I'm planning opening a pasty shop - what are the profit expectations?

mewbie_2

I have been known to eat more than one pasty at a single sitting.

edit: And I would be prepared to spend up to fifteen pounds for a quality pasty, say as good as a Ginsters or Tesco own brand.

dopester

Thrugelmir wrote: »

Not wishing to burst your bubble..... but that is an exceptional profit for a sandwich shop.

If you made a net profit of 50p per pasty. You would need to sell around 200,000 a year to make your pre tax profit.

On a 6 day week thats around 640 a day :eek:

Even if it were true (640 a day), that is a lot of chasing about being busy all day for you and your staff.

I take it anecdotal stories of increasing number of people taking their own packed-lunches in to work are now to be ignored. Simply because interest rates have fallen, many with jobs have low mortgage repayments, and there is unlikely to be further job losses to rock the takings of lunchtime pastry stores?

What do you do if you have many pasties left over at end of a slow day?

I've always been sceptical of the food industry. Older relatives and friends I often hear b1tching about food retailers, the butcher or whatever, to one another. Whoever drops out of favour that month. For stupid reasons like maybe the butcher didn't have time to address them by name and ask how they were doing, or remember details of their last convo.. to it then probably mutating into stories like the quality has dropped or he freezes leftovers overnight. Similar to the quote below.

That said I am hearing stories where indys, like butchers and grocers are being extra welcoming/nice to their customers atm, but I do find customers in shops take-the-p1ss sometimes. Can be really short and nasty to staff. Treating them like dirt.

There was nothing fresh about the products at the hamlin shop. The baker told me they would refreeze everything over the weekend and reheat and ice it again on Tuesday. Nothing like paying top price for seconds. What turned me away was their Christmas cakes, not the filling or color cake I had ordered. When I went back to complain I was told sometimes they get mixed up "but at least you got a cake" like they did me a favor by selling it to me.

The owners wife was always saying we can bring that up from the other store in a day or two for you, gee thanks I only wanted it for my guests tonight.So off to Weiss I went. I was told by another baker who had stopped in there that their pies were old by the way the filling sat against the crust. Nothing good about that place, it went downhill fast when the wife took over the counter and they fired the regular counter woman, she was kind, polite and told the truth about what was old. Can see why the owners did not want her around, the customers were her friends. So glad that place is closing.

fc123

Conrad wrote: »

Hey, thanks for those ideas. The hot meal one I thought of some years ago but as ever freinds / family said there would be no demand.

FRANCHISES - I'm very wary as they can be a non starter. Having said that some client's had me arrange thier commerical finance to aquire amongst others, McDonalds and Subway, and both haev done well. The McDonalds chap is making over £250,000 pa net profit out of one shop. He however agrees with you and thinks most franchises are rubbish. KFC he rates as the food sits for hours so there is little waste, but you need £1m in raw cash in your account to even get an interview.

In some regards a franchise is appealing, in that a decent one has gone through a long learning process to distil the 'perfect model'.

My inclanation is to do my own thang though. I could easily do a pasty shop (again plus other foods) and would simply visit lots of good ones to glean best practice.

I want a day time biz which the pasty thing lends itself to. I don't want to be serving evening meals!

Cheers for your extensive post:T

I have found the 10 times rule to be almost faultless over 25 years odd, despite agents and the like poo pooing it during the boom (as there were fatter margins to be had from cheaper immi labour and imports) so easiest way is to calculate rent x 10, with gross profit for owner manager @ 20% (which will be your salary)

In the area I am now, the cheapy, off main footfall areas cutesy shops just can't earn someone a salary.
They rent @ £8k pa.
They T/O 80k pa (if they are good)
The owner manager earns 16k pa gross.

Tax credits now prop up an awful lot of small businesses that aren't really viable. I am not sure if it's a good thing or a bad thing to be honest.

It's why DD's shoe shop may not have worked. It may have taken good money but a 5k pa shop will not turnover 150k pa unless it is a base for other things as well. To earn 60k pa before tax, you do need to T/O about 180k gross min.

http://www.channel4.com/programmes/gerrys-big-decision/4od#series-1

Conrad may find episode 2 worth watching as features a pasty maker who won best pasty award and hasn't made a profit since he bought the business. You can see the flaws though.
Staff are the biggest headache in a small business as they can make or break you.
I loved those programme esp the furniture maker. Actually, DS may find ep 2 interesting if he has time for telly.:o


Don'y know if anyone else (Thrugelmir?) agrees with the 10 times rent 'rule'.

fc123

dopester wrote: »

What do you do if you have many pasties left over at end of a slow day?


.

Some would say donate them to your local outreach centre that helps/feeds the homeless.
Or eat them yourself, every night for supper, so Conrad may get a little larger than now.
Or feed them to the birds/badgers/foxes in your garden..........

Or to max up profits, freeze them for another time......which will make them taste not so good and could be dangerous.

Waste or write offs exist in every business and you just have to put the cost into the mark up.
In fashion, it was around 5% -10% of goods...so we did a booty once or twice a year to clear everything @ £2 piece.

Food? I have no idea what industry standard is...but it's why the freeze and heat up model is so popular as you get hardly any waste.

bo_drinker

As I said before the Cornwall shop here ships them in frozen at night, I bet a lot of customers don't even realise that and think there is some little bloke constantly making them in the back room.
The best mark up on this sort of food is pizza, it's only a cheese sandwich with other fillings @ the end of the day..

Pobby

The 10 times rule? Well that depends on all sorts. Let`s say in my industry, over supplied in product, and margins ripped to the bone.

So here`s the real deal. 10k rent and 100k turnover. Taking in, even without staff, and that figure is net of V.A.T., you are likely to make a gross mark up of about 35% if you are lucky. Take out utilities, business rates and all the rest of it, you are just over minimum wage.

fc123, I am sure you are acquainted with The Lanes in Brighton. A buddy of mine closed down 2 shops there, despite a £400k turnover and they were small shops, just no money to made because of low margins. Also he was hit with huge delaps when quitting the leases.

These days, prices are hammered by online traders. One price in the shop, another online.

Thrugelmir

Pobby wrote: »

These days, prices are hammered by online traders. One price in the shop, another online.

I'm not sure that selling hot pasties on Ebay will be sucessful.

Pobby

Thrugelmir wrote: »

I'm not sure that selling hot pasties on Ebay will be sucessful.

Don`t you believe it. I think they might be working on that.

fc123

Pobby wrote: »

The 10 times rule? Well that depends on all sorts. Let`s say in my industry, over supplied in product, and margins ripped to the bone.

So here`s the real deal. 10k rent and 100k turnover. Taking in, even without staff, and that figure is net of V.A.T., you are likely to make a gross mark up of about 35% if you are lucky. Take out utilities, business rates and all the rest of it, you are just over minimum wage.

fc123, I am sure you are acquainted with The Lanes in Brighton. A buddy of mine closed down 2 shops there, despite a £400k turnover and they were small shops, just no money to made because of low margins. Also he was hit with huge delaps when quitting the leases.

These days, prices are hammered by online traders. One price in the shop, another online.

I know the business that took the units on too;) Let's just say things are not what they seem with the incomer.
10 times may just apply to my sector. I know an ex Bauger chain renegotiated all their rents and based the lower offers on 10th of T/O.

Whenever we T/O 10 X, things ticked over nicely.....I think 4 years in 19 we did less, mainly due to rent increase and last year due to crunch effect and the rest.

Sell throughs are the hardest thing. The amount of start ups that calculate their projected T/O based on stock outlay...aagh...drives me nuts.
They buy stock @ 100k, mark up @ X 2.5 then expect to T/O 250k.

I have been helping out someone set up far away...and was she offerred a kipper of a lease. Fortunately, she took on board my concerns, went back to LL with a solicitor and got a great deal. We have worked out projected T/O based on stock held instore...I hope she does well as it is her second go as the last shop failed. It should do this time as she learnt from her past errors too.

I don't know if it is approrpriate on here to post some anecdotal as some businesses are not what they seem.
I'll have a think about it.:o

dopester

PasturesNew wrote: »

I hadn't heard of Greggs until I moved 2 years ago. They're not everywhere.

A lot of people here, giving advice on shopping etc, speak as if everything is everywhere. Where I used to live there wasn't even a Waitrose within 50 miles, so I'd not been in one of those ever until recently. Starbucks - I hadn't seen one until 2 years ago, still haven't been in one but don't care. Saw my first Nandos 2 years ago too ... and went into a shop just to see a PS2/WII as I'd never seen those either.

Some places aren't everywhere... even Greggs.

Edit: Greegs - I just checked, my nearest used to be 110 miles away, in a town I've never even been to.

There are probably good reasons for no local Waitrose or Starbuck or Greggs in certain areas. If there is no local Greggs, it doesn't mean someone setting up their own independent pasty shop is going to service the demand, and tap a lot of profit.

People frighten me. They literally mortgage their homes and everything they ever worked for to finance completely barmy schemes. Of course, your scheme isn't barmy, or is it?

On delegate told me that he wanted to open a luxury handmade chocolate store. I said that other people had made a success of these but didn't he think that the market was getting a bit saturated these days.

He told me that he had a cunning scheme. What he had in fact done was map the position of every chocolate store in the country in relation to population distribution. From this he had discovered a highly populated area that had no luxury chocolate shop. This happened to be the Rhondda Valley in South Wales, at the time one of the most economically depressed areas.

When, I pointed out that the residents of the Rhondda might not have all that much spare cash for luxury chocolate and that the lack of competition from other chocolate stores was probably no oversight, this observation caused a surprisingly acrimonious reaction.

This guy had borrowed against everything he had - his redundancy money, his home, his all - and yet the project was being lavishly equipped with not just the obvious choccy related items, but also with electronic do-das such as computers, sophisticated tills, copiers and faxes.

Go It Alone.
The Streetwise Secrets Of Self Employment
Geoff Burch.