Food Cost Basics
Under normal conditions, a food service establishment needs to keep average food cost under 34% of revenue in order to make a healthy profit. That being said, a retail store that sells bottled juice can achieve a lower food cost, and should strive for 20% – 25% average food cost for organic juice.
This means that if the juice is selling for $10.00 / bottle, the cost of the actual produce that goes into the juice should cost no more than $2.50, on average.
Keep in mind that the actual food can vary quite a bit between recipes, as long as the average food cost stays under the 20%-25%.
Note: This How to Write a Juice Business Plan PDF is a step-by-step guide to helping you write a business plan for your juice business. Download it for free!
Here is an easy guide to estimate food costs, without actually making any juice.
Step #1: Determine how much of each ingredient, in weight, goes into the recipe.
Hint: The Goodnature X-1 takes between 20-30 lbs of produce per juicing cycle, so the total weight of the recipe should be 20-30 lbs (9-13 kg).
Step #2: Get current pricing of the produce from your local distributor. If you do not yet have a distributor, you can use the prices at the grocery store, but keep in mind that those prices will be much higher.
If your distributor or grocery store doesn’t have some items sold by weight, e.g. a “bunch of kale,” you need to weigh the item to determine the weight.
Step #3: Calculate the total cost of the recipe by adding the cost of each ingredient.
Step #4:
In general, each pound of produce makes about 10 oz. of juice, so for a 16 Oz / 500 ml of juice, you need about 1.6 lbs / .73 kg of produce.
So use the following formula to achieve an estimated food cost for each bottle of juice:
FC per Bottle = Total Cost / Total Weight in lbs * 1.6
or
FC per Bottle = Total Cost / Total Weight in kg * .73
Note: Whether you’re starting a juice bar, a juice delivery service, or a wholesale juice business, this How to Write a Juice Business Plan guide explores the key elements of a successful juice business plan, along with industry tips, resources, and downloadable content to help you write it. Get it for free!
Example Recipe
Step #1:
My make believe recipe uses:
15 lb apples
5 lb celery
3 lb kale
2 lb lemon
1 lb ginger
Total Recipe Weight: 26 lbs
Step #2:
My local organic prices are (I’m just making these up):
Apples : $1.50 / lb
Celery: $1.25 / lb
Kale: $3.00 / lb
Lemon: $1.00 / lb
Ginger: $2.00 / lb
Step #3:
15 * $1.50 + 5 * 1.25 + 3 * $3.00 + 2 * $1.00 + 1 * $2.00
Total recipe cost: $41.75
Step #4:
FC Per Bottle = Total Amount / Total Weight in lbs * 1.6
FC Per Bottle = $41.75 / 26 * 1.6
FC Per Bottle = $2.57
Conclusion:
If we already know we are charging $10 per bottle, then we can do the following calculation:
Cost / Price = FC%
$2.57 / $10.00 = 25.7%
We could also work backwards, and determine the minimum price we can sell the juice for, going on our target food cost.
If we were going to stick to the 25% target food cost, we could do the calculation to determine the minimum price:
Cost / 25% = Minimum price per bottle
$2.57 / .25 = $10.28
So now we know that the juice has to sell for at least $10.28 to achieve a 25% or lower food cost.
Please note that these numbers and formulas are estimates, and to achieve exact figures you will have to actually make the juice.
About The Author
Charlie Wettlaufer
President and CMO - Goodnature
Host - Cold Pressed Truth and Goodnature Radio
Creator - JuiceCon
I’ve been around juicing all my life. My Dad built his first hydraulic juice press in 1976 and founded the company Goodnature Products, Inc. I have incredible memories of having “cider parties” when we would invite all the people in our rural neighborhood over to make apple juice. To this day, when I taste apple juice made on a Goodnature press, a rush of nostalgia runs through my body.
I pride myself on guiding our clients into the world of cold-pressed juice and showing them how much fun this industry can be. I love talking business, technology, and marketing. My missions is to carry on my Dad's goal - one day make Goodnature a house-hold name.
Comments
Im in the process of opening up a Juice lounge in the Bay Area.I can’t wait until I get the goodnature juicer.
I want to start a small juicing business in my local area. I need someone to educate me on how to buy whole sale and organic, and also where to find Louisiana's laws and restrictions for juice.
Where do you get the 1.6 from?? FC Per Bottle = Total Amount / Total Weight in lbs * 1.6
In general, each pound of produce makes about 10 oz. of juice, so for a 16 Oz / 500 ml of juice, you need about 1.6 lbs / .73 kg of produce.
IVE BEEN IN BUSINESS FOR TWO YEARS. I NEED HELP WITH WRITING A BUSINESS PLAN AND GETTING MY BOOKS AND NUMBERS IN ORDER.
Hi Donnell, Ari our juice business consultant will be emailing you shortly. In the meantime, check out our free guide on writing a juice business plan here: https://www.goodnature.com/how-to-write-a-juice-business-plan/
the calculations have really enlightened me. thank you! i am from Zambia and have tried to start a juice factory , met a lot of huddles from cost of regulation certificates to distribution costs above all labour but all because of the failure to have the right Price
Hello, unlike you I hadn't been around juicing my whole life but I have LOVED juice my entire life lol. I am a husband, father of 4, and veteran who is looking to have my juice bar running in the next couple months. What is some valuable advice going into this business that I'm going to need in order to be successful?
Hi Richard, Congrats on opening your juice bar! Check out the list of our 20+ must read articles if you're staring a juice business here: https://www.goodnature.com/blog/20-must-read-articles-if-youre-starting-a-juice-business/
I would like to start a cold juice factory. I need your advice and support for the same. Please let me know if you want to venture your business or any other support.
One of our team members will reach out to you shortly, thanks!
Excellent breakdown of the juicing profits.
Hi! What advice would you give to someone interested in producing their own homemade juice blends for sale? I do meal planning for my family which includes food prep and juice blends. I have friends who see my posts on SS and want me to make juices for them. However, I only have a power blender. I'm sure I will need more to produce to a mass audience. Thanks in advance!
It sounds like a delivery business correct? In that case I would recommended starting with an X-1 Mini or M-1 Goodnature juicer. (Depends on the volume of juice you need to produce).
Thanks so much sir for sharing am really blessed ..
Excelente articulo
Hi there, when you talk about the healthy cost between 20-25%, does this include the bottle and label? You made an example about selling a bottle for $10, so the cost should be $2.50, but I think you only include the cost of the produce. What about the cost of bottle, label, and hpp? Please clarify. Thank you
This article is specifically about the cost of the raw ingredients (the food cost) and doesn't include packaging. There are other articles on this blog that talk about COGS, which includes packaging.
Very great article with clear explanation and example is the best to indicate how to determine the food cost. Yet, it will be great if you can give us a scenario of cost of goods sold by including the labour and packaging cost. God bless.
Hi! I was wondering what the 1.6 represents. Is that the ounces of juice per bottles? FC Per Bottle = Total Amount / Total Weight in lbs * 1.6 FC Per Bottle = $41.75 / 26 * 1.6 FC Per Bottle = $2.57
In general, each pound of produce makes about 10 oz. of juice, so for a 16 Oz / 500 ml of juice, you need about 1.6 lbs / .73 kg of produce.
Hello, I got some question about juice production, would appreciate if you could help me. How many Kilograms of apple is needed to produce one Liter of Apple Juice? Same question on Carrots and Beetroots? Thanks, David
It really depends on how ripe the fruit is, but in general you can expect to use about 3-4 lbs of produce for 1 liter of juice.
hola , estoy empezando un negocio de jugo prensado en frio, tengo muchas dudas, 1- el calculo que hiciste al inicio para cuantas botellas seria?, 2-es mejor hacer el jugo por separado y luego mezclar de acuerdo a cada formula?, en mi país tenemos un mercado central donde podemos comprar las frutas y verduras a precio mayorista, lo cual reduce mucho el costo por kg. 3- los costos de importación y el precio del dolar en mi país son un problema grande, que maquina me recomendas para empezar?gracias
Sir!I would like to do cold predsed juice business.Please give me guidance.
Hello Nalini, Have you checked out our consulting page https://www.goodnature.com/product-category/consulting/ We have quite a bit of services to assist when you are starting out as well as some informative blog articles on this subject as well. You can email me if you have any questions as well. Thanks
Hi and many thanks for your help to all of us! Charlie is it possible to give an advice on marketing strategy? We produce cold-pressed juices without HPP as well as cleanses. We have only one shop and want to go further. I'm intrested in consignment model that you mentioned before or another principles of retail's beginning. We don't have extra hands so will do everything ourselves. I mean coming up with business strategy, delivering, etc. If you don't mind to be our adviser it would be great or just tell whst our first steps in retail should be? The main problem as you know that juices are good only three days. Thanks a lot again!
Hi Tori, where are you located? Maybe I can help.
Another question don't you add in labour cost and the utensils you use? #God Bless You
Labor costs are not included in food costs, as food costs are only related to the food in the product. COGS (cost of goods sold) can include other costs that are directly related to the production and sale of the product.
Question where did the 1.6 come from? How did you determined to multiple the weight lbs * 1.6 Where did 1.6 come from?
It takes about 1.6lbs of produce to make 16 oz of juice, on average.
Hello! Thanks for the info, it has been very useful but I have a question! What happens with mylks? It can be applied the same formula for the juices? Thanks!
Correct, You would use the same formula.
We at MiaFruta do fresh juices in our point of sales but would love to do cold press bottle juices. Does anyone knows what is the department of agriculture regulation around producing these juices in Florida? Trying to find a Florida cold press juice facility that can help me outsource the process in the beginning. Any ideas? thank you
Teodora, it should be OK to make juice in your shop and sell it direct to consumer. Popular companies doing this in Florida include Jugofresh and CROP Juice. If you want to sell juice made by a 3rd party instead of making it yourself, it would have to be juice that has been pasteurized or HPP'd, since under FDA law you cannot resale raw juice.
We grow wheatgrass ,barley grass hydroponically in New Delhi india and are using masticating juicer at present to extract juice.we want to juice at least 25 kg of wheatgrass per hour .we sell as 30 ml wheatgrass shots.we want to know whether your X1 juicer will be the right choice for us to juice 25 kg of wheatgrass per hour .do we have to use any other grinder also as you have mentioned earlier.what will be the quality of juice as compared to the masticating juicer we are already using Huron.what is the best price of your juicer if you think it opt for us,delivery time ,electric consumption and load required, CIF price NewDelhi by air freight.please let us know if we can try juicing our wheatgrass in any of your machines supplied in india.also what will be the import duty on your product in india.will be obliged for a quick response.
Pradeep, our presses work on wheatgrass if it has been ground up already, but our grinders are not meant for small herbs like wheatgrass. I would recommend either using a wheatgrass juicer, or grinding the wheat grass into a pulp then pressing it.
Thank you so much for this information. With regards to the Food Cost percentage - is this referring to the Mark-up percentage, or are they two separate things? I'm struggling with the calculations on what to sell each juice at. If a juice costs me 10.00 to make and I want to make a GP of 20%, how will I work out what my Mark-up% will be and then what to sell the juice at? Thank you for all the advice!
Hi Morgan, food cost percentage is the cost of the raw ingredients and nothing else. If you're juice costs you $10.000 to make and you want a 20% margin, you would need to sell it for $12.50. Here is the math: $10 / (1 - 0.2) = $12.50
Hi Charlie! Amazing you are giving so much feedback and advise to us out here! 😄 Thank you. I would like to know if I can have a Skype call with you or your colleague to explain me more about the calculations. I am based in Ibiza, Spain and I have a small CPJ brand. It's so much fun! But to be honest I am not the best with numbers. Especially with all the conversions (we use KG and ML). Would it be possible to schedule a short meeting? Thank you so much and hope to see you in Ibiza! Best, Mieke
Hi Mieke! I will have our consultant reach out to you to set up a call. thank you!
Great article, thanks! I am launching a business of production and selling of fresh juices to retailers. As I read the X-1 is the best option for less than 1,000 bottles per day. Would you recommend a good machine that ensures the capping (and maybe labelling) of the bottles? Does the transfer of the juice from the juicer to the bottles and its exposure to air alteres the quality of the produce?
Selma, it is best to bottle, label, and cap by hand until you reach 3,000 or more bottles per day, as the automated equipment is expensive and is not necessary for low volume. And yes, exposure to air for too long is not good, so bottle quickly and keep cold!
Hi there. Thanks for the detailed information. Like know the difference between cool press juicer and slow press juicer like Hurom product. I am in Malaysia, intend to quit my hardware shop business and to venture into small scale juicing kiosk.
A Hurom is a masticating juicer, which is a slow screw basically. It doesn't create the same quality juice as a real hydraulic press, but it is much cheaper to purchase.
If I want to sell my product for 6.50, how much should each actual juice cost to make?
25% of $6.50 would be $1.63. Then you would need to add the cost of the packaging and labor and other costs you want to include in the total cost.
When you say, "This means that if the juice is selling for $10.00 / bottle, the cost of the ACTUAL produce that goes into the juice should cost no more than $2.50, on average." Does this include the cost of the bottle itself? So if the bottle costs 0.47 cents, I add that to the total cost of the juice? Or do I only include the cost of what goes into the bottle in terms of produce and not count the cost of the actual beverage bottle? Holly
The food cost is the cost of the fruit and vegetables that go into the juice. This doesn't include packaging. In order to get the total COGS (cost of goods sold), you would need to add the cost of the packaging.
HI Charlie I have few questions. I'm in business with juices for last 4 years and we run it successfully it is summer job we have outdoor space of 3m2 and do centrifugal juices in front of people and we sell 300-400 bottles a day. But now i'm think renting one much better place which is bigger and of course spot cost much more. And I'm think about X1 because then I can do juices in advance so people don't wait and I can sell much more of them and easier. And I hope we will extract much more juice from fruits and veggies. Because even though I have high end centrifugal juicers pulp is quite wet after processing. So my questions is do you have your sister company in europe where can i get X1? Second is bags where pulp goes how do we wash it ? and how many times one can be used? and what is price of one ? Third containers where juices goes do you have them made in cube shape because it think it will be much easier to store them in that shape and more of them could fit in fridge. Thank you for your time and answer.
Ante, the X1 can make 400 bottles of juice in just a couple of hours, I think this would make your life much easier. And you're right, you would get much more yield out of the fruit and vegetables, saving you money. We sell direct to Europe, we do not have a distributor there. The bags are $65 / ea and you can use one for 1-3 months before needing to replace it, as long as you keep them clean. We provide cleaning instructions with the equipment. You basically just scrub them then soak them in a sanitizer solution. We don't supply a cube shaped container, but you can use any container you wish.
Thanks for your wonderful blog and various questions and answers i am reading on your blog. However, i will focus more on the machine operations and functionality, this x1 machine should extract juice from beet root, carrot and wheatgrass directly without any need for grinding . 2. Nigeria is a big country with relatively large market size , there is peculiar problem of power failure i need to factor in the cost of diesel to power my generating set , please can you recommend the power capacity of your x1 machine?
Ahmed, you need to grind almost everything before pressing, including beet root, carrot, and wheatgrass, but the X1 comes with a grinder attached. Wheat grass is special though, you would need to grind it in a separate food processor before-hand, since the grinder on the X1 does not do well with such small herbs. The machine runs on 200-230v, 50-60 Hz.
hello, i have a couple questions about the juice production.. First, id like to know how i can make the juice come out cold right out of the juicer.. Are there any tricks to help me serve it cold? Also, i know the weight of each ingredient that goes into a recipe. But how do i make the process faster when im actually juicing it for the customer? Do i need to weigh the ingredients or is there a faster way to make the juice without weighing each ingredient? Thank you hope you reply!!
Leo, the best way to serve cold juice is to use cold produce. If you are using a real cold-press juicer (a press) like the X-1 or the CT7, it will not heat up the juice. And in regards to weighing the ingredients, can you just weigh out the recipes before-hand and store them in containers? That way when a customer orders the juice it is already weighed out.
Thanks for the write up. Please will like to know if this machine can work in Africa.
Yes, our machines work in Africa.
Great article and so nice to see you keep answering people's questions. Here's mine, which relates to calculating food costs: Do you know roughly how much juice is produced from 5lbs of apples for example, cucumber, celery, etc As prices are very different in different countries, I feel that this would help me make a solid business plan! Thanks
This would depend on some factors such as ripeness of the produce, but you could expect to get about 8-12 oz of juice from 1 lb or produce. Leafy greens will yield the least, and something like watermelon will yield the most.
How much a bottle should Be included regarding a salesrep/salesperson/delivery?
That would depend on the compensation program. Are you paying commission per bottle for sales reps? This article was targeted more towards restaurants and cafes than juice delivery, but you could add some columns for those expenses in the spreadsheet when you download it. If you want something more custom let me know and I'll put you in touch with Ari.
Hi Charlie, Thank you so much for the article. The 25% is a great target to strive for. I am wondering if you could provide advice on glass bottles versus plastic bottles for cold-pressed juice. We have a production facility all lined up but my partner and I are divided on the issue. Glass bottles are more expensive and the sealing is an issue. You can't do tamper proof caps, you have to shrink band each bottle which adds to labour time and if you go the seel liner route the machinery investment is high. Also, any idea on how we approach a local company that has partnerships with all of our local producers. What would be in it for them? Originally we were thinking of providing a name mention on each bottle e.g. "proudly supporting X company" but that seems like a small exchange for giving us access to all of their produce growers. And lastly, we are going to be approaching fitness centres, spas and yoga studios to equip them with our cold-pressed juice products (and refrigeration) and am again uncertain about whether we should sell them the juice upfront, or give them X amount of money per juice sold. The value equation is stumbling us at the moment. The juices will be 12oz bottles and our cost is roughly $2.25-$2.50/juice (prices reflect grocery store prices). Our retail cost for that volume would be $8. Any advice?
In regards to bottles, read Plastic vs. Glass Bottles. By the way, StanPac is located in Canada, maybe you can get a good price on glass bottles from them. This company you want to approach, are they a produce distributor? Can you just buy the produce from them? Dealing with individual growers can be hard to manage. Lastly, in order to get your foot in the door at retailers, you should either offer the consignment model (pay them commission for juice sold), or guarantee to buy back juice not sold, so they have low risk in taking on your brand. The short shelf life is the top fear for retailers, because they're afraid the juice will go bad before people buy it.
Hi, You got me into this but I have questions in order to understand this business thoroughly. I hope I can get a complete explanation so I get started soon... 1. What about the other expenses besides the ingredients; how do you calculate each of them and what is the final expense should be like and the percentage of the profit for a healthy grow of business? 2. How do you make your recipe in a big batch? Say I have a very good juice recipe for a single glass/bottle but how am I supposed to get the same taste if I make it hundreds of bottles? How to calculate the exact ingredients for big batches to produce the same taste every single time? Is this a secret or there is a method for this as well? I appreciate your generous opinion... 3. What is the check list of a cold pressed juicing in a day: in kitchen and to the store? If it's a family business of 4 people, what is a daily plan per day for each member? How long does it take to produce the juice, ready to be sold in the store? If these juices should be juiced fresh daily, what time do you start and end the day to get ready for the next day?
1. Labor costs can be worked out on an hourly basis, then divided into the number of bottles produced per hour. For example, if you are paying 2 people $10/per hour, the the labor costs are $30/hr. If you make 100 bottles per hour, then the labor cost per bottle is $0.30/ per bottle. You can also factor in overhead like rent, but this can be done on a monthly basis instead of hourly or per bottle. At the end of each month, the business should be making at least 30% net profit, but it should be more. 2. For accurate consistency, it is best to juice each ingredient separately then mix later. But, you will still get some variance due to seasonality, ripeness, and variety of fruit and vegetables. 3. Most small cold pressed juice businesses juice ever 2 or 3 days, not daily. That's because the juice usually has about a 3 day shelf life (depending on ingredients and how it's produced). You will need to make it daily when you reach a certain volume and are at max production capacity. You can easily make 100 bottles per hour on the Goodnature X1, or 40 per hour on the Goodnature countertop. There is other time involved in washing produce, bottling the juice, labeling, stocking the shelves, etc. That depends heavily on sales volume.
Hi. Really interesting read. I just have two quick questions. Can the machine be set to extract a thicker consistency of juice from the same food components being used to manufacture the final product i.e. can the machine extract different consistencies of the same fruit's juice? Also, can cold pressed juices be packed in tetra paks/ other protective plastic packaging so as to protect the juice from heat and thereby reduce the requirement for refrigeration so as to increase shelf life? Thanks!
The consistency of the juice can only be controlled by which bag you select. Some bags have a wider filter size than others. The wider filter will let more juice solids through. Shelf life can only be controlled through refrigeration, acidity, and extra processing. The packaging won't make a difference.
Hi, thanks for all your help!! We are also trying to start a juice company and we dont really have a lot of competition, yet! We are investigating about which would be the Best cold pressed juicer... As I read the x1 would be a good choice and we were wondering what about the bottling.. Do you have any advice. Is there any botttling machine to do this? And if there is, which one would work with the X1? Thanks a lot, Susana
If you are bottling less than 1,000 bottles per day it's usually cost effective to just hand poor the bottles. Beyond that there are some semi-automatic bottling systems that you can buy. The most popular is by a company called Inline. http://www.fillers.com/overflow-filling-machine/
Thanks so much for this article, especially with the mock food cost calculation, especially seeing that I am not a math or numbers person... just someone with plenty of ideas. I have been thinking very seriously about opening up a small juice bar in NYC (which is already a highly competitive place). I am very much into healthy eating and juicing and would like to quit my day job (I am a secretary) and venture into the juice bar business. However, I am a bit terrified because I have no prior experience (besides making my own which is usually very raw organic and tasty). I would really appreciate any ideas/suggestions you may have for how I can get started. My passion is to be my own boss and to have a business that is of excellent quality for my customers.
Angela, I think the most important aspect to successful juice bar owners is that they are passionate. You are right that NYC is a highly competitive and expensive place to do business. If you are determined to make it as your own boss, I think coming up with a real business plan and budget goes a long way. It is a lot of work, but once your plan is down on paper you can talk to people about it and see if you can put together a good team of people and either come in with enough capital, or raise funds from investors, friends, and family. If you are interested in talking to an experienced juice consultant, I can pass along your info.
Thank you for these helpful information. I am leaving outside the USA and was wondering if your machines are 3 phase?
They are single phase.
Extremely helpful information as I only embarking on juicing for my career change.
very good article. what is about the bottles? Why they are not in the calculation?
Marcell, bottles would not be food cost, that would be packaging cost. Packagin and labor and distribution need to be added separately.
Hi Charlie, does anyone make the X1 under license in Europe?
No, all of the machines are made in our factory in Buffalo, NY.
Hi, I have three queries: 1. I would like to understand how easy it is to clean this machine thoroughly after every produce. For e.g one recipe might have apples, celery, cucumber and the next produce might have orange, pineapple. The second produce will taste to perfection only if there are no bits of celery left in the machine after the first produce. 2. What is the shelf life of these juices if not kept under any sort of refrigeration? 3. Is there any difference in taste of juices while comparing X1 versus any Slow Juicer like Omega, Breville or Hurom?
Hi PK, here are answers to your questions: 1. I would like to understand how easy it is to clean this machine thoroughly after every produce. For e.g one recipe might have apples, celery, cucumber and the next produce might have orange, pineapple. The second produce will taste to perfection only if there are no bits of celery left in the machine after the first produce. It's usually as easy as changing the press bags and rinsing out the machine with water, however if the ingredients are particularly potent ingredient like ginger, you may want to do a full wash down with soap and scrubbing that takes about 10 minutes. We recommend doing recipes with strong color or tastes at the end of the process to avoid extra cleaning. 2. What is the shelf life of these juices if not kept under any sort of refrigeration? All raw juices must be refrigerated for safety reasons, or consumed within 4 hours. 3. Is there any difference in taste of juices while comparing X1 versus any Slow Juicer like Omega, Breville or Hurom? Yes, the juice off of a cold press juicer is more filtered and contains less pulp. It tastes better, cleaner, and has a longer shelf life. Thanks!
Hello, currently a nurse becoming a Registered Holistic Nutritionist. Looking to begin cold pressed juicing and would like some recommendations on where to begin and options with a juice bar rather than using HPP and bottling the juice. Any advice would be appreciated Thank you
Hi Nicole, happy to hear you are becoming a nutritionist! We need more of you in this world. Are you looking to sell made-to-order juice (one glass at a time)? Or, raw juice that's already in bottles (without HPP or other processing)?
How about if the business idea is to set a small juice business either on a mobile structure (Trail, Car) or on a small kitchen space? Do you think is worth it to start with X1 for a new business that seeks to provide natural products with competitive prices? I understand the advantage of having one single worker operating the machine, my concers are related to the type of orders we are expecting to receive. In other words, we foresee that every customer will require a (slighlty) different combination of products in its orders, it is a very personalize product. Could you give me your thoughts about it? Thanks for your help
If you are looking to produce made-to-order juices, there are two different ways to go about it: 1) Produce every juice on a small countertop juicer. 2) Produce the juice on the X1 before hand and store it in containers, then mix the juice to the customer's order specifications. Option #1 requires higher labor costs, and also requires more cold storage space since you will need room to store all the produce that you will be using throughout the day. If you make the juice in large batches in the morning, you will only need storage for the juice. This becomes more important if going the mobile route.
How about distribution & marketing costs? Is it as high as cost of the produce. Also in the above calculations, is the cost of producing the juice (machine,labor,electricity) considered? If not how high are they, assuming the above quantity of produce.
Abhishek, these factors that you're referring to are specific to each company. A retail juice store will have much higher overhead than a juice delivery program. A wholesale juice company will have lower margins but (hopefully) further distribution than direct to consumer sales. I think the best way to research this is to first decide what type of company you want to be, and work backwards from there. The machine and labor costs depend on which equipment you're using. Using 5 people on 5 norwalk juicers is going to have much higher labor costs than using 1 or 2 people on an X1.
Great article, we are going to start a juice company and basicaly this is one of the issue we are dealing with. Because in my country is no such a competition in this area, so we are the price creators, so you are saying that if our minimum price per bottle will be = Cost / 25% the price should be ok for our market and we should also keep going and have healthy profit? Why we shouldnt go for lets say 20% or higher 30%? Thank you for your opinion
Daniel, the 25% number allows for a healthy net profit in the US, assuming labor costs and overhead costs are reasonable. It is possible to run a business with higher food costs. Some restaurants operate with as high as a 40% food costs and remain profitable, but it becomes difficult. Lower than 25% is also possible, but if you try to make too much of a margin I think people tend to feel like they are overpaying, because the price doesn't match the product. As in many businesses, you can lower food costs over time as you produce a higher volume of product.
Daniel, it is interesting you asked that question, for I too am setting up In a country that has little competition. Charlie, thanks for your information and demonstrations. It makes decisions earlier when purchasing. I have two machines I'm currently researching, yours and one from Australia... Is the gx American made in USA OR CHINA. if not USA I have to add 5% tax on it. Also generally the shipping to the Middle East. It's 200 kg right, what would a rough estimate for shipping be. What sort of square footage would I need in space for workable kitchen are people's? I have a 450 sqft shop space on the ground floor and the same on the floor above. Im thinking 25O sqft is enough for production and packing. (Would I be wrong) I'm thinking of refrigerating up stairs, but not sure how that would be practical... I'm looking at a small foot fall trade and mostly cooperate and juice cleanses so I am anticipating I will need a built In Cool room right by the machine plus and extra one upstairs for storage and supplies. Would love any feed back on what type of benches are used. I'm assuming stainless steel in the working are. I have a zillion questions to ask .if anyone else is starting up I would welcome a brainstorm Skype session. Ubeauti@aol.com many thanks
What about the cost of the bottle and label?
Hi Kristian, This depends on the price you get from you supplier, and should be added into the calculation when finding the gross margin and net profit, however not when calculating food cost. The food cost is just the cost of the actual ingredients, and does not include the packaging.
Great article! I guess one of the challenges is keeping retail prices consistent (which is what customers expect) whilst dealing with seasonal fluctuations from wholesalers and farmers. The other issue is trying to deal with availability and deciding whether to go organic, a hybrid of organic/chem free or just low cost conventional. Be interested to see you blog on that one at some point. 😄
Hi Adam! Thanks for the comment. I agree with you. I would say that you can never be 100% certain of future food costs or availability when dealing with local and organic sources. Some of the larger juice companies have resorted to growing their own harder-to-source organic ingredients.
Thanks for this simple as it is, its good to re read it...
I'm happy to hear it!
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