Podcast Summary
Running a meal prep cafe business in the restaurant industry: Despite the financial unpredictability, focusing on healthy, niche offerings can help differentiate and thrive in the competitive food industry
Running a meal prep style cafe business in the restaurant industry can be financially unpredictable, with months of high revenue contrasted by months of barely breaking even. Jodine, a successful entrepreneur based in Wales, shares her experience of running a £28,000 a month business that specializes in healthy food. While her business model includes both a cafe and meal prep services, the primary focus is on serving customers in a restaurant setting. Despite the challenges of managing a restaurant, including the need for specialized staff to prepare and serve hot food, Jodine emphasizes the importance of offering a better alternative to fast food chains. By focusing on healthy, niche offerings, entrepreneurs in the food industry can differentiate themselves and thrive in a competitive market.
Profitable quick-service food businesses with lower overheads: Quick-service food businesses can have higher profit margins due to lower overheads, but face challenges like rising costs and competition. Expanding online sales is crucial for additional revenue streams.
Quick-service food businesses like Gregs and Windsor's, which offer pre-prepared, easily heatable meals, can be profitable business models. These businesses have lower overheads compared to traditional sit-down restaurants, allowing for higher profit margins. However, they face challenges such as rising costs of stock and competition from low-cost options like fast-food chains. Another key takeaway is the importance of growing online sales for additional revenue streams. The interviewee aims to expand her business by opening more stores and increasing sales of protein balls and treats online. Ultimately, her goal is to build a profitable business with multiple locations and the potential for franchising or sale. Despite these challenges, the interviewee remains committed to her business and sees potential for growth.
Business Owners Underpaying Themselves: More than half of business owners work long hours without paying themselves a fair wage, leading to personal struggles and the need to prioritize tasks.
A significant number of business owners, including Jodine from Feed Me Fit, underpay themselves or even don't pay themselves at all. According to the discussion, over 50% of business owners are paying themselves less than minimum wage when accounting for all the hours worked. This situation puts immense pressure on these entrepreneurs, affecting their personal lives and relationships. Jodine shared her experience, revealing that she used to work six days a week on the grill but had to take a step back after having a baby. Now, she focuses on admin duties and visits her stores to resolve issues. Feed Me Fit is a healthy eating takeaway business where customers can choose their base, protein, and veg to create a customized "fit box." Jodine started her business by opening a Mexican takeaway before transitioning to Feed Me Fit.
Understanding customer base and tailoring offerings: Focus on health-conscious customers, adapt to location preferences, aim for £100k profit per store, maintain consistency, and track gross profits
The success of a business, especially in the food industry, relies on understanding your customer base and tailoring your offerings to their needs. For JP, this meant starting with a health-focused brand, Feed Me Fit, which attracted customers from his previous business and gym-goers. The customer demographics and dining preferences vary between locations, with some stores prioritizing takeout and others offering more sit-down options. It's crucial to focus on making each location profitable before expanding, aiming for a profit of at least £100,000 per store. Additionally, maintaining consistency across stores in terms of menu and operations is essential to avoid burnout and ensure financial sustainability. Regularly tracking gross profits is also vital to staying afloat in the competitive business landscape.
Monitoring Menu Gross Profits for Food Business Profitability: Regularly monitor menu gross profits using accounting systems, rag sheets, or calculators, and balance quality and affordability to optimize profitability.
To be profitable in the food business, you must have a clear understanding of your gross profit for every item on your menu and monitor it regularly. This involves using an accounting system like QuickBooks or Xero, creating a "rag sheet" or gross profit calculator, and ensuring that your menu gross profits align with your monthly profit and loss statements. Regularly producing and reading monthly profit and loss statements will help you identify discrepancies and areas for improvement. Additionally, the appearance of your food may not always align with the prices you charge, so it's important to strike a balance between quality and affordability. The use of a spreadsheet and regular monitoring can help you make informed decisions and improve your business's profitability.
Understanding food business costs for profitability: Maximize profits by achieving a 70% gross profit per menu item, and consider selling some items cold to reduce costs.
Running a food business, especially one that serves hot food, requires careful consideration of costs to ensure profitability. The speaker in this discussion emphasized that the cost of producing hot food is often higher than what customers are willing to pay, and this can lead to thin profit margins. For instance, the cost of ingredients, labor, utilities, and overheads can add up quickly, and factors like VAT and card processing fees can further erode profits. The speaker also mentioned that understanding your gross profit is crucial for any food business, as it determines your ability to make a net profit. To maximize profits, the goal should be to achieve a gross profit of around 70% per menu item. Additionally, selling some items cold, which don't require heating, can help reduce costs and increase profitability.
Optimizing menu pricing with VAT and consumer preferences: Consider offering cold food items VAT-free to boost sales, analyze menu regularly, calculate gross profit, and manage stock effectively to optimize menu pricing and increase revenue.
Optimizing menu pricing based on VAT and consumer preferences can significantly impact a business's profitability. The speaker suggests that offering cold food items VAT-free could encourage customers to purchase them, reducing the need for restaurants to bear the additional cost of heating these items. However, it's crucial to consider consumer behavior and menu cohesion. For instance, offering a mix of healthy, high-protein meal prep options and greasy, high-profit-margin pizzas might confuse customers. Additionally, regular menu analysis, gross profit calculations, and stock management are essential for improving profitability. Overall, focusing on these areas can help business owners make informed decisions, increase revenue, and ensure a sustainable business model.
Mastering the financial side of your food business: Hire a bookkeeper, focus on a niche, create a 'rag sheet', and learn from industry experts to effectively manage costs and make informed decisions.
For a successful food and beverage business, understanding your finances is crucial. Hiring a bookkeeper to help manage your accounts, including stock counts and profit and loss statements, can be highly profitable. This knowledge will enable you to make informed decisions about your business and its direction. Additionally, it's important to focus on a specific niche and avoid trying to cater to everyone, as this can result in being unprofitable and unclear in your market position. To get a clear understanding of your costs, consider creating a "rag sheet" that details the exact costs of each menu item. This will help ensure that you're selling items at a price that covers your costs and generates a profit. Working for a professional restaurant or consulting with a head chef can also provide valuable insights into effective costing and menu pricing. In essence, mastering the financial side of your business is essential for long-term success in the food and beverage industry.
Providing affordable quality food attracts loyal customers: Understanding customer needs, offering value, and persevering in business can lead to customer satisfaction and loyalty, even with low profit margins.
Providing quality food at affordable prices can attract a loyal customer base, even if the business owner is operating at a loss. Jodine, a mummy entrepreneur, shared her experience of running a food business where she offers cheaper options like ramen and wrap pizzas, which are healthier and cost-effective for customers. Despite the low profit margins, she continues to operate because of the positive feedback and satisfaction she receives from her customers. Jodine discovered the podcast through a business podcast search and was impressed by the host's insights. The discussion highlighted the importance of understanding customer needs, offering value, and persevering in business despite financial challenges. It's a reminder that providing a service or product that makes a difference in people's lives can be rewarding beyond just financial gains.
Scaling back operations for profitability: Focusing on high-profit items and minimizing costs can help small businesses maximize profits. Dedicated food and beverage management is crucial for larger operations.
Managing a business based solely on cash in the bank can be risky, but it doesn't necessarily mean that a business with no cash or making a loss is unprofitable. Sometimes, scaling back operations, such as removing hot food and focusing on high-profit items like ice cream, teas, coffees, or grab-and-go food, can help businesses save on costs like kitchen equipment cleaning and maintenance. However, having a dedicated food and beverage manager becomes essential when dealing with large volumes of food sales. For smaller businesses, focusing on high-profit, easy-to-prepare food items and minimizing specialized kitchen staff can help maximize profits. Additionally, tracking average order value and focusing on key areas for improvement can help business owners make informed decisions and optimize their operations.
Understanding Profit Margins in the Food Industry: Knowing your cost of goods sold (COGS) and implementing a sound pricing strategy are essential for maintaining healthy profit margins in the food industry. Utilize resources like Entrepreneurs University for further insights into business strategies and profit lines.
Understanding your profit margins is crucial for any business, especially those in the food industry. The speaker discussed how important it is to know the cost of goods sold (COGS) and the pricing strategy to maintain a healthy profit. He used an example of a local food vendor selling mass-produced chicken curry and chips versus a potential steak ramen, highlighting the difference in perceived value and profitability. The speaker also mentioned Entrepreneurs University, a free 14-day video platform that provides deeper insights into business strategies and profit lines. This platform can be beneficial for business owners seeking to learn more about profitability and growing their businesses. Overall, the conversation emphasized the importance of knowing your costs and pricing strategy to maximize profits and succeed in business.
