report: sales minus food and drink, divided by sales.) · Worked out from the example monthly report: sales minus food and drink, divided by sales.
  • 23.1%sec.gov ·2025 · First Watch, a daytime-café chain, fiscal 2025: food and beverage as a share of restaurant sales.
  • 2.8%restaurant.org ·2024 · Income before taxes: the median for table-service restaurants, 2024.
  • 1%sec.gov ·2025 · First Watch, fiscal 2025: income before income taxes as a share of restaurant sales.
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