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Calculating Juice Profit Margin

Calculating_Juice_Profit_Blog

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:

Produce costs from distributor
Produce costs from distributor

 

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:

Food cost for sweet green recipe
Food cost for 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.

Juice profit margin
Juice profit and profit margin

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:

Profit per day calculations
Profit per day calculations

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.

 

Charles 's profile image

About The Author

Instagram: @cwjuice

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.

35 Responses

  1. Thank you so much about this article. i’m planning to open some juice bars in my country. I believe Goodnature Machine X-1 is my first choice.

    Dennis le

    Reply

  2. Good article, and you used fair numbers. The input that’s missing is the labor cost of creating a batch of juices, and , in most states, if creating a juice delivery business (as you suggest) you’ll need to add the cost of preservation (of your choice).
    I’d love to see a follow up article addressing these additional inputs.
    Thanks!

    Reply

    1. Steve, yes you’re right this doesn’t include labor costs. Labor costs have a lot of variables. The wages you pay your employees, which equipment is being used, and how many recipes are being made all make a substantial difference. It’s hard to suggest a general number because there are so many variables. If one employee is making one recipe for an hour, the production rate will be much higher than if that same person is making 3 or 4 different recipes, as that requires prepping different produce and possibly cleaning the machine in between.

      As far as preservation is concerned, do you mean refrigeration or something else like HPP?

      Reply

      1. You cannot calculate the profit without considering the two most important costs to your business: rent and labour as they are the biggest recurring costs. Then you have electricity, insurance, etc.

        Reply

        1. You are right if trying to calculate the net profit for your business, but this article is explaining how to calculate gross profit on your products, which includes direct costs but not fixed costs.

          Reply

  3. Excellent info! My business partner and I were just talking yesterday about the best way to approach this. One question we have is about yield for each ingredient. I realize that fruits and veggies can vary in the amount of juice they produce, but do you have any data on yield? For example, 5lbs of carrots produces how many fluid ounces of juice? That would be incredibly helpful for us as we create our business plan and seek financing to make our CT-7 purchase! Thank you!!

    Reply

    1. You make a very rough estimate by assuming ten fluid ounces of juice per pound of fruit or vegetable. The amount varies a bit depending on the ingredient, but usually not more than 10%-15%.

      Reply

      1. THANK YOU!!!

        Reply

  4. Thank you for sharing this information! I have found your blog and videos to be valuable.

    Reply

  5. Thanks for this information. I am planning to start a juice business in Nigeria soon. This information is a big help.

    Reply

  6. Your gross profit calculation is misleading as you did not include labeling, labor, or overhead. We have been making juices for over four years (three with an X-1) in a commissary kitchen and our margins are much lower, primarily due to labor and overhead.

    Reply

    1. I tried to make it clear that this example does not include labor or overhead, as that will vary a lot depending on the business model. Juice bar vs. restaurant vs. wholesale juice company will all have very different labor costs and very different overhead costs. I went back now and edited the first paragraph to make it crystal clear that this is gross margin only.

      Hopefully your gross margins are within line of this example.

      Reply

    2. Gross Margin is the cost of raw material & packaging

      Reply

  7. Very great read…. Truly informative… Any recommendations on glass bottle manufacturers that are fairly reasonable in cost??

    Reply

    1. Glass bottles are generally pretty expensive. Unfortunately I don’t have any recommendations for reasonably priced ones. You can order from China but then you have to deal with the issues that that brings you 🙁

      Reply

  8. good info to get a rough figure and how to calculate. however, it is not accurate to some extend. eg 1 pound of orange for the first batch of cold pressed does not guarantee that the following batch of orange will give the same output liquid yield.

    Reply

    1. Yes that’s true, produce will always vary a bit depending on how ripe it is and if its in season or not.

      Reply

  9. This was awesome! Thank you thank you! I am in the process of starting my own cafe/juice bar, and I was wondering if you have any advice or information on selling cold press juice that is not going to be bottled first? ( So pour to order.) < Does that make sense ? 🙂

    Reply

    1. Yes, that makes sense. A company named Jugo Fresh in Miami used to do it this way, not sure if they do any more. Here is an article about it: Mixed-to-Order concept

      I think a Goodnaturte X-1 Mini would be great for this model, as you can make batched of juice throughout the day as needed.

      Reply

  10. Aloha!
    Thank you for the great article! Any suggestions on where to buy labels for your bottles?

    Reply

    1. We have had good feedback from referring customers to tapecon, which is a company located near us in Buffalo: http://www.tapecon.com/contact/

      Reply

  11. Thank you for your article. Very good information!

    Reply

  12. Very informative well written as usual Charlie.
    Love reading your blogs.

    Reply

  13. I have been living in Australia for the last 5 years but l will be returning to the States next month. I am very much interested in starting my juice business . I would like to know if t there is there anyway to listen to the conference or did you guys do any
    audio/ visual recording of the conference. Here in Australia today is August the 1st meaing the conference has passed . I would appreciate keeping me on your mailing listen.
    Thanks
    Alex

    Reply

    1. The event takes place November 10th and 11th 2018. You can still make it!

      Reply

  14. These numbers are not real. You did not include the label cost. You only included the bottle and cap cost. Adding another $0.50 to the equation fore the label and printing cost.

    Reply

    1. Thanks for pointing that out. The 0.60 in the example is a figure given to me by a real juice company, but that cost could vary depending on your type of packaging.

      Reply

      1. You are a patient person, Charlie! Thank you for the information. I am about to purchase an X1 and plunge into a brick and mortar. I think I can make it work but thanks for this real gross cost info. With that I am able to factor in my estimated overhead costs and can easily see that 50 bottles a day of organic juice would be hard pressed to keep the place running. I plan to deliver to local businesses as well and I think I can do better than I imagine based on our area and tourism. Wish me luck!

        Reply

  15. Very useful article, thanks for sharing. I’m in Europe and would love to use your spreadsheet as a template before converting to Euro and adjust prices. This would save lots of time. Sadly the link to download the spreadsheet seems not to work. Any suggestions?

    Again thanks for sharing your experience
    Nicco

    Reply

    1. Hi Nicco, the link works for most people. Maybe you can try using a different browser?

      Reply

  16. I’m planning on starting a juicing business using indigenous wild fruits and many of them have hard seeds. Can you recommend a suitable machine for this type of fruits

    Reply

    1. This would depend on the size of the seeds. For example, apples and lemons work fine on a real juice press like a Goodnature machine, but fruit with larger seeds like cherries or peaches do not. How large are the seeds?

      Reply

  17. Wow, you are a patient person! Thank you for your article.

    Reply

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