Unit Profitability Estimator
Estimate a single unit's EBITDA, margin, and break-even revenue from average unit volume and your cost assumptions. Instant, in your browser.
What this calculates
This builds a single unit's income statement from the top line down: average unit volume, then cost of goods, labour, occupancy, royalty and advertising fund contributions, then the remaining overhead — leaving EBITDA and the margin it represents. It also solves for the revenue at which that margin reaches zero, so you can see how much room sits between your assumption and trouble.
What you will need
Average unit volume (AUV). Annual revenue for one unit. If you take this from an FDD Item 19, note whether it is a median or a mean and which outlets it covers — a mean across a network with a few very strong units flatters the typical case.
Cost ratios. Cost of goods and labour as percentages of revenue. Use quotes for your own market rather than network averages; rent and wages are the two lines that vary most by location.
Royalty and ad fund. Both are usually charged on gross revenue, before your costs. Include the advertising contribution — it is easy to forget and it comes off the same line as the royalty.
How to read the result
EBITDA is not what you take home. Debt service, capital replacement and your own tax sit below it, so a unit showing thin EBITDA is likely to be cash-negative for an owner carrying a loan. Then flex the model: drop AUV by fifteen per cent and raise labour by three points, which is an ordinary bad year rather than a disaster, and see whether the unit still clears its obligations. If it does not, the deal depends on everything going right.
Questions about this tool
Should I use the franchisor's AUV or my own estimate?
Model both. The franchisor's figure tells you what the system achieves; your own, built from local rent, wages and realistic footfall, tells you what your unit is likely to achieve. Where the two diverge widely, find out why before committing.
Why does EBITDA look healthy when owners say the money is tight?
Because EBITDA sits above loan repayments, equipment replacement and tax. A unit can post a respectable EBITDA margin and still leave its owner with very little after the bank is paid.
Does this include my own salary?
Only if you put it in the labour or overhead line. If you plan to work in the unit, cost your own time properly — a model that relies on unpaid owner labour is not measuring a business, it is measuring a job.
For reference only; not legal, tax, or investment advice. Results depend entirely on the figures you enter — check them against your own quotes and your franchise agreement before acting on them.