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Cost-center KPI rules

Updated
2026-06-06

Profit-center KPIs (margin, gross profit, revenue growth) do not apply to cost-center entities. A cost center succeeds when it hits break-even on its service mission — putting margin pressure on a cost center treats it as failing when it's actually doing what it was built to do.

This page captures the cost-center KPI overrides and Needs Action rule deltas so any cost-center entity's dashboard can render correctly. Sonoran Taco Shop (STS) is the first cost-center entity in the Arizona Truck Group (ATG) family; future cost centers should inherit from this pattern.

The cost-center definition

A cost center is an entity whose financial goal is break-even on its service mission, not profit. Break-even IS the success metric.

The two constraints that hold across all cost centers:

  1. The service / mission gets delivered — measured by mission-specific volume metrics (meals served, hours of coverage, deliveries made, etc.)
  2. Total cost ≈ total revenue — neither subsidized by other entities nor extracting profit from them

See Entity classification for the profit-center vs cost-center taxonomy across the family.

Needs Action rule deltas

For any cost-center entity, the Needs Action rules engine should apply the following overrides:

Rule Apply to cost center? Why
"Cost ratio drifting above 1.05" (i.e., losing money) → AMBER/RED ✅ Yes The break-even mission is at risk
"Wage / compensation below market" → AMBER ✅ Yes Cost-center principle includes paying staff fairly
"Service-volume dropped X% week-over-week" ✅ Yes Proxy for whether the mission is still being delivered
"Low gross margin" ❌ No Margin isn't the goal — would generate constant false alarms
"Revenue down from prior period" ❌ No Revenue is incidental to mission delivery
"Profit growth slower than target" ❌ No No profit target exists
"AR aging high" ⚠ Maybe Only if the entity invoices customers — for prepaid / point-of-sale service it doesn't apply

KPI set per cost-center entity

The dashboard for a cost-center entity should render KPIs in this priority order:

  1. Break-even ratio — revenue ÷ total cost; target ≈ 1.0
  2. Mission volume — entity-specific service delivered (e.g., meals/day, hours covered)
  3. Customer mix — who is being served (relevant when the entity serves both ATG-internal and external constituencies)
  4. Wage / compensation tracking — operator wages against the stated "good living wage" benchmark for the local market
  5. Food-cost / consumable spend velocity — for STS specifically; for other future cost centers, the equivalent consumable line

Profit-style KPIs (margin %, gross profit $, revenue $) should still appear on the dashboard for transparency, but demoted out of the headline section — they're context, not the success metric.

Per-entity application

STS — Sonoran Taco Shop

  • Mission: on-site food service for the workforce
  • Volume metric: meals served / day
  • Customer mix: ATG-yard employees vs three neighboring (non-ATG) yards
  • Wage benchmark: "good living wage" for Phoenix area — per Brandon
  • Consumable spend: food-cost spend velocity vs meal revenue

See STS entity page for the full business-model context.

Future cost-center entities

Any new cost-center entity added to the family should reference this doc as its KPI baseline. The override pattern (which standard Needs Action rules apply, which don't) is meant to be inherited verbatim; only the mission-volume metric and wage benchmark are entity-specific.