What does the term 'gross margin' refer to in deli financials?

The term 'gross margin' is a key financial metric that specifically refers to the difference between sales revenue and the cost of goods sold (COGS). This calculation provides insight into how much money a deli makes from its sales before accounting for operating expenses, taxes, and other costs. Essentially, gross margin reveals the profitability of products sold and is crucial for understanding the basic financial health of the deli's operations.

Understanding gross margin is vital for making decisions regarding pricing strategies and cost control. A higher gross margin indicates that a deli is retaining more capital per sale, which can be reinvested or used to cover other expenses. This metric helps in assessing the overall efficiency of the deli in managing its production and inventory costs compared to its sales.