Margins on Foods and Beverages in a Cafe or Restaurant

LAndym on 30/10/2017 - 09:58
Last edited 30/10/2017 - 10:16 by 1 other user

Hi, I was wondering if there is a website or other resource that listed the profit margins of various products sold in cafes, restaurants and take away vans, especially what are the best money makers. For example, Fish and Chips and other fried foods, Coffee, Ice Cream (scoop and packaged), Soft drinks, Keg beer, Slushies etc.

Also have you seen any newer type food/drink products which are popular and you could recommend as good money makers e.g. Nutella donuts, curly fried potatoes on a stick etc

Any help or advice would be appreciated.

cheers :)

Food & Grocery

Comments

  • JimmyF on 30/10/2017 - 10:16

    You end game is?

    • Andym on 30/10/2017 - 10:33

      I have friends looking into buying into a restaurant/cafe or food van and wanted to find the most profitable/popular items to sell to work some business plan around it.

      • TheBilly on 30/10/2017 - 10:45
        +10

        I would say the most profitable would be the ones you can do best. I.e. nobody is going to buy shitty fish and chips. But when something tastes nice and has a reasonable price, the lines are out the door.

        • Slippery Fish on 30/10/2017 - 10:54
          +1

          Lol it actually costs about the same to buy pre battered or crumbed as to do it yourself.

        • GregMonarch on 30/10/2017 - 21:53
          +2

          I say the opposite. If I saw two food vans, one selling some kind of airy-fairy designer food and another selling fish & chips, I'd take the latter. Because you know what it will be like - you expect it will be similar to what you've had before, whereas the former is unknown.

          It's why there's still so many 'dagwood dog' vans at the show after decades, and I think it's also why so many 'specialty' shops like health food and indian takeaways in supermarkets go bust: sheer customer numbers. While it's noble and all, to do something different/special/healthy, the fact is it's about business - money - and much fewer people care about their health when it's a one-off. If they're not cooking at home, they probably want something familiar, that is usually a no-no for them. So more people choose the fried chicken & chips over a salad wrap.

        • TheBilly on 31/10/2017 - 13:31

          @GregMonarch:

          My example was more about comparing the same type of food. I.e. skimping on quality of fish versus not to determine margins. I would also not do fancy new age food.

      • Slippery Fish on 30/10/2017 - 10:46
        +2

        It would depend on what your doing, what you have to cook with ect. Are they going to run a coffee shop with a pie warmer and sandwich press? If so telling you fish and chip things won't help…

        Your friends will need a better business plan than "this has a high margin" they will need to know where they plan to go, is there a need for their business, over saturation of a type of business will kill them fast, what's their point of difference ect.

        What can they make, what will they need to buy ect. We can give you advice but it's like pissing into the wind unless we know where your headed.

        Keep in mind company's like sun super sometimes give out boxes of coffee cups ect to help advertise their business, is that something they would like to take advantage of?

        At one point one of the local clothing shops printed 3flat sandwich bags and gave them out to the fish and Chip shops, maybe they could find an arrangement like that.

        Buying bits themself instead of ordering from 1-2 places can save cash, but takes time. All things to consider.

        Also I wouldn't open a food business unless I can run it, to much can and will go wrong if you can only manage it.

        • Andym on 30/10/2017 - 10:56

          They already have a lot of experience in retail and catering/cooking etc, where they want to set up their is not chance of over saturation. They are looking for fresh ideas of what people are really into at the moment as well as old stables e.g. pies/fish and chips. It is good to hear other people's voices as to what are really good earners such as coffee etc. Many eyes can pass on new ideas and draw from their own experiences.

        • Slippery Fish on 30/10/2017 - 11:02
          +2

          @Andym: short order cooking is very different to catering, keep that in mind (I have done both but I've short order cooked the last 6-7 years)

          Keep in mind something to get them in the door, we sell the Kirk's cans and Pepsi max for $1ea, people will buy a snack ect when they are grabbing one, and even if it's all they grab it's getting people through the door.

          Packs are where your high profit items really shine, example: you can buy a fish and chips for $5 or I'll sell you the fish and chips 3 potato scollops 2 calamari and a drink for $10

          Potato scollops if made yourself cost approx 10cents? Maybe 15 if your slow at making?

          Turn PM's on and I'll send ya some ideas

        • Andym on 30/10/2017 - 11:07

          @Slippery Fish: That is the sort of information that I want to pass on to them what you said about value adding with packs.

        • Slippery Fish on 30/10/2017 - 12:17
          +1

          We personally do pub meals and fish & chip take away. So if you want some recipes ect msg me.

      • JimmyF on 30/10/2017 - 12:12
        +1

        then maybe they should do their own legwork before going into business!

        profit per item means nothing if can't move those items.

        You have to find a nice mix between profitable items and what is selling.

        You're better to sell 100 items making $4 per item than to sell 10 items making $10 per item.

  • [Deactivated] on 30/10/2017 - 10:23
    +2

    In my experience, food services aim for a 70% gross margin on sales directly.This would of course slip down to 30-40% at the net profit level after OPEX. Your chance of grabbing such data for free would be through the ABS. There are commercial data providers who specialise at such data collation however come with a price to access.

    Chips on a stick is a booming show type food. Food trucks are also a majorly profitable business if executed correctly. Particularly mexican food and burgers (massive market in the USA).

    Best of luck

  • Baysew on 30/10/2017 - 10:25
    +5

    Food for thought: previous posts -

    When Is The Right Time to Quit a Business?
    AMA I'm a small business owner - Ask Me Anything!
    Calculating Profit Margin for Cafe/Restaurant

    Take away- High yielding products do not always equal high sales, let alone high profits.

  • bobbified on 30/10/2017 - 10:27
    +1

    The biggest margin, as a percentage, is in the coffees. A cup of coffee costs 40c, including the paper cup.

    There's going to be a huge discrepancy in the margins between different cafes re things like sandwiches and cakes.

    My reference is a small store that's part of a large chain - a cake that costs the shop $32-35 is sold for $49. A baguette costs $7 and is sold for $12. As a customer, those retail prices seem quite high already. The margin must account other costs and wastage as well.

    There weren't many items, other than the drinks, that were marked up for 100 or more percent. Buying power is a significant factor when it comes to the food.

    So aim for the coffee sales.

    • JimmyF on 30/10/2017 - 12:13
      +2

      yeah, that 40c a cup figure is a little off these days.

      • bobbified on 30/10/2017 - 12:39
        +1

        yeah, that 40c a cup figure is a little off these days

        How much do you think nowadays?

        40c is the figure the owner uses in our discussions and that's pretty recent.

        • JimmyF on 30/10/2017 - 14:00
          +2

          There is at least 200ml of milk in a SMALL coffee, CHEAP $1/ltr milk means that alone is 20c, but cafes generally use better milk than cheap supermarket milk. Even $2/ltr milk means this cost alone is 40c and $3/l milk is 50c!

          Cafe coffee is around $25-50/kg, so 10 grams per shot of $30/kg coffee is 30c. But hey, lets say they use $15/kg coffee, its still 15c or $45/kg coffee is 45c per shot.

          paper cups range between 15-30c a cup when ordered in bulk, plus a few cents for a lid, again when ordered in bulk and the style etc.

          So a small coffee can range from 50c for the cheapest of cheap crap, up to $1+/cup for decent coffee/milk/cups.

          Larger coffees mean 'double' shots and more milk etc.

          Plus don't forget wages for making the coffee, and the cost of the machine!

  • supnigs super skids on 30/10/2017 - 10:38
    +5

    Coffee needs a good barista. If they are crap I wouldn't even bother with anything else in the shop. Not sure about anyone else but that's what I always do

    • Amaris on 30/10/2017 - 10:47
      +1

      Sorry to sound ignorant but can you explain why coffee needs a good barista….doesn't the quality/ taste of the coffee depend on the beans used (which are already roasted), the machine (which the barista has no control over), and if there's such a thing ratios of coffee to water/milk (which I presume is already set in the machine)?

      Thanks

      • Baysew on 30/10/2017 - 10:51
        +3

        Just an observation.

        suprings super skids location = Melbourne. - Coffee needs a good barista.
        lahiruwan location = Sydney. - Coffee doesn't need a good barista.

        • Amaris on 30/10/2017 - 11:30
          +2

          I'm not saying good coffee DOESN'T need a good barista. I'm happy to accept that it does but I can't figure out WHY good coffee NEEDS a good barista. Could some one (maybe from Melbourne) explain the WHY?

        • coco1458 on 30/10/2017 - 11:44
          +3

          A good barista comes down to whether they can nail the grind settings at the beginning of the day and monitor and setting it accordingly throughout the day to output good coffee.
          One thing I've noticed being a barista in the past is just how hard some barista's tamp compared to others, it's actually not a lot of force needed at all.
          Some of the foot traffic for cafe's is generated by how well the coffee is made and sometimes the observation of who makes it.

          Beans is only the beginning of the equation, but good beans that give a distinct flavour do help some people identify where the coffee comes from

        • mskeggs on 30/10/2017 - 14:30
          +1

          Please don't tar all Sydneysiders with the "a machine can make it" brush!

          I'm not a barista, but consider that each customer has their own preference (strong, weak, milky etc.) plus the variability of beans means adjusting volumes etc. to make a good, repeatable cup that can then be varied to taste. And getting the milk right plus presentation. It isn't rocket surgery, but it isn't Nespresso either.

      • bobbified on 30/10/2017 - 11:39
        +5

        can you explain why coffee needs a good barista

        There's various ways that barista's can make coffee taste different on the same machine and with the same beans. The machine settings are adjustable and the ratio of water/milk/coffee in a cup is important . There's techniques in making coffee, that may not sound like much to us, but is important - such as how the milk is frothed and even how it's poured into the cup. There are even people who come in and ask for a certain temperature (I'm not sure if they can really tell the difference!).

        The coffee shop I spend a lot of time in has four different baristas that revolve during the week - there's a marked drop in business when one particular barista works. The coffee tastes much more watery and it tastes like the milk is separated. I've been there where I've heard many customers openly say that they don't come in when they walk past and see a particular barista. The owner of the place works sometimes and they don't like the coffee he makes either.

        Another thing I've noticed is a good, friendly and talkative personality makes a huge difference. There are people who will come in to have a chat but they'll buy a coffee just because they're there.

        • humdingaling on 30/10/2017 - 14:12
          +2

          ^^
          nail on the head

          i follow the barista rather than the shop/machine/beans itself
          once a good barista moves on …generally my business moves on as well.

    • spackbace on 30/10/2017 - 12:02
      +2

      Ex-Barista here, 100% agree. I can hear someone frothing milk badly, and decide not to buy a coffee from there.

      • woodwa on 31/10/2017 - 07:56
        +1

        Ditto Ex-Barista..

        Ditto the quality Barsitas will ensure the beans are up to spec.. and the grinder is constantly adjusted to spec.. and the machine is functioning and properly cleaned/flushed..

        Beans are only a part of the story..

        this being said I helped a friend run/start a coffee van post my Cafe career and we opted for cheap as possible and there is savings that can be made whist keeping a 4 out of 5 quality.. Beans and Milk from the super market.. much cheaper.. $15 bags of Lavazza or Vittoria(not the black one) can be found on sale.. STOCK UP! otherwise good coffee is roughly $28/KG(quality small scale locally roasted blended origin).

        Other High margin products.. Post Mix soft drink.. Slushies… Not Food..

  • CLoSeR on 30/10/2017 - 10:38
    +1

    Big profit margins in donuts.

  • Baebs on 30/10/2017 - 10:43
    +2

    Crushed garlic and ginger.

  • [Deactivated] on 30/10/2017 - 10:50
    +1

    Standard rule (based on when we look the books for cafes and restaurants) is a 60% margin on the cost of the goods sold.

    With regards to market segmentation - would recommend that you look at what your competitors are offering and see if you can capitalise on a missing gap. Combine with some random conversations with patrons of other cafes - you should have a good idea of what people are looking to buy.

  • dasher86 on 30/10/2017 - 13:11
    +1

    40-50% food cost and 25-30% beverage (including alcohol) cost for upper end restaurants I worked for.

Login or Join to leave a comment
Login Join