David Read: Making money whilst building back from 60% of historic revenues

Ask anyone in food manufacturing what the key to EBITDA is, and the answer will almost always come back as “managing gross profit”. But of course, everyone does that already, don’t they? Well, right now it feels like pulling the statement “managing gross profit” apart a bit is a worthy exercise, as the deltas are surprising. Just take for example a pre-coronavirus dining business with a 6% EBITDA margin on £10m revenues. Add just 3% points to GP margin and the EBITDA increases by 50% to £900k. On the other hand, starting from the same 6% point, a 50% increase in sales is required to hit the £900k.