Running a sandwich shop is relatively easy and straight
forward. However to make profit you need to balancing the books and factor
overhead costs.
You should set goals and understand how to calculate your
profit margin. Things that impact on profit margin are quantity of sale, prices
and cost of marketing.
Other factors that affect profit margins are age of the
business, type of inventory, labor cost and rent. Proper analysis of running a sandwich
shop should help improve your profit margin.
Sandwich Shop Profit Margin
The Location
You need to determine between high traffic, expensive
location to low traffic and cheap location. An expensive location such as a
popular mall reduces profit. However huge number of patrons adds to the gross
profit.
Low impact locations with low leaseholds turn profit on
each sale. A high–rent location does not necessarily convert to huge traffic.
The proprietor of such establishment in order to make
profit usually offers the product at a higher price than competitors. The higher prices impacts negatively on
customer choice and might attract very few buyers.
Pricing
There is a notable differentiation in sandwich prices.
There are the very expensive sandwich and the cheap sandwich.
The reason is because of rent costs, location, cost of
ingredients and overhead costs. To remain competitive a sandwich shop owner
needs to come up with a reasonable price.
He needs to factor cost of materials, ingredients and
labor. The shop needs to reduce wastage and figure out the cost of each menu.
Always work within an anticipated volume to reduce wastage.
Labor
Costs
Figure out the opportunity cost between labor and wages.
Hire only as much staff as you need and less that you can afford. The cost of
making the sandwich including labor and price dictates your profit margin.
The Age
of your Establishment
The older the establishment the less resource you spend
marketing. The business should have developed a reputation and a brand name.
You get lots of repeat customers conversant with your
product and services. Lower marketing costs impact positively on profit margin
Inventory
To reach acceptable profitability sell-lower ticket
items. Lower priced items sell rapidly adding to your profit margin.
Diversify your inventory to accommodate different target ages
and offer a large selection of popular items to your customers. The lower
priced items attract customers who might purchase some of your premium brands.
Target health addicts, gourmet tastes and family groups.
Investment
Costs and Overhead
Before appropriating prices factor overall costs. You
need to factor the cost of running the sandwich shop.
Things to account for are bank interest, lease cost,
maintenance and repairs. Other cost considerations are business license,
commissary fees, labor, kitchen equipment and promotions.
Sourcing
the Raw Material
The amount you spend buying the raw material impacts
positively or negatively on your pricing. You need to keep the purchase price
low while maintaining high quality standards.
Buy you bread directly from bakers or make your own
bread. Make sure the ingredients are bought from farms or farmer markets.
Always purchase certain items in bulk according to your
needs. This will effectively reduce the price of the item and your final
product.
Build
a Website
If you want to build a website keep the cost low. You can
use a free host plan and direct a top level domain name to the site. Provide
information on your sandwich shop and include beautiful photographs of the
establishment.
Conclusion
You need to plan for profit by creating a good pricing
plan. Work strictly to your budget and business goals.
Understand the expenses and remain realistic in your
expectations. Find the pricing sweet spot and calculate anticipated expenses.
Other cost considerations are cost of building a website,
social media marketing, domain name and host plans. How to Start a Biscuit Making Business
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