Question

High food cost percent does not necessarily mean less profit. Why?

Answer 1

This can be due to high volume sale the company might be doing to it's customer.

So, high food cost percent may be giving very low per unit profit. This low per unit profit turns into high profit for the company when multiplied with the quantity the company it is selling.

for example- A product sale price is $ 10 and food cost is $8 ( i.e. 80% of sales price). In this case per unit profit is just $2 but when multiplies with $10,000 unit it is selling, it is making profit of $ 20,000.

Please write back for more explanation on this.