Branch-wise profitability: how to see the truth across locations

Multi-branch P&L from ERP data: how to allocate shared costs honestly, which numbers to compare and what to do when one branch quietly subsidises the rest.

Multi-branch businesses in India tend to know branch revenue very well, branch gross margin roughly, and branch true profit almost never. The numbers exist somewhere: vouchers in Tally, allocation rules in spreadsheets, head office costs that nobody assigns. They just don’t show up on any one screen.

That is the gap a branch-wise profitability view fills. Done right, it takes one afternoon and changes how the business is run.

Three layers of “branch profit”

Be explicit about which one you are showing:

Branch revenue: sales booked at that branch. Easy, but a vanity metric.
Branch contribution: revenue minus direct costs (COGS, branch salaries, branch rent, branch utilities). The real comparison number for like-for-like ranking.
Branch net profit: contribution minus allocated shared costs (HO salaries, ERP/IT, marketing, finance team). This is the number for the closure-or-not decision.

Most owner dashboards show layer 1 and stop. Layer 2 is what you want for monthly reviews. Layer 3 only for annual planning.

Direct costs: pulling from ERP

Tally and most Indian ERPs already have cost centres for branches. If your accounts team has been disciplined, every voucher hits a cost centre. If not, fixing this is half a day of work in master data and pays back forever.

What to pull, per branch, per month:

Sales (net of GST)
Cost of goods sold (purchase + opening − closing stock at that branch)
Branch staff salaries + statutory contributions
Branch rent + utilities + insurance
Branch-specific marketing (local promotions, hoardings)
Branch travel and freight inward

That gives you gross contribution per branch. Already more honest than 90% of multi-branch P&Ls we see.

Shared cost allocation: the honest method

This is where most spreadsheets get political. Three approaches, in order of usefulness:

Method 1: Revenue weighted

Allocate HO costs in proportion to each branch’s revenue. Simple, defensible, but it penalises growth: a fast-growing branch carries more overhead even though HO didn’t actually do more for it.

Method 2: Activity weighted

Allocate by a proxy for activity: number of invoices, number of staff, number of SKUs handled. Better than revenue, but needs the data to be clean.

Method 3: Step-down

Allocate first to functions (finance, IT, HR), then from each function to branches using the right driver (IT by user count, HR by headcount, finance by transaction volume).

For SMBs, method 1 is fine if you tell people clearly that is what you are doing. Method 3 is overkill below ₹500 Cr.

What to actually compare

When you have the numbers, don’t compare branches to each other directly. They have different sizes, ages and markets. Compare:

Branch this year vs same branch last year, same month: apples to apples.
Branch contribution margin % (contribution / revenue): size-independent.
Branch revenue per employee: efficiency proxy.
Branch sales per square foot (for retail): productivity.

When you rank branches by contribution margin % you often see something surprising: the smallest branch is the most profitable on a percentage basis. That is a strong signal to either expand it or use it as a model for the others.

The “subsidising” branch problem

In almost every multi-branch business, one branch quietly subsidises the others. It usually has:

High revenue concentration in one or two customers
Very low return-to-sales ratio (so receivables actually collect)
An experienced branch manager who has been there 8+ years

The branch shows up as average in headline revenue, but its contribution is 40% of total. The day that branch manager leaves is a bad day for the business.

Spotting this branch is reason enough to build the view.

How long it takes

If your cost centres are clean and your party masters tag branches consistently, this is a two-day project: one day for the data model, one day for review.

If they are not clean, budget two weeks. The data cleanup is the actual project, the dashboard is the easy part.

Doing this with AnalytAI

We have a branch-wise template that ships with the Tally connector: revenue, contribution, contribution %, employee count, rank versus last year. You connect, we run it on your data, and we walk through where the cleanup needs to happen.

Book a 20-minute demo with one Tally company. We will show you your branch ranking by contribution margin on the call.