Fixed Cost Allocation: Seeing the Whole Restaurant, Not Just Food Cost
How rent, utilities, staff, subscriptions, and other fixed costs can inform menu pricing without creating fake precision.
Food cost is only part of the truth. A dish can look healthy on ingredients and still fail the business if rent, staff, utilities, and operating costs are ignored.
Why fixed costs matter
Restaurants live between variable costs and fixed costs. Variable costs move with sales: ingredients, packaging, payment fees. Fixed costs exist even when the room is quiet.
A menu system does not need to pretend it can assign rent perfectly to a croissant. It does need to help owners understand whether the menu produces enough contribution to cover the business.
Use allocation as a decision lens
Allocation is most useful when comparing products, categories, and sales volume scenarios. If a product has low contribution and high operational burden, it deserves review.
Karu should show both food margin and a broader profitability view so owners can ask better questions: what sells, what contributes, and what consumes capacity?
Avoid false precision
A simple allocation model is better than a complex model nobody trusts. Start with monthly fixed costs, sales mix, and category assumptions.
As the business imports better sales data, the allocation can become more accurate without making onboarding impossible.
Operator checklist
Track rent, utilities, staff, software, and recurring costs.
Separate fixed and variable costs.
Use allocation to compare decisions, not to invent perfect truth.
Review contribution margin by category.