How are markdowns expressed as a percentage calculated?

The calculation of markdowns expressed as a percentage is achieved by dividing the difference between the original price and the new price by the original price. This method effectively quantifies how much the price has decreased relative to the original price, providing a clear understanding of the markdown in percentage terms.

To elaborate, the formula is as follows:

1. First, you determine the dollar amount of the markdown by subtracting the new price from the original price. This gives you the absolute decrease in value.

2. Next, you take this markdown amount and divide it by the original price.

3. Finally, to express this as a percentage, you multiply the result by 100.

This percentage tells you how significant the markdown is compared to the original price, allowing customers to easily grasp the extent of the reduction. Understanding this calculation is vital in retail settings, particularly in quick-serve restaurants where pricing strategies greatly influence sales and customer perceptions.