Calculating Juice Profit Margin
A juice business or restaurant selling juice direct to consumer can expect about a 50% – 70% gross margin (profit before labor and overhead costs) if careful planning is done when developing the recipes. If you are considering getting into the business of selling juice, you can take these four easy steps to calculating juice profit and profit margin.
This article shows calculations done on a spreadsheet. You can download the spreadsheet here, which will allow you to see the actual formulas used and add your own recipes as needed.
Step 1: Get produce costs from your local purveyor
The best way to start here is to get some real numbers from your local produce distributor on the cost of items you plan on using in your recipes. We contacted a produce purveyor in our area and got the following prices on some common items (priced per pound). Please note that prices fluctuate based on seasonality, supply, and demand:
Step 2: Price out some basic recipes
If using a real cold-press like a Goodnature X-1 or X-1 Mini, you will be getting high yield and you can expect that 1 lb of produce will make about 10 fluid ounces of juice on average. So if you’re making 12 ounce servings, you can expect to need about 1.2 lbs of produce. Here is an example of a basic sweet green recipe:
Step 3: Set the price
Pricing can be tricky—you want to price the juice reasonably, but you also want to make enough profit on each juice that you can afford your labor and overhead costs. What we’ve seen in the market is that prices of about $4.99 – $5.99 do well for conventional juice, and $5.99 – $6.99 for organic. For this example, we will use the higher price points of $5.99 and $6.99.
Step 4: Calculate profit and gross margin
This step is pretty straight forward. You calculate the COGS (Cost of Goods Sold) and subtract it from your price to end up with your gross profit. You then divide Gross Profit by Price to get your profit margin as a percentage.
COGS includes food cost and packaging costs, but not overhead costs like labor, rent, and utilities.
For this example we are assuming $0.52 for the bottle and cap as the packaging cost (you can view real life bottle costs on our Bottle-Up app.) Packaging costs will vary a lot depending on what you’re using—glass bottles would be a much higher cost, whereas plastic cups would be a much lower cost.
Here you can see that the conventional recipe at $5.99 is more profitable than the organic recipe at $6.99.
Step 5: Calculate total profit per day
Now is the fun part. We decide how many servings per day we think we can sell, and multiply that by the profit to see how much gross profit we could potentially make per day. Keep in mind gross profit doesn’t factor in overhead or costs:
If you are a restaurant owner considering adding juice to your menu, this example makes a fairly good argument towards implementing this into your business. If you are thinking about starting a juice business from scratch, fifty juices a day is probably not enough to run a brick and mortar juice store, but might be enough to sustain a juice delivery business. For more info check out the popular article four basic business models of a cold-pressed juice business.
Any questions? Let me know by commenting below and I will do my best to answer them.