Posted by Gerard on July 24, 1998 at 17:17:26:
In Reply to: vegetarian deli seeks pricing advice posted by Pam on July 24, 1998 at 13:00:52:
: I own a vegetarian deli and smoothie/juice bar in a food court. We are doing very well,
: 2 1/2 years old, our gross income has increased 20% from last year. I want to continue
: in this vein but feel I need some more info about food costs, labor costs especially
: in the vegetarian food business because our products are all homemade we have huge
: labor costs. I would like to get more info on what products might be too costly, what
: limits should be, stuff like that. Since our food costs are generally higher
: than non-veggie food businesses (we try to use organics and natural whole foods)
: I feel that some of the traditional pricing advice and standard 30% food cost
: doesn't always apply. Anyone have any advice? TIA
Pam,
I run a bakery, working with raw ingredients is every bit as labor intensive.You have to be able to control cost, passing it on is sometimes the only solution but often the customer won't pay.
30% food cost is high, its ok if you can process product at high volume, for my wholesale accounts my cost for me is 35% but in my retail store cost is well below 30%.
Food court rents are usually quite high and it has to reflect in your prices.
Sometimes its easier to raise prices ( if they are set too low) but other times its a case of doing a complete rethink in regards of the way you look at your product, sometimes you have to let go of the way you've been doing things.
Heres a good example, the product I wholesale is croissants, butter prices jumped from $1.75 to 2.44 theres no way wholesale customers will pay the increase and I can't absorb it so I switched from butter to unsalted margarine.
Is the product inferior, maybe to some people but the customers don't know and I sure don't tell them anything. For the retail I keep using butter because the markup is still there.
Fruit drinks made fresh from fresh fruit is definately profitable, the same made from expensive organic produce probably is marginal. I'd seriously think about using organic only when available at a price you can live with.
Most customers could really care less as long as its fresh, tastes good and doesn't make them look stupid when they pay.
I've spent 30 yrs serving products I bake and the percentage of customers who actually know the difference is NOT large enough to build a business on.
at the wholesale produce mkt in Boston I can buy bruised cases of apples for $2 each, flats of wet raspberries for $3 each just to name a couple of examples.
Slight shakers as they call them but at pennies on the dollar.
Paying premium prices for specialty fruit is not the way to profitability.
If you absolutely HAVE to have organic toss one apple in with the case and say "made with organic fruit", not made FROM organic fruit.
One way makes profit, the other isn't feasible.
The labor you'll always be stuck with, don't get stuck with fancy fruit prices too, you need an advantage on one or the other but it sounds like you're getting clipped at both ends (labor and cost).
Don't be rigid and don't ever say you won't compromise yourself, people like that go under.
Cheers, Gerard.