View Full Version : Calculating profits
10-14-2013, 04:45 PM
Hi - quick question for you guys. Like many here, I have always fantasized about opening a BBQ joint one day. There is a spot in my town that I know would be perfect. It's a classic roadside, "shack" type place that currently serves burgers, hot dogs, etc. and is the type of place you see on Diners, Drive-ins and Dives. Anyway, I have a pretty well-paying day job and don't think I'd be quitting any time soon to buy a place like that, but I was thinking about approaching the owners and seeing if I could maybe sell BBQ out of their location on the weekends only.
It could be a good way to start out, experiment, and see what it's like without taking a huge financial risk.
So, here is my question. I'm trying to get a handle on how to calculate potential profits on the food. I would probably just buy the meat, smoke over night and then sell it the next day until it's gone. I want to know what kind of margins there are with something like this - with my only expenses being the food costs, and I imagine some sort of cut or fee to the place for hosting it.
I would probably just start doing brisket and ribs, and maybe pulled pork. I belong to Restaurant Depot and could source the meat there, and have an idea of the prices, but I'm trying to figure out what I could reasonably charge, and also for brisket or pulled pork, how much meat is left after cooking.
I figure if I have a 14 lb brisket, about 1 lb of fat, etc would probably trimmed off. I'm not sure how much it would weigh approximately after cooking? Same for the pulled pork?
Can anyone point me in the right direction of how to start crunching these numbers?
10-14-2013, 07:11 PM
10-14-2013, 07:32 PM
What I have always figured is a 60-65% return on butts and 50-55% return on briskets. Hope this helps.
10-14-2013, 07:39 PM
Is this a bad question? I know I sound like a complete newbie amateur, and I am that. I am just a backyard cook but since I've been cooking que, every person that has tasted it has said it's the best of ____ they've had. So, this is really just dreaming - the type of thing I would love to do if I won the lottery and didn't have to worry about my day job. I talk about this all the time with my co-workers and I would like to be able to run some real numbers to either squash my dream, or maybe to consider making it a reality.
Also, my father was in the restaurant business for almost 20 years and I grew up in a pasta shop, so I am familiar with how difficult this industry is. That's why a partnership arrangement with an established business seems like a great way to dip your feet in the water.
10-14-2013, 07:53 PM
Figuring profit at this point is very difficult, as you do not have the agreement. If you are providing meats, for the current business to sell, that is a pretty straightforward calculation. But, if what you are talking is a pop-up BBQ stand, then you have to first understand the conditions of the deal. Can you use their equipment, license, etc...who is paying for power, water, etc... Lots to the deal.
Whatever you do, cost times 3, that is where you start. Even when you are not paying for the building, as there are other costs, when you don't have the building, to get your pricing done. You can dial in profit once you understand costs, by refining the knowns.
Meat, fuel/wood, transportation/transit, ingredients, consumables, equipment leveraged over time, and you will begin to see what cost is. Start at 3x that cost broken down to a daily rate.
10-14-2013, 10:32 PM
No No. It's awesome question. I love what your doing because I am in the same boat. I'm just pulling up a chair and being as quiet as possible and taking notes
10-14-2013, 11:10 PM
With this type of business proposal there a many variables to examine.
What type of agreement will be made with the current food vendor for use of their facility?
What will the current food vendor want out of the agreement?
How will sales be recorded/tracked (affects sales tax and income tax reporting as well as calculating net profit)?
Do their business/food/tax licenses and insurance cover you?
How is the kitchen to be shared for use in food storage/prep?
Will you use their equipment to produce the BBQ or your own and if your own do they have space for it and is it NSF approved? (almost, if not all states, require a licensed kitchen/commissary for food produced for sale to the public, i.e cannot be cooked in a home kitchen)
These are some of the basic hurdles you must address to see if the proposal is viable. Once these are covered you can then begin calculating margins on menu items.
EDIT: ooops, Landarc covered a lot of these already, guess I should read the full thread before posting? :mrgreen:
10-14-2013, 11:25 PM
[QUOTE= with my only expenses being the food costs, and I imagine some sort of cut or fee to the place for hosting it.
I would think there is a lot more than just this to be your cost. Sauce,wood,fuel,rubs,ect.....
UP IN SMOKE BBQ PA
10-14-2013, 11:36 PM
10-23-2013, 09:18 PM
Still taking notes in the corner...
10-25-2013, 02:17 AM
what ever your market will bare...10 to 13 for pulled pork per pound .samies 6 to 8 ..
11 to 14 per pound for brisket samies 7 to 9
ribs 21 to 24 per rack
10-25-2013, 07:50 AM
You are getting some good information here but have you considered what your proposition will do to the owner's business? Are you going to be taking away customers? If so, he may be asking you for quite a bit of your profit to compensate him for the loss.
Have you thought about a food trailer? It has more flexibility than a fixed location especially if you are trying to do this on a small scale.
10-31-2013, 11:01 PM
I too have been bite by the BBQ bug and daydream about a way into the business. Also cannot leave a good paying job at this time but retirement is about 5 years away and I can use the time to perfect. From what I've research, "bmikiten" has a very good recommendation. Jump into a food trailer (nice used one if your not completely financially committed) and get legal. Takes the pressure off of outrunning the HD and gives you all the best options to make it successful. I'm thinking any other choice would diminish your chances of success and isn't that what you want? If later you've exhausted your efforts and it's not in your future, sell the food trailer and little is really lost...
early mornin' smokin'
11-07-2013, 03:29 PM
my guess, is your profit margin will be lost to the business selling your stuff. This is a tough one. To sell it there, it needs to be prepped and cooked onsite. Are you, or they set up for that? Do you have a food managers certificate/servsafe certification? What would you really gain by doing this? At the end of the day, the sign on the building isn't yours, so who's business are you really pumping up?
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