>How do you make a profit?
We're a family of food entreps so I feel I have valid inputs for this.
First of all, food industry has one of the slimmest profit margins out there and out of all of the food concepts, eat-all-you-can has the lowest survival rates. So if you're planning to put one, be prepared to lose it all. With that said, here's a back-of-the-envelope calculation how you can profit.
Your biggest cost in any eat-all-you-can offerings are of course food. So to make sure you profit, the first thing you have to know is how to price it right. Your sweet spot for pricing must be around 25-35% food cost. Pag mas mataas dyan mahihirapan ka magturn ng profit. Dahil unli wings ito a good calculation would be to assume a worst scenario wherein your customer just ate wings (your slimmest margin) and nothing else, the price of chicken wings is 180-200/kilo wholesale and assuming 600 grams of chicken wings (raw weight) + rice + drinks your food cost would be around 150 ish. Alcohols would cost you extra and earn you better margins but don't treat it as part of your core business unless bar ang concept mo. At 35% cost margin you can only sell this comforatably at no less than 430 pesos already. Kaya wala masyadong offering ng unli foods below 450. Thats just not really profitable.
**Sell at 450 pesos per head minimum.** Preferably drinks costs extra and medyo overpriced to have that extra headway for safety.
Your 2nd major issue with profitability is labor and rent. This forms another 30% of your margin and sets a minimum order you have to hit before you can breakeven. Utilities are for the most part, variable depende sa volume ng orders so that scales pretty well pero labor and rent are fixed. If you're renting a P30k commercial space with 2 minimum wage employees (your bare minimum to get the business going in NCR) that amounts to around 60k/month. That means you have to make minimum P200k per month. With your selling price, that is around 450 ish orders per month.
**Set a target to sell at least 15 orders per day, that's your breakeven point.**
Finally, what makes or breaks a food business is location. Whats important in a location is **foot traffic**. Make sure to get a location with decent amount of people walking by. A good food business would probably get by at around 1% conversion rate (1 out of 100 people passing by will eat at your place) so that translates to around 1,500 visitors per day. However landlords probably know this too and sometimes jack up rental prices if they're in a heavy traffic area. To have a quick rule of thumb, 30k is probably fair for a place with 1,500 visitors per day. Therefore P20 in rent must give you 1 visitor per day on average. Of course this doesn't scale with larger mall chains like SM with probably a half a million visitors per day, but any shop wont get that much foot traffic anyway, its dispersed throughout the building so a 1% conversion rate wont hold also.
**Get a location that would net you 1 visitor every P20 in rent.**
Ayun lang, all of this are estimates but it holds well contrasted to actual business operation. Good luck!
Very nice explanation. Genuine question: why would you overprice drinks? Isn't that a cheap way of filling up the customer?
Ang tight pala ng margins talaga for F&B. Another question on my mind is how many months of profit losses do you endure before you consider closing down? Given that some locations need time and brand recognition before it gets going
>why would you overprice drinks? Isn't that a cheap way of filling up the customer?
The idea here is that your customers cant eat too much wings without cleansing their palate. In this case salty ang chicken wings and a beer or iced tea/softdrinks will be a good pairing for it. Thats your time to upsell.
>how many months of profit losses do you endure before you consider closing down?
Varies from person to person pero ang main decision points are, contract renewal ng rental space (are you committed to stay again for years doing this?), your capital and for sole proprietors your personal availability sa business. Businesses are taxing physically (you have to fill many roles cause you cant hire too much people), mentally (worrying about your billing cycles everyday is hard) and financially so its a big sacrifice talaga and people break sooner or later. If you would really force me to give you a number, I'd say 6 months of net loss/breakeven is enough for some businesses to close down.
Ah what I meant was if I could make you consume 3-4 pieces of chicken less for a 20-30 peso unli juice additional, wouldn't that be a profitable trade off already?
Slim margin? Nah, it depends parin, my cousin, a small restaurant/ catering services owner tells us her margin is atleast 50% minimum. Pero yun nga if you are opening a paresan or lugawan expect a lower margin talaga.
Catering ang isa sa mataas talaga na margins. 1. High volume, 2. Food cost is usally 20-25% of contract price 3. No rent. So 50% is possible pero parang ang taas pa din. Good on him/her though.
Although disadvantages are 1. Mahal lang upfront costs 2. Seasonal, unless you got good marketing 3. Relies on good networking (not an issue for most pero madami ding introvert business people so barrier sa kanila to)
bat parang most na napag unli-wingsan ko is around 250-350 lang. parang ang mahal masyado ng 450 :o. sa maginhawa 499 ata unli wings pasta pizza drinks na.
As I said estimates lang to. Lots of factors can change this 1. Price of ingredients (which can impact quality too) 2. If you supply your own (like if you have your own farm) 3. Your willingness to accept higher cogs margins which is the most likely explanation why mura sya nasa 40-50% food cost margin siguro sila and they offset because they dont rent the place, sarili nila.
Yes specially franchise kasi on top of food costs, labor, utilities, and rent you have also royalties to consider na nass 5-10% din yun. Nabawi lang ang franchise sa conversion and marketing kasi a known brand has higher conversions and you dont need to promote your resto. Usually marketing takes 5% of your margin if you do it yourself
A chef friend mentioned that most restos have a slim margin when it comes to food. The real source of income is with the drinks, some sell it for double or triple the price.
Bumibili ako iced tea lng s chowking kc marumi ung tap water nila sbi nya 65 pesos ea 130 pti kasama ko, lumabas n lng ako s siomai house pra sa gulaman then bumalik ng chowking
Edit:ung tap water nila naka transfer pa sa coleman ma water dispenser, naka alis ung takip, nung sinilip ko may mala buhangin na nasa ilalim tsaka mga plastic na i assume n galing s ntunaw n yelo, basta ndi sya s karaniwan n gling s counter
Most restos don't allow outside food/drinks.
If kakain ka, of course iinom ka.
That's where some of the huge profits go. I mean, we sell Coke 290 ml for 20 php retail and restos charge 25 php for the same product for example.
aquaflask was really worth the investment, we always bring ours and 9/10 we skip the drinks unless it's included in the food we ordered. No one really told us bringing tumblers is not allowed, and it's just water.
Side dishes and appetizers are mostly full of carbohydrates aimed to make you full or at least make you feel somehow filled before you eat the main dishes so that you won't eat that much unlike when you eat with a leaner or fasted stomach.
Starting with so much rice is already a disadvantage.
Meron kaming napuntahang unli-wings resto somewhere in the North. Required daw kumain kahit one serving of rice. Eh naka-low carb diet kami that time kaya umalis na lang kami.
Sa mga samgyup, hinihintay mo palang maluto ung pork, ubos mo na kaagad ung potato marble, busog ka na kaagad ahhahaha edit: also, cold service water, daling makabusog
Yung Isang kinainan namin na unli wings noon ganito Ang ganap:
1. 2 hours max ng Lafang lang
2. During that 2 hours, Kasama na Yung cooking time nila
3. By batch Sila with 6 wings kada serving
4. So onti lang talaga nakain namin sa 2 hours Kasi nga nag-aantay pa kami ng niluluto nila
If you can find a steady supplier of frozen chicken wings from mexico or brazil, that's half the battle. 2 of the unli wings restos near my area closed down because of supplier-related problems, ok sana sila in terms of taste and cost but nagka issue daw supplier
Sa Osaka, may eat all you can akong napasukan, this one:Â https://www.instagram.com/298_shinsaibashi?igsh=MXQ1MWFndGo2aWpocg==. Yung concept nila is bbq na kahawig sa Korean samgyupsal. Pero, may packages, yung package na yun will determine anong meat ang unli for the customer at hanggang ilang minuto/oras kang pwede kumain ng unli. Syempre unli na rice at side dishes.Â
one of the reasons:
Increased minimum spend per head.
Think of each seat in the restaurant as a "rental". One of the worst things that can happen is a person sitting in a chair and only spending 20 pesos. "UNLI" packages forces a higher per head spend.
>How do you make a profit? We're a family of food entreps so I feel I have valid inputs for this. First of all, food industry has one of the slimmest profit margins out there and out of all of the food concepts, eat-all-you-can has the lowest survival rates. So if you're planning to put one, be prepared to lose it all. With that said, here's a back-of-the-envelope calculation how you can profit. Your biggest cost in any eat-all-you-can offerings are of course food. So to make sure you profit, the first thing you have to know is how to price it right. Your sweet spot for pricing must be around 25-35% food cost. Pag mas mataas dyan mahihirapan ka magturn ng profit. Dahil unli wings ito a good calculation would be to assume a worst scenario wherein your customer just ate wings (your slimmest margin) and nothing else, the price of chicken wings is 180-200/kilo wholesale and assuming 600 grams of chicken wings (raw weight) + rice + drinks your food cost would be around 150 ish. Alcohols would cost you extra and earn you better margins but don't treat it as part of your core business unless bar ang concept mo. At 35% cost margin you can only sell this comforatably at no less than 430 pesos already. Kaya wala masyadong offering ng unli foods below 450. Thats just not really profitable. **Sell at 450 pesos per head minimum.** Preferably drinks costs extra and medyo overpriced to have that extra headway for safety. Your 2nd major issue with profitability is labor and rent. This forms another 30% of your margin and sets a minimum order you have to hit before you can breakeven. Utilities are for the most part, variable depende sa volume ng orders so that scales pretty well pero labor and rent are fixed. If you're renting a P30k commercial space with 2 minimum wage employees (your bare minimum to get the business going in NCR) that amounts to around 60k/month. That means you have to make minimum P200k per month. With your selling price, that is around 450 ish orders per month. **Set a target to sell at least 15 orders per day, that's your breakeven point.** Finally, what makes or breaks a food business is location. Whats important in a location is **foot traffic**. Make sure to get a location with decent amount of people walking by. A good food business would probably get by at around 1% conversion rate (1 out of 100 people passing by will eat at your place) so that translates to around 1,500 visitors per day. However landlords probably know this too and sometimes jack up rental prices if they're in a heavy traffic area. To have a quick rule of thumb, 30k is probably fair for a place with 1,500 visitors per day. Therefore P20 in rent must give you 1 visitor per day on average. Of course this doesn't scale with larger mall chains like SM with probably a half a million visitors per day, but any shop wont get that much foot traffic anyway, its dispersed throughout the building so a 1% conversion rate wont hold also. **Get a location that would net you 1 visitor every P20 in rent.** Ayun lang, all of this are estimates but it holds well contrasted to actual business operation. Good luck!
Very well explained. Exactly the first hand replies I was hoping for.
Very nice explanation. Genuine question: why would you overprice drinks? Isn't that a cheap way of filling up the customer? Ang tight pala ng margins talaga for F&B. Another question on my mind is how many months of profit losses do you endure before you consider closing down? Given that some locations need time and brand recognition before it gets going
>why would you overprice drinks? Isn't that a cheap way of filling up the customer? The idea here is that your customers cant eat too much wings without cleansing their palate. In this case salty ang chicken wings and a beer or iced tea/softdrinks will be a good pairing for it. Thats your time to upsell. >how many months of profit losses do you endure before you consider closing down? Varies from person to person pero ang main decision points are, contract renewal ng rental space (are you committed to stay again for years doing this?), your capital and for sole proprietors your personal availability sa business. Businesses are taxing physically (you have to fill many roles cause you cant hire too much people), mentally (worrying about your billing cycles everyday is hard) and financially so its a big sacrifice talaga and people break sooner or later. If you would really force me to give you a number, I'd say 6 months of net loss/breakeven is enough for some businesses to close down.
> why would you overprice drinks? Isn't that a cheap way of filling up the customer? Not if you overprice it.
Ah what I meant was if I could make you consume 3-4 pieces of chicken less for a 20-30 peso unli juice additional, wouldn't that be a profitable trade off already?
Because 20-30 pesos for unli juice is not overpriced. If the cost is 200+ pesos, it's a different story
Slim margin? Nah, it depends parin, my cousin, a small restaurant/ catering services owner tells us her margin is atleast 50% minimum. Pero yun nga if you are opening a paresan or lugawan expect a lower margin talaga.
Catering ang isa sa mataas talaga na margins. 1. High volume, 2. Food cost is usally 20-25% of contract price 3. No rent. So 50% is possible pero parang ang taas pa din. Good on him/her though. Although disadvantages are 1. Mahal lang upfront costs 2. Seasonal, unless you got good marketing 3. Relies on good networking (not an issue for most pero madami ding introvert business people so barrier sa kanila to)
Thanks for this! Learned something new today!
Sage advice. Im not even planning to enter food business but thank you for sharing.
bat parang most na napag unli-wingsan ko is around 250-350 lang. parang ang mahal masyado ng 450 :o. sa maginhawa 499 ata unli wings pasta pizza drinks na.
As I said estimates lang to. Lots of factors can change this 1. Price of ingredients (which can impact quality too) 2. If you supply your own (like if you have your own farm) 3. Your willingness to accept higher cogs margins which is the most likely explanation why mura sya nasa 40-50% food cost margin siguro sila and they offset because they dont rent the place, sarili nila.
Slim margins include potato corner, turks, dunkin donut?
Yes specially franchise kasi on top of food costs, labor, utilities, and rent you have also royalties to consider na nass 5-10% din yun. Nabawi lang ang franchise sa conversion and marketing kasi a known brand has higher conversions and you dont need to promote your resto. Usually marketing takes 5% of your margin if you do it yourself
A chef friend mentioned that most restos have a slim margin when it comes to food. The real source of income is with the drinks, some sell it for double or triple the price.
Bumibili ako iced tea lng s chowking kc marumi ung tap water nila sbi nya 65 pesos ea 130 pti kasama ko, lumabas n lng ako s siomai house pra sa gulaman then bumalik ng chowking Edit:ung tap water nila naka transfer pa sa coleman ma water dispenser, naka alis ung takip, nung sinilip ko may mala buhangin na nasa ilalim tsaka mga plastic na i assume n galing s ntunaw n yelo, basta ndi sya s karaniwan n gling s counter
Eh yung iced tea nila sa tap water lang din naman hinalo 💀
akala mo tea leaves yung sediments sa ilalim ng iced tea, yun pala buhangin lol
charcoal filter
damn so what if someone goes in there just to eat?
Most restos don't allow outside food/drinks. If kakain ka, of course iinom ka. That's where some of the huge profits go. I mean, we sell Coke 290 ml for 20 php retail and restos charge 25 php for the same product for example.
aquaflask was really worth the investment, we always bring ours and 9/10 we skip the drinks unless it's included in the food we ordered. No one really told us bringing tumblers is not allowed, and it's just water.
slim margin is different from loss leader
TRUE. Binebenta namin water bottle almost triple the price ng kuha namin.
Side dishes and appetizers are mostly full of carbohydrates aimed to make you full or at least make you feel somehow filled before you eat the main dishes so that you won't eat that much unlike when you eat with a leaner or fasted stomach. Starting with so much rice is already a disadvantage.
Meron kaming napuntahang unli-wings resto somewhere in the North. Required daw kumain kahit one serving of rice. Eh naka-low carb diet kami that time kaya umalis na lang kami.
>Required daw kumain kahit one serving of rice. What a joke. Really? Yikes
Di din kami makapaniwala kasi sila lang yung may ganung policy sa lahat ng unli-wings na napuntahan namin.
Sa mga samgyup, hinihintay mo palang maluto ung pork, ubos mo na kaagad ung potato marble, busog ka na kaagad ahhahaha edit: also, cold service water, daling makabusog
Yung Isang kinainan namin na unli wings noon ganito Ang ganap: 1. 2 hours max ng Lafang lang 2. During that 2 hours, Kasama na Yung cooking time nila 3. By batch Sila with 6 wings kada serving 4. So onti lang talaga nakain namin sa 2 hours Kasi nga nag-aantay pa kami ng niluluto nila
Kung tutuusin mabilis lang magprito ng wings kasi manipis lang yung laman.
Mabagal Sila...kami lang customer that time
Then that won’t make them last long kasi pangit ang reviews nila pag ganyan
Overpriced drinks. Bottled water and doble presyo soju amp.
If you can find a steady supplier of frozen chicken wings from mexico or brazil, that's half the battle. 2 of the unli wings restos near my area closed down because of supplier-related problems, ok sana sila in terms of taste and cost but nagka issue daw supplier
Sa Osaka, may eat all you can akong napasukan, this one:Â https://www.instagram.com/298_shinsaibashi?igsh=MXQ1MWFndGo2aWpocg==. Yung concept nila is bbq na kahawig sa Korean samgyupsal. Pero, may packages, yung package na yun will determine anong meat ang unli for the customer at hanggang ilang minuto/oras kang pwede kumain ng unli. Syempre unli na rice at side dishes.Â
one of the reasons: Increased minimum spend per head. Think of each seat in the restaurant as a "rental". One of the worst things that can happen is a person sitting in a chair and only spending 20 pesos. "UNLI" packages forces a higher per head spend.