Recurring revenue for restaurants comes from one source most operators walk past every week: the hours your kitchen sits dark. You already pay rent, core staff, and certifications whether the line cooks four days or seven. A prepaid meal-plan line (people pay up front for a week of meals, eat them, reorder) runs in those idle hours and turns them into income you can count on monthly instead of wishing for the next event call. On a kitchen you already own, that line breaks even at roughly 18 prepaid subscribers — because the expensive part is already paid for. Everything past that is contribution profit.
This page is for the operator who already runs a real kitchen: a restaurant with dead weekday hours, a contract caterer, an event caterer whose calendar swings between feast and famine. Not a beginner with no kitchen. Not the end customer. You. The one who hears “this is incredible, where can I get this every week?” and has never had a way to say yes.
Why one-off covers and events are a treadmill
The one-off model pays you once and forgets you. You quote, you cook, you clean, you wait for the next call that may or may not come. The phone rings on Thursday for a Saturday event; the following Tuesday the kitchen is silent and the rent meter is still running. You are good at the cooking and trapped in a model that punishes it.
An event caterer put it the way I think about it every week: “Events are the gravy. I want bread-and-butter accounts.” A floor you can plan on. The grind isn’t a sign you’re doing it wrong — it’s the old model doing exactly what it was built to do. Every fix the standard playbook offers makes the volatility worse:
The delivery apps take roughly 30% of each order, then keep the customer’s name, email, and phone. You did the cooking; they own the relationship. You’re paying to build someone else’s business on land you rent.
A second location or a proper restaurant carries brutal odds — roughly 60% of restaurants close within two years. You’re betting a year of cash flow on the most romantic, lowest-survival option in food.
Chasing more events just buys you a bigger treadmill: more quoting, more scrambling, the same dark Tuesdays in between.
None of those fix the actual problem. The problem is structural — your revenue arrives in unpredictable lumps, and your costs arrive every single day. I unpack this gap in more detail in the ugly truth about starting a food business.
Idle kitchen capacity is your biggest untapped margin
Here is the mechanical fact at the centre of all of it: it takes a cook the same time to put one chicken breast in the oven as it does to put in a tray of a hundred. Cook for one person and you have a luxury private-chef service almost nobody can afford. Cook for a hundred pre-planned eaters from one kitchen and you have that same service brought within reach of an ordinary household — at a price they’ll pay every week.
Your idle capacity is the rarest thing in this business: fixed cost you’ve already absorbed. In a typical restaurant the premises alone eat 22–29% of every dollar before a single ingredient is bought. Your idle weekday hours carry none of that overhead, because your event or à-la-carte business already paid it. A new line started in those hours only has to cover what it adds — the food and the extra hands — not a whole kitchen from scratch.
That’s why the scary “you need 150–300 subscribers to make money” figure is wrong for you. That number assumes a kitchen built from zero. You’re not building from zero. You’re filling a room you already rent.
The break-even math, on a kitchen you already own
Let’s run it out loud instead of in your head, because the math in your head is using broken inputs. Per subscriber, your monthly variable contribution is the price minus the food, packaging, and the marginal labour to make their meals. The line’s only new fixed cost is the incremental piece — one packer, equipment wear, a little extra overhead.
Across plausible bands — thinner margins, leaner ops, different markets — break-even lands somewhere between 10 and 35 prepaid subscribers. That’s an order of magnitude below the from-scratch myth. Run it on your own numbers and the picture rarely changes shape; only the exact count moves. (Don’t trust my margins — trust yours. Plug in your rent, your food cost, your delivery.)
And food cost is lower than the myth says. “30% food cost” gets repeated like a law of physics. In one operator’s own test, simply buying each item from the cheapest supplier — pure price comparison, no negotiating — moved food cost from about 40% to roughly 28%. Across the two brands I built, blended food cost ran 24%. To a wholesaler’s rep, a meal-plan kitchen is worth ten restaurants, so you buy like one. If your food cost feels stuck at 35%+, start with how to count food cost properly and where food costs actually leak.
One-off vs recurring: the contrast that changes your bank account
The difference isn’t a few points of margin. It’s the entire shape of the business — when cash arrives, whether you can plan, and what each customer is worth over time.
Dimension
One-off (events / à-la-carte / delivery apps)
Recurring (prepaid meal-plan line)
Cash-flow timing
After the work; net-30 invoices on contract jobs; app payouts on a lag
Up front. Customers prepay the week — an interest-free loan before you buy the food
Demand predictability
Feast or famine; you forecast by guessing
A renewing base you can roster, buy, and route against
CAC amortization
You pay to win a buyer who orders once, then vanishes
Cost to win is spread over ~25–40 reorders a year; LTV ~$500–2,400+
Net margin
Restaurant 3–9%; apps gut another ~30%
15–20% net (the category leaders run NTFY ~16%, Kuchnia Wikinga ~18%)
Who owns the customer
The app, or nobody — they don’t come back
You. Your list, your renewals, your reviews
Delivery economics
One courier, one order, across town — and the 30% fee
One off-peak route drops the day’s meals to ~150 customers in a single run
Read the delivery row twice, because it’s the one operators get backwards. You’ll happily pay for one restaurant order driven across town by one courier and hand over a 30% fee, then doubt batched meal-plan delivery, which is far cheaper per meal. One is a milk round. The other is a taxi for a sandwich.
The CAC row is the quiet one that compounds. In the one-off world, every dollar you spend to win a customer dies after a single order — which is why customer acquisition cost is the lever that decides catering profitability. In the recurring world, that same dollar is amortized across a year of reorders, so a winning unit economics math holds even when retention isn’t perfect. The whole game becomes acquisition discipline, which is exactly why marketing for catering stops being an afterthought and becomes the engine.
How to start small without breaking what works
The fastest way to kill a good idea is to bet the core business on it. You don’t. The recurring line is additive — it runs in hours that are currently producing zero, so the downside is your time, not your livelihood. Here’s the sequence that protects what already pays the bills:
Run the sum on your real numbers first. Before you cook a single subscriber meal, find your break-even subscriber count using your rent (zero, it’s sunk), your food cost, your delivery. If the number scares you, stop here — you’ve lost nothing.
Start with one fixed-day, fixed-menu week. Three to five dishes, one delivery window, one weekday. A tight menu keeps food cost low and prep simple. Cebulka launched on a dead-simple offer — three dishes, 1,000 calories, free delivery — and that constraint was a feature, not a limit.
Sell to demand you already have. The people who said “where can I get this every week?” at your last event are your first 18 subscribers. You don’t need an ad budget to test the model — you need to call back the compliments you’ve been throwing away.
Cap it until the unit economics prove out. Hold the line at a number your idle hours and current staff can absorb. Don’t hire ahead of demand; let the prepaid cash fund the next packer.
Keep your brand, recipes, and customers. This is a line you own, not a platform you join. No 30% middleman, no renting someone else’s relationship. The relationship is the asset.
Suppliers are part of starting small too: a meal-plan kitchen buys at volume a restaurant never sees, so you negotiate from a position of strength. Done right, you become a partner, not a hostage — the mechanics are in negotiating supplier prices. And before you scale, plug the leaks the one-off model hides; 14 places your catering money escapes applies double once you’re running a daily line.
Where this leads if it works
I built three meal-plan brands from a single kitchen. One hit $200,000 a month by month four — about 2,000 customers, near 10,000 dishes a day off a 33-dish menu. The largest operators in this category — NTFY, Maczfit, Kuchnia Wikinga — pushed past $50 million a year. Every one of them started where you’re sitting: a kitchen, a craft, no outside money, and the willingness to fill the empty hours instead of chasing the next one-off.
The trophy numbers aren’t the point. The point is that recurring revenue changes what kind of business you own — from one that lives quote-to-quote to one with a floor under it. Catering margin stops being something you defend and starts being something you compound.
If you want the ordered path — the first-customer sequence, the equipment and staff list, and the profitability calculator that runs this math on your real inputs — that’s exactly what the $197 First-Customer Kit is built for. But before you spend a cent, settle the only question that matters: does a prepaid line pay on your kitchen? Run the numbers above first. If they work, you already know what to do with next Tuesday.
Frequently asked questions
What is recurring revenue for a restaurant or caterer?
It’s income that arrives on a predictable schedule from the same customers, rather than one unpredictable payment per event or cover. The cleanest version for a kitchen operator is a prepaid meal-plan line: customers pay up front for a week of meals, eat them, and reorder. You get cash before you spend on food, a base you can forecast against, and a customer worth 25-40 reorders a year instead of a single transaction.
How many subscribers do I need to break even on a meal-plan line?
On a kitchen you already operate, roughly 18 prepaid subscribers in a representative case, and 10-35 across plausible margin and price bands. The number is low because your rent, core staff, and certifications are already paid by your existing business. The new line only has to cover its incremental costs (food, packaging, one packer, a little overhead), not a whole kitchen. Run the math on your own rent, food cost, and delivery before trusting any benchmark.
Won’t adding a subscription line break my existing restaurant or catering business?
Not if you start in idle capacity and cap it. The line runs in hours that currently produce zero revenue, so the downside is your time, not your core income. Start with one fixed-day, fixed-menu week of three to five dishes, sell to demand you already have (the people who asked where they could get your food weekly), and don’t hire ahead of demand. Let prepaid cash fund each next step.
How is a meal-plan line more profitable than the delivery apps?
Two reasons. First, you keep the roughly 30% the apps take, and you keep the customer’s contact details and relationship instead of renting them. Second, batched delivery is far cheaper per meal: one off-peak route drops the day’s dishes to about 150 customers in a single run, versus one courier per order across town. Net margin on a prepaid line runs 15-20%, against 3-9% for a typical restaurant before app fees.
Is food cost really lower for a meal-plan line than for a restaurant?
Usually, yes. The repeated ‘30% food cost’ is not a fixed law. In one operator’s test, simply buying each item from the cheapest supplier moved food cost from about 40% to roughly 28% with no negotiating. A meal-plan kitchen also buys at volumes a restaurant never reaches, so suppliers price it like ten restaurants. Blended food cost across the brands I built ran about 24%.
What’s the difference between one-off catering revenue and recurring revenue in cash terms?
One-off revenue arrives after the work, often on net-30 invoices or lagged app payouts, in unpredictable lumps. Recurring prepaid revenue arrives up front, before you buy the food, so it acts like an interest-free loan. More importantly, your cost to acquire each customer is spread across a year of reorders instead of dying after one order, which is what makes the unit economics hold over time.
Yes, a meal-prep business is profitable — but only when four things are true at once: you take the money up front (prepaid, not pay-as-you-go), you hold food cost near 30% instead of letting it drift to 45%, customers stay long enough to pay back what you spent to get them, and your delivery runs on a dense planned route instead of one-off drop-offs. Miss any one of those and the math collapses, because the headline number — $10 to $14 a meal — is a margin trap. The good news for you specifically: you already run a kitchen. Your rent, your head chef, your hood, your licences are already paid. A prepaid meal-plan line only has to cover its extra costs, not a whole new business. That is why an established operator breaks even on roughly 18 subscribers, not 200.
This page is the honest version. Real numbers, a worked profit table, the trap explained, and a calculator so you can plug in your own kitchen’s figures before you commit a cent.
The short answer, with the conditions spelled out
“Is meal prep profitable?” is the wrong question. The right one is: profitable for whom, run which way? A beginner renting a commissary kitchen to sell 30 meals a week is running a different business than you. For an operator with idle weekday capacity, the four conditions below decide whether the line prints contribution profit or quietly bleeds.
Prepaid cash flow. The customer pays for a week or a month before you buy a single onion. You cook against money you already hold. This is the structural gift of the subscription model — it funds your own purchasing and kills the working-capital squeeze that sinks à la carte food businesses.
Food-cost discipline. The difference between a 30% plate and a 45% plate is the difference between a business and a hobby. Most operators do not know their real number. We will get to that.
Retention. You spend money once to acquire a subscriber, then earn it back week after week. If they quit in two weeks, you lose. If they stay two months, you win. Retention is not a soft metric here — it is the whole unit economics.
Route density. Batched delivery on a planned route costs a fraction of one-off restaurant drop-offs. Operators who doubt meal-prep profitability are usually picturing UberEats-style single-order delivery, which genuinely does kill margin. That is not the model.
Get those four right and the question stops being “is it profitable” and becomes “how many subscribers until I cover the line.” For you, that answer is small.
The margin trap: why $12 a meal looks better than it is
A meal-prep meal sells for roughly $10 to $14. New operators see that price next to a $3.50 food cost and assume a fat 70% margin. Then reality arrives. Packaging, the cold-chain box, the label, the packer’s wage, the delivery van, the card processing fee, the customer who churns after week one — each takes a bite. The gross margin that looked like 70% lands closer to 25-35% of revenue as contribution profit, and that is before you’ve earned back what you paid to acquire the customer.
This is where most thin competitor blogs stop — they quote “food cost 30%” and call it a day. The two costs that actually decide your fate are the two operators ignore: true food cost and delivery structure.
True food cost is almost never 30% when you first measure it
On real operator sales calls, the pattern is brutally consistent. A restaurant doing $600K a year was running food cost near 50% and had no tool to control it — “I just try to put it in control.” Another operator had a single dish landing at 47%, driven by pre-peeled boiled eggs nobody had ever costed. The target a disciplined meal-prep line should hit is 24% on the plate. The gap between 47% and 24% on a $600K business is roughly $140K a year — that is not a rounding error, that is the entire profit of the line. If you have never built a line-by-line plate cost, read how to count food cost and beverage cost before you price a single plan.
The lever most operators miss is purchasing, not portioning. In one supplier test, pure price comparison across vendors — ordering each item from the cheapest source, no negotiation, no haggling — cut input cost about 30% and pulled food cost from ~40% down to ~28%. That single discipline can be the difference between a line that loses money and one that prints it. There is more buried profit hiding in your supply chain than you think; see the 14 places your catering money is getting away.
Delivery is a route problem, not a per-order problem
Here is the reframe that turns the biggest objection on its head. Operators tolerate paying $6-8 for a single restaurant order on UberEats, then declare daily meal delivery “impossible to make profitable.” They are comparing the wrong models. Meal prep delivers a planned, batched, off-peak route — twenty boxes down one street at 6am, milkman-style — at a per-meal delivery cost a fraction of a one-off drop. The density is the whole game. A line with route density delivers for under a dollar a meal; the same line delivering scattered one-offs pays five times that and dies. Plan the route and the delivery objection dissolves.
The real margin math: a worked example
Let’s run a concrete monthly subscriber, then build to the full line. Assume a daily meal plan at $13/day — about $400/month for 30 days of food. This is a representative price band; your market may sit higher or lower, which is exactly why you should run your own numbers, not mine.
Per subscriber, per month
Amount
% of revenue
Subscription revenue ($13/day × 30)
$400
100%
Food cost (disciplined, ~30%)
−$120
30%
Packaging & cold-chain consumables
−$36
9%
Marginal labour (prep, packing — incremental only)
−$36
9%
Delivery (dense planned route, ~$0.80/meal)
−$24
6%
Card processing & platform fees
−$12
3%
Variable contribution per subscriber
$172
43%
That $172 is the money each subscriber throws off every month before the line’s own fixed costs and before acquisition cost. Now the part that thin blogs never show you, because they assume you’re starting from zero: because your kitchen already exists, the line only carries its incremental fixed costs.
Incremental monthly fixed cost of the line
Amount
One added packer/prep role
$2,500
Starter equipment amortisation (~$10k over 24 mo)
$420
Incremental overhead (utilities, consumables)
$580
Total incremental fixed cost
$3,500/mo
Break-even = $3,500 ÷ $172 ≈ 21 prepaid subscribers. Tighten contribution to $200 with leaner ops and disciplined purchasing and you’re at ~18. Every subscriber past that line is close to pure contribution profit, because the kitchen, the rent, and the head chef are already paid for. That is the operator’s structural edge over a beginner, and it is why the scary “you need 150-300 customers” figure is simply wrong for someone in your position — that number assumes a kitchen built from scratch.
Where the math breaks: retention and CAC
The contribution number is only half the story. The other half is how long they stay and what they cost to acquire. Subscriber lifetime in this category is bimodal and uncomfortable: a big chunk churn inside the first two weeks, another chunk stay three to six months. A realistic base case is a customer life around two months of ordering. At $172/month contribution, that’s roughly $340 of gross lifetime value per subscriber.
That number sets a hard ceiling on what you can spend to win a customer. To keep the standard 3:1 health ratio, your acquisition cost must stay near or under $100-115. Blow past it and you lose money on every signup no matter how good your food cost is. This is why retention work — nailing the first four weeks so fewer customers churn early — is worth more than almost any other lever; lifting the early-churn cohort even 30% can push lifetime value up by half. For the deeper treatment, see the key to profitability through optimising customer acquisition costs and the broader ways to make money in catering.
Run your own numbers — don’t trust mine
Every figure above is a representative band. Your food cost, your market’s price, your packer’s wage, your churn — they will differ, and the answer changes fast when they do. Before you commit a cent to a meal-plan line, plug your real numbers into the Operator Profit Calculator. It takes your subscription price, your true food cost, your fixed costs, and your churn, and shows you the one number that matters: how many prepaid subscribers until this line covers itself and starts printing contribution profit.
It is free, it takes three minutes, and it will tell you in plain terms whether the line is a yes or a no for your kitchen. Run your own numbers here.
What separates the operators who make it work
The ones who profit aren’t the ones with the fanciest menu. They’re the ones who treat the line like a margin machine: they cost every plate, they buy at the cheapest verified price, they plan a dense route, they obsess over week-one retention, and they never spend more to acquire a customer than that customer is worth. The food is table stakes. The discipline is the moat. If you want the broader reality check on the whole space first, read the ugly truth about starting a food business in 2025 and how to run effective marketing for catering.
If you’ve run the calculator and the numbers say go, the next bottleneck isn’t the food — it’s getting your first ten paying subscribers without lighting cash on fire on ads. That’s the exact playbook inside the First-Customer Kit: the operator’s step-by-step for filling a prepaid meal-plan line from a kitchen you already own. Build the line on numbers, not hope.
Frequently asked questions
Is a meal-prep business actually profitable, or just busy?
It’s profitable under four conditions: prepaid cash flow, food cost held near 30%, customers who stay long enough to pay back acquisition cost, and dense route delivery. For an operator who already runs a kitchen, break-even sits around 18-21 prepaid subscribers because rent, head chef and licences are already paid. Miss any of the four conditions and the $10-14 per meal price becomes a margin trap rather than profit.
What is a realistic meal-prep profit margin?
After food cost, packaging, marginal labour, delivery and fees, a disciplined line throws off roughly 35-43% of revenue as contribution profit per subscriber — before fixed costs and acquisition cost. That’s contribution, not net profit. The number only holds if true food cost stays near 30%; many operators discover theirs is actually 45-50% when they first measure it, which erases the margin entirely.
How many subscribers do I need to break even?
For an established kitchen, roughly 18-21 prepaid subscribers cover the line’s incremental fixed cost (about $3,500/month for an added packer, equipment amortisation and overhead). That’s an order of magnitude below the 150-300 figure quoted for from-scratch operations, because your base fixed costs are already sunk into the existing business. Every subscriber past break-even is close to pure contribution profit.
What is the unit economics of a meal subscription?
At ~$400/month revenue and ~$172 contribution per subscriber, with a realistic two-month customer life, lifetime value is around $340 gross. To keep a healthy 3:1 ratio, acquisition cost must stay near or under $100-115. Subscriber lifetime is bimodal — many churn in the first two weeks — so first-month retention is the single highest-leverage thing you can fix.
Doesn’t delivery destroy the margins?
Single-order, on-demand delivery (UberEats-style) does destroy margins at $6-8 per drop. Batched meal-prep delivery on a planned off-peak route is a different cost structure entirely — under a dollar per meal when the route is dense. Operators who doubt meal-prep profitability are usually picturing the wrong delivery model. Route density is the whole game.
How do I know if it works for my specific kitchen?
Run your real figures — subscription price, true food cost, fixed costs and churn — through the Operator Profit Calculator at flambia-operator-calculator.vercel.app. The representative numbers in any article are bands; your answer changes fast when your inputs differ. The calculator shows your specific break-even subscriber count in about three minutes, so you decide on math rather than on a generic blog’s averages.
If you already run a kitchen with idle weekday hours, the lowest-risk way into recurring food revenue is to bolt a prepaid meal-plan line onto it: customers pay up front for a week of meals, you cook a fixed menu in batches, and a single route drops the boxes off-peak. You do not open a second concept, sign a second lease, or hire a second crew. You sell the empty Tuesday-to-Thursday capacity you are already paying for. On a kitchen you already own, the line breaks even at roughly 10 to 35 prepaid subscribers — because the rent, the head chef, and the certifications are already sunk costs. Every subscriber past that point is contribution profit.
This is the hub page for the whole model. Below: why an existing kitchen is the cheapest possible on-ramp, the mechanics of the prepaid model, the honest economics (including the retention problem nobody warns you about), and the exact step path from your first idle week to your first paying customers. The cluster articles linked throughout go deep on each piece.
Why your existing kitchen is the lowest-risk way in
Most “start a food business” advice assumes you are starting from zero — find a unit, fit it out, pass inspection, hire, then pray someone walks in. That is the hard path, and it is why most new food businesses fail inside two years. You are not on that path. You have the hard assets already.
The whole argument rests on one accounting fact: your big fixed costs are sunk. The rent gets paid whether the kitchen runs at 40% or 90% capacity. The head chef’s salary does not change because you added a meal-plan line on Wednesdays. So the new line only has to cover its incremental costs — one packer, some consumables, a bit of equipment amortisation — not a whole second business. That is why the break-even number is small.
Here is a worked break-even, using illustrative numbers you must replace with your real per-market figures:
Run the sensitivity and the answer holds across plausible bands: somewhere between 10 and 35 prepaid subscribers covers the line. Compare that to the “150 to 300 customers” figure you see quoted for starting a meal-prep business from scratch — that number assumes you are also paying for a whole new kitchen. You are not. That is your unfair advantage, and it is the single most important thing to understand before you do anything else.
The model: prepaid, weekly menu, batched route
The recurring prepaid meal plan has four moving parts. Get these right and the rest follows.
1. Prepaid, not pay-as-you-go
The customer pays for the week (or month) before you cook a single box. This is the part that changes everything. You get the cash up front — an interest-free loan from your customer that funds your purchasing — and you know exactly how many portions to make before you turn the oven on. No guessing, no waste, no chasing invoices. Restaurants live on receivables and walk-ins; this line lives on prepayment and a known headcount.
2. A fixed weekly menu in multiples
You do not cook to order. You publish a set menu for the week and cook each dish in batches — multiples of the same recipe. This is the mass-personalisation trick: it takes a cook the same time to put one chicken breast in the oven as a tray of a hundred. One menu, cooked in volume, portioned into boxes. Your food cost drops because you buy and prep at scale, and your labour-per-meal falls because nobody is plating à la carte.
3. A clustered delivery route, off-peak
You do not deliver one box at a time at lunch rush. You batch a route — milk-run style — and drop all the boxes in one efficient loop, typically early morning before service. This is where most operators get the economics backwards. They look at what a single UberEats order costs to deliver and conclude “delivery kills margins.” But that is per-order delivery, the most expensive kind. A planned route with dozens of stops, each customer taking four or five dishes at once, is an order of magnitude cheaper per meal — and you skip the ~30% aggregator fee entirely. (More on this in where your catering money leaks.)
4. You own the customer
Because the customer subscribes directly with you, you have their email, their phone, their preferences, and their renewal date. No marketplace sits between you taking its cut and hiding the contact. Do not build a house on rented land.
Why this beats opening a new concept
The instinct, when an existing kitchen wants to grow, is to open a second location or launch a new restaurant brand. Resist it. Here is the prepaid meal-plan line set against the alternatives, dimension by dimension.
Dimension
Prepaid meal-plan line
New restaurant / à-la-carte
Demand pattern
Recurring, predictable
Walk-in, lumpy, one-off
Cash flow
Paid up front
Pay-after, receivables
Unit margin per dish
50–60%
7–22%
Customer value (LTV)
$500–2,400
$25–150
Capex to start
Incremental only (sunk kitchen)
A whole new operation
Delivery economics
Clustered route, off-peak
Per-order, peak-time
Customer ownership
You own them and the data
Marketplace owns them
The reason this matters for your bank balance: the business that can pay the most to acquire a customer wins, and that is almost always the business with the higher margin and the longer customer value. A meal-plan subscriber who stays nine months is worth far more than a walk-in who visits twice, so you can afford to outbid a restaurant for the same prospect’s attention. That is the whole game, and it is why marketing a recurring line behaves completely differently from marketing a restaurant.
One caution: do not confuse this model with meal-kits or 10-minute grocery delivery. The famous flameouts — Blue Apron, Freshly, the quick-commerce names — were a different model entirely (the customer still cooks, or sub-10-minute delivery economics that never close). Cooked, planned, prepaid, recurring meal plans are the opposite, and the category’s revenues are rising, not falling. Do not let a skeptic conflate the two.
The real economics — including the part nobody warns you about
I have built and sold food brands; one of them hit roughly $200,000 a month by month four on this exact model. So let me be precise about where the money actually is, and where the trap is.
Food cost: 24–32% is achievable, but only if you measure it
The target is a blended food cost around 24%, not the 30% most operators assume is the floor. The catch: most operators do not actually know their food cost. On sales calls I have seen a real $600K/year restaurant running food cost near 50% and the owner had no system to see it — a single dish came in at 47% because someone was buying pre-peeled boiled eggs, invisible until we put it on a spreadsheet. If you are going to add this line, the first discipline is counting food and beverage cost properly, dish by dish.
Procurement: bulk buying is a ~30% lever
When you cook in volume, you matter to a supplier the way ten small restaurants do. In one real test, pure price comparison across suppliers — ordering each item from whoever was cheapest, with no negotiation at all — cut input cost by around 30%, dragging food cost from ~40% down to ~28%. Before you negotiate, you compare. (And when you do negotiate, do it as a partner, not a hostage.)
The retention problem: novelty fades into habit, or it churns
Here is the part the cheerful blogs skip. Monthly churn on meal-plan subscriptions typically runs 10–15%, which means average retention is only eight to fourteen months. People sign up on novelty — “I’ll never cook again!” — and then the novelty wears off. Either the food and the routine become a genuine habit, or they cancel. So your gross customer value of roughly $2,000 only materialises if you defend retention, and your cost to acquire a customer has to stay well under it — call it $100–300 to keep the unit economics safe.
This is the single biggest reason operators underestimate the line: they model the first month’s revenue and forget that acquisition discipline is the entire game. If you cannot acquire customers profitably and keep them, the prepaid model’s beautiful margins never show up in the bank account. Think in Contribution Profit — cash in, minus VAT, returns, food cost, and ad spend — not in sign-ups. (For the deeper margin map, see where the margin actually lives in catering and how to optimise customer acquisition cost.)
The step path: from idle week to first subscribers
You do not need a brand, an app, or a paid-ads budget to start. You need one menu and your first five customers. Here is the order.
The forced-idle trigger. Pick the days your kitchen already sits underused — usually mid-week — and ring-fence them for the line. You are not adding hours; you are filling empty ones. This is what keeps the cost incremental.
Build one week’s menu. A small set of dishes you can cook in multiples, with food cost counted per dish before anything else. Five to seven recipes is plenty to launch. Do not over-engineer the menu before you have a single customer.
Sell to your warm list first. Past event-catering clients, regulars, local businesses, friends-of-the-kitchen. These people already trust your food. A handful of them, prepaying for a week, is your proof of concept — and your first cash.
Add gym and trainer referrals. The fastest source of meal-plan customers is a local gym or personal trainer whose clients already want “eat clean without cooking.” Structure it as a referral cut or free trial meals for their members. This warm-partnership path, not cold ads, is how you get from five to fifty.
Only then think about paid acquisition. Once you know your real food cost, your real retention, and your real cost to acquire one subscriber, you can scale with ads. Not before — paid traffic into a leaky, unmeasured line just burns cash faster.
What NOT to do
Do not open a new location to do this. The entire advantage is the sunk kitchen. A new lease throws it away.
Do not launch on a marketplace and call it a meal-plan business. They take ~30% and keep your customer’s contact details. You would be renting the one asset that makes this model work.
Do not cook to order. The margin comes from batching a fixed menu. If you let every customer customise everything, you have rebuilt a restaurant with worse logistics.
Do not scale ads before you measure. Acquire your first customers organically, learn your real numbers, then turn on traffic. Marketing cannot fix a line whose food cost and retention you have not yet pinned down.
Do not treat retention as a given. Novelty churn is real. Build the menu rotation and the routine that turn a trial into a habit, or your LTV stays theoretical.
Where to start
The opportunity is real and the on-ramp is genuinely cheap if you already own the kitchen. The hard part is not the cooking — it is winning and keeping those first paying subscribers, because acquisition is where most operators stall. If you want the exact organic playbook for landing your first prepaid customers — the warm-list scripts, the gym and trainer partnership structure, and the menu-and-pricing setup that gets you to break-even — that is what the First-Customer Kit is built to do. It is the operator’s shortcut past the part where this usually stalls.
Frequently asked questions
How many subscribers do I need to break even on a meal prep line?
On a kitchen you already run, roughly 10 to 35 prepaid subscribers — because your rent, head chef, and certifications are already paid for as sunk costs. The new line only has to cover its incremental costs (a packer, consumables, some equipment), so a worked example lands around 18 subscribers. Replace the illustrative figures with your real per-market price, food cost, and packer wage to get your own number. Every subscriber past break-even is contribution profit.
Is adding a meal prep line cheaper than opening a second restaurant?
Far cheaper, and lower risk. A second restaurant means a new lease, fit-out, inspection, and crew — a whole new set of fixed costs you have to cover from zero. A prepaid meal-plan line runs in the idle weekday hours of the kitchen you already own, so you only pay incremental costs. That is why the break-even is a couple of dozen subscribers instead of a couple of hundred customers.
What food cost should I target for a prepaid meal plan?
Aim for a blended food cost around 24%, not the 30% most operators assume is the floor. You get there two ways: cooking a fixed menu in batches (volume buying and prep), and comparing suppliers before you order — in one real test, price comparison alone with no negotiation cut input cost by about 30%, moving food cost from ~40% to ~28%. The prerequisite is actually measuring food cost per dish, which most operators never do.
Isn’t delivery what kills the margin on meal plans?
Only per-order delivery does — the UberEats single-drop model, which is the most expensive kind. A prepaid meal-plan line uses a clustered, off-peak route where each customer takes four or five dishes at once and one loop covers dozens of stops. That is an order of magnitude cheaper per meal, and you skip the ~30% marketplace fee entirely. Operators who think delivery kills margin are usually pricing the wrong delivery model.
How do I get my first meal-plan customers without spending on ads?
Start warm. Sell first to people who already trust your food — past event-catering clients, regulars, local businesses. Then add referral partnerships with local gyms and personal trainers, whose clients already want clean food without cooking; structure it as a referral cut or free trial meals for their members. This warm-and-partnership path gets you from your first five subscribers to your first fifty. Turn on paid ads only after you know your real food cost, retention, and cost to acquire one subscriber.
What’s the biggest mistake operators make adding a meal prep line?
Underestimating retention and acquisition. Monthly churn typically runs 10 to 15 percent, so subscribers stay eight to fourteen months on average — people sign up on novelty and cancel when it fades. The gross customer value of around $2,000 only materialises if you defend retention and keep your cost to acquire a customer well under it ($100 to 300). Operators model the first month’s revenue, forget the churn, and scale ads into an unmeasured line. Acquisition discipline is the whole game.
“Paweł, Paweł, come quickly, you have to see this!” – my Aga called out to me with a tone that mixed disbelief and fear.
“What happened? I’m kind of busy,” I replied, thinking it was just another internet drama, something like: “a politician said something compromising or outrageous” – just another day in the world.
She showed me her phone with a news article.
“Paweł, the whole world is being locked down. There’s some epidemic that came to us from Wuhan, China.”
We’d already had other epidemics before: bird flu, mad cow disease, swine flu, and others. My first thought was that it was just another media-driven topic. Surely, there was no way they could lock the entire world at home, right?
The information had been circulating earlier, but at a much lower intensity. We don’t watch TV. At the time, we were on a family trip to Gdańsk, relaxing and working by the sea. Most global news had flown under our radar until it began to affect us directly. Suddenly, news of the epidemic was everywhere: our Facebook feeds, Instagram, email inboxes. The world froze.
The government announced the introduction of a state of epidemic threat:
“We are implementing safety measures in connection with the coronavirus, including restrictions on movement. However, the obligation to stay at home will not apply to commuting to work or taking care of essential daily needs such as buying food, medicine, or caring for loved ones. We want Poles to avoid putting themselves and others at risk of coronavirus infection.”
We stared at each other in silence, reading more articles and comments in disbelief. When it finally sank in that this was real and already decided, I didn’t feel a fear of suddenly getting sick. I had read that those most at risk were people with weakened immune systems, mainly the elderly and those with obesity.
Thoughts began to sprout in my mind:
“How will work look now?”
“How will kids go to school?”
“Will there be any problems with food availability?”
Few days before the lockdown. On our trip in Gdańsk.
The Only Constant Is Change
Closed restaurants, shops letting in one person at a time, and massive queues outside. The situation escalated day by day.
Business and startups are my interests, so I was curious to see how the market would respond to these events. The quick commerce category exploded—food delivery in 10 minutes became the new trend.
In Europe, Gorillas led the way, becoming the fastest company in history to achieve unicorn status, valued at $1 billion just 9 months after its founding.
Restaurants that didn’t go bankrupt and were fighting to survive turned to marketplaces to enable deliveries to their customers. However, the cure turned out to be worse than the disease. Marketplace commissions, reaching up to 30%, effectively wiped out any margin for restaurants. It became clear that customers using these apps stayed loyal to the marketplaces, not the restaurants. Attempts to encourage direct orders bypassing intermediaries largely failed.
Millions of hospitality workers lost their jobs. A significant portion switched industries, for example, becoming couriers, as demand for them surged due to the rapid growth of e-commerce. Once restrictions were lifted, the food service industry faced a severe challenge: a lack of skilled staff, many of whom had found work in other sectors.
Because supply (chefs seeking jobs) was smaller than demand (restaurants looking for chefs after reopening), wages rose dramatically, in some cases doubling within 2–3 years.
Geopolitical events, like the war between Russia and Ukraine, drove up fuel and energy prices, significantly affecting food truck businesses and food startups. This, in turn, caused logistics costs—and consequently food prices—to skyrocket. Restaurant prices, both for dine-in and delivery, rose to a level that made eating out unaffordable for much of the population, influencing many to seek affordable meal prep options or start a catering business that offers value. While weekends still saw people visiting restaurants, weekday traffic and orders dropped, as wages failed to keep up with inflation.
The world was changing before our eyes. Alongside growing challenges, new needs emerged. Everyone realized how precious health is. Who among us doesn’t know at least one person saying they need to take better care of themselves, whether through exercise or healthier eating? Around 70% of people say they’d like to eat healthier, which is a significant opportunity for starting a health-focused food business in 2025. At the same time, the number of people with dietary restrictions increased significantly. The most common are avoiding meat or all animal products, but there’s also a growing demand for foods tailored to religious needs, like halal, or fitness goals, like high-protein meals.
Designing a menu tailored to individual needs is an art—like building a LEGO set with a million pieces, many of which are damaged or don’t fit. This is particularly important when considering how to start a meal prep service that meets diverse dietary needs. There are more food products available now than ever, but finding, selecting, calculating, and cooking the right ones is no small feat. It’s like searching for a needle in a haystack—there are endless options, but very few match our needs and lifestyle. Without enough time and knowledge, creating a proper daily menu feels almost impossible.
We dream of a beautiful treehouse, but amidst the chaos of life, it often ends up as a mess, leaving us feeling far from satisfied.
Switching to remote work disrupted the monotony of our daily routine—the grind of spending an hour commuting to work, 8 hours at a desk, another hour traveling to the store, an hour shopping, an hour cooking, an hour cleaning, and then off to bed, only to repeat it all again.
It turned out that for many, remote work was far more convenient, and commuting to the office wasn’t as necessary as we once believed. Similar changes occurred in our approach to shopping and eating—we suddenly realized: “Someone else can do this for me, and I gain time for the things I enjoy.”
The Aftermath: Four Key Trends Reshaping How We Eat and Impacting Food Business Ideas in 2025
Health
Yoga studios, CrossFit boxes, and gyms are sprouting up like mushrooms after the rain. Marathons have become a staple of urban life, and sales of supplements are breaking records. Moreover, 70% of people actively seek healthier food options. Eating is no longer just about taste—it’s now a way of taking care of both body and mind.
Convenience
We live in the age of subscriptions—from Netflix and Spotify to gyms and phones. It’s all about the “set it and forget it” mentality. Why? Because it’s convenient. We want to minimize effort, and convenience now dominates our culinary choices as well, pushing the growth of food startups focusing on ready-made meals and meal prep services. We don’t want to plan meals or cook when we can have ready-made solutions delivered right to our door.
Transparency
It’s not just about how food is produced—whether it’s ethical, sustainable, or where it comes from. While we claim these issues matter, companies like Shein, notorious for breaking every standard, continue to thrive. In food, transparency has become more personal: What exactly is in this product? Does it contain sugar? How much protein does it have? Is it vegan? Consumers demand clear, specific information to make informed decisions, which is crucial for anyone starting a food business that aims for transparency.
Time-Saving
Fast. As fast as possible. We live at the speed of immediacy. Smartphones are with us 24/7, and platforms like TikTok, Instagram, and Facebook have taught us that everything needs to be “here and now.” If I can’t order something with two clicks, I just scroll on. Why drive to the store, sit in traffic, or battle crowds when a courier can do it for me? This need to save time fuels the growth of delivery apps and platforms, presenting an opportunity for starting a food business focused on quick, convenient delivery.
More than half of us changed our eating habits after the COVID pandemic, but only one in three people is satisfied with the offerings in restaurants and stores. Most of us feel misled about the composition and contents of products, clearly indicating a need for transparency and clear product labeling: source .
We are often bombarded with choices of dishes, how do we decide on the single best one?
Is It Possible to Tame the 4 Horsemen of the Apocalypse?
At this point, it was clear to me that the modern food business is not tailored to the needs of our times. I analyzed all the business models available in the market. Each of them fulfilled at most two out of the four expectations.
Food delivery isn’t as fast as it might seem. Apps are designed to showcase restaurants, not dishes. Who’s interested in restaurants? Show me the menu and don’t make me sift through a Yellow Pages of businesses! From the moment you place an order, delivery can take up to two hours, and the food arrives barely warm. You know what? I order food because I’m hungry now , not in two hours!
Is it better at a restaurant? My wife can’t eat dairy. Ordering is a real nightmare. Good luck finding out which dishes don’t contain dairy. Waiting times and prices make it more of a weekend pleasure than a daily solution.
Other models have emerged too, such as meal kits popularized by companies like HelloFresh, Blue Apron, and others. These are fantastic for people who have time and enjoy cooking. You can order one for the weekend and spend time cooking with family and friends. However, for people aged 20-40 focused on their careers, this solution is entirely unsuitable. They’re simply not home and don’t have time to cook during the week.
Then there’s the meal prep category, which is essentially the same as buying ready-made meals in the supermarket, except they’re delivered to your home. Meals arrive once a week. Are they still fresh and healthy after a week? Let’s answer that question ourselves, especially since some companies deliver frozen meals. How is this convenient? Are you going to bring a carton of frozen dinners to work? And what about breakfasts or something for the evening? There’s nothing. One way or another, you still have to go to the store. So why not just buy ready-made meals there in the first place?
Estimates for such a meal for two adults and a child are as high as $100.
Then it hit me. What we need is not mass production but mass personalization ! Mass production allows for creating meals at a price affordable to the average person, while personalization ensures that the diverse needs of each of us are met.
While you’re fighting to survive, they’re taking 30% of every sale, and you don’t even have access to your customers’ email addresses or phone numbers to contact them directly.
Let’s pause here for a moment. What needs? Food is just food, right? I was hungry, now I’m full—mission accomplished. This couldn’t be further from the truth. Each of us has specific needs and expectations when it comes to eating.
Some people look to food to improve their physique, whether to lose weight or gain muscle. Others, for religious or ideological reasons, exclude certain products, like meat, pork, or require that meat be produced in a particular way—halal, for example. Then there are those with allergies, like nuts, or conditions like celiac disease, which make them unable to eat gluten. More and more people are noticing lactose intolerance. We avoid bloating products like onions, garlic, or brussels sprouts.
Running a diet catering service taught me that a significant portion of clients detest olives—it’s the most common exclusion in primate.diet , though I have no idea why. If any olive-haters could explain this in the comments, I’d be grateful.
On top of all that, we all want to eat deliciously without overspending. Add to this the need for variety; sometimes we want something portable, like a smoothie, while on cold days we crave a warm soup. Factor in calorie counting, the wide-ranging needs of our families, leftovers in the fridge, and the eternal question: “What should we have for dinner?”
What we end up with is a multidimensional Rubik’s Cube we try to solve every day. And rarely with fully satisfying results.
Diet Catering – the Holy Grail of Gastronomy
The perfect solution would be hiring a personal chef to cook exactly what we want for the entire day, in the exact portions we need, without the dreadful ingredients we want to avoid ( begone! cried olive haters in unison). However, having a dedicated person shopping and cooking for just one client is far from economical—most people simply can’t afford it.
But what if a single chef could cook for 10, 100, or even 1,000 pre-planned customers? Since the chef knows in advance what to prepare, they can plan production efficiently and do everything once instead of dozens of times throughout the day, as is typical in a restaurant.
It takes the same amount of time for a chef to put one chicken breast in the oven as it does to cook an entire tray of 100 breasts. The same applies to soup: making a pot for one person or a massive pot for hundreds takes nearly the same effort. What’s more, cooking in such large quantities allows for the use of kitchen machines that simplify and speed up the process. Peeling three potatoes with a machine? Not worth it. Peeling 300 kg of potatoes? Absolutely!
Prepared food for my primate.diet clients
With daily meal kit deliveries, traffic jams can be avoided, and it’s much cheaper than UberEats couriers delivering single dishes. First, planned deliveries for diet catering are made outside peak hours. Second, refrigerated trucks can deliver all the packages at once.
Imagine a service where fresh meal sets are delivered daily or every other day, consisting of 3 to 5 meals per day. These sets are balanced in terms of macronutrients, calories, and allergens, so you receive your perfectly tailored Rubik’s Cube of meals. Thanks to economies of scale and far more efficient production, companies can often offer such sets, including delivery, for the price of a single dish at a high-end restaurant.
Here’s how it works in a nutshell: The client orders online—via a website or mobile app. Every day, they receive a personalized meal set that helps them effortlessly achieve their goals. The subscription model ensures they don’t have to think about anything. The business owner gains a base of loyal customers ordering five meals every day. Without geographical restrictions, the business can reach a significantly larger audience, and simpler, more cost-effective production allows for higher profit margins.
Sounds impossible? Welcome to diet catering.
The client’s perspective:
Comparing food business models from a customer perspective.
Legend for the Client Table
Do I need to shop?
Indicates whether grocery shopping is necessary to supplement the delivered food.
Values: Yes, No.
Cost
How expensive the given model is from the client’s perspective.
Values: Cheap (affordable), Medium (mid-price range), Expensive (high cost).
Waiting time
How quickly the food is ready to eat.
Values: 5–10 min (Ready), 30–60 min, 60–120 min.
Health customization
How much the food supports health goals.
Values: Low (Taste most important), Medium (Balanced), High (Healthy).
Can I order online?
Availability of online ordering.
Values: No, Via marketplace, Direct.
Is the food fresh?
Freshness of the delivered food.
Values: Fresh, Chilled, Frozen.
Do I need to cook?
Indicates whether meal preparation is required.
Values: Yes, No.
Ingredient transparency
How much information about ingredients and nutritional values is provided.
Values: Ingredients only, Ingredients and allergens, Full transparency.
Supports dietary goals
Indicates whether the service supports specific dietary needs.
Values: No, Partially, Yes.
Effort with cleaning/dishes
Effort required after eating (e.g., washing dishes).
Values: None, Minimal, Yes.
Effort in meal planning
Effort needed to decide what to eat.
Values: None, Minimal, Moderate, High.
The business owner’s perspective:
Comparing food business models from a business owner’s perspective.
Legend for the Business Owner Table
Interior project cost
Reflects the investment required to create a suitable interior or space for meal preparation.
Values:
Low : Minimal or no investment (e.g., delivery services).
Medium : Requires basic preparation (e.g., food trucks).
High : Significant investment in atmosphere and customer experience (e.g., dine-in restaurants).
Property cost
Represents costs related to securing a space for business operations.
Values:
Low : Operates from inexpensive locations, such as warehouses.
Medium : Requires mobile permits or mid-range locations.
High : Requires premium locations (e.g., city centers with high foot traffic).
Service range
Defines the geographical area the business can effectively serve.
Values:
Local : Limited to the immediate surroundings.
Neighborhood-level : Covers a specific area of the city.
Regional/National : Scalable to larger areas, potentially across cities or regions.
Profitability (profit margin)
Reflects the percentage of revenue that translates into profit after covering costs.
Values:
5–15% : Low to moderate margins (e.g., restaurants).
Medium : Requires functional but portable equipment (e.g., food trucks).
High : Fully equipped kitchens for large-scale production (e.g., large-scale diet catering).
Payment timing
Indicates when customers make payments for the service or product.
Values:
After service : Payment is made after using the service (e.g., restaurants, fast food).
Upfront : Payment is made in advance (e.g., subscriptions, online orders).
Feedback collection mechanism
Evaluates the effectiveness of collecting customer feedback.
Values:
Low : General reviews without detailed information about dishes.
Medium : Feedback collected via delivery platforms.
High : Direct and frequent feedback from customers about specific meals or experiences.
Orders per customer annually
The average number of orders placed by a single customer in a year.
Values:
Varies depending on the business model (e.g., 5–10 orders annually for fast food, 25–40 orders annually for diet catering).
Average order value
Represents the typical amount spent by a customer on a single order.
Values:
Depends on the business model (e.g., $5–$15 for fast food, $20–$60 per set for diet catering).
Customer lifetime value (LTV)
Calculates the total revenue generated by a customer over their relationship with the company.Values:
LTV = Annual orders × Average order value (e.g., $25–$150 for fast food, $500–$2,400 for diet catering).
Direct customer contact
Describes the level of interaction with customers.
Values:
Low : Limited or no direct contact (e.g., dine-in restaurants).
Medium : Partial interaction through platforms (e.g., delivery platforms).
High : Direct contact with the customer (e.g., diet catering).
Winners Rising from the Ashes of the Fallen
The market has exposed and verified the weaknesses of less effective business models. The failures were nothing short of spectacular:
Freshly : Acquired for $1 billion by Nestlé, only to shut down due to unprofitability. No matter how big the scale—this model simply doesn’t work. Source
Gorillas : Initially grew at a breakneck pace, but was acquired by Turkey-based Getir, and both eventually disappeared from the market. Getir now operates only in Turkey. Source
Chef’d : Once valued at $150 million, now completely gone. Source
Munchery : Operated in cities like San Francisco, Seattle, and New York but suddenly declared bankruptcy due to insurmountable debt. Source
Plated : Acquired by grocery chain Albertsons, then shut down. Stakeholders decided they could sell ready meals directly in stores instead. Source
Blue Apron : Year after year, reports losses. They are now exploring options for selling the company or merging to survive. Source
In the diet catering sector, however, the situation is completely different.
Example of number of packages for customers at primate.diet
The number of companies achieving impressive revenues in this market is growing. NTFY , Maczfit , and Kuchnia Wikinga are just a few businesses surpassing $50,000,000 in annual sales (estimated data).
Their marketing rivals that of giants: hiring celebrities, sponsoring marathons, or in the case of Kuchnia Wikinga , even sponsoring the national football team.
Despite starting much later and without such financial backing, I managed to create a diet catering brand that reached $200,000 in monthly revenue by its fourth month of operation.
If you also want to start your own food business, make sure to watch the free online training.
Why Were We Deceived? For Money.
We’ve been made to believe that healthy eating is complicated. There’s an endless stream of new trends: low-fat, low-carb, keto, paleo, intermittent fasting. It seems that to run a healthy food business, you must serve only goji berries in coconut milk sprinkled with acai. The common belief is that healthy food is expensive and overly fancy.
What’s the truth? It’s much simpler—but simplicity doesn’t generate profits for corporations constantly looking for new ways to sell their processed products.
“Healthy eating” boils down to just three elements:
Quality – Unprocessed food. An apple picked from a tree, not dropped into a can of syrup. A carrot pulled from the ground, not created in a lab. Simple and short ingredient lists. What should ham contain? Meat. If it contains anything else, it’s not meat—it’s a meat-like product.
Proportions – Everything tastes better in the right proportions. It’s not about one meal; it’s about the proportions of everything you eat throughout the day. This applies to vitamins, minerals, and macronutrients. A little bit of everything. Even an app can calculate that for you.
Quantity – The dose makes the poison. Even water can be toxic if you drink too much—6–10 liters within a few hours can be lethal. It’s the same as with water in a bathtub. If you fill it faster than it drains, the tub overflows. If you fill it slower than it drains, the water level decreases. Nutrition works the same way. Eat too much, and you gain weight. Eat too little, and you lose weight. That’s it. No magic. It doesn’t matter whether the calories come from fats, carbs, or alcohol—if there’s a surplus, your body stores it. If there’s a deficit, your body burns stored resources.
Has anyone ever said, “I became a millionaire thanks to food marketplaces”? Yes—their founders and investors who sold shares when they went public. It certainly wasn’t the entrepreneurs or restaurant owners whose backs these marketplaces were built on.
Many small restaurants have great potential. But what if they are competing with the whole restaurant world?
Marketplaces assure small businesses that they’ll gain visibility, but the truth is quite different. The system is designed in a way that makes it impossible for you to stand out. They shove you into generic categories, force you into price wars with competitors, and take your customers in the process. While you’re struggling to survive, they’re taking 30% of every sale, and you don’t even get access to your customers’ email addresses or phone numbers to contact them directly.
As programmers say, “it’s not a bug; it’s a feature.” These systems are intentionally designed to work against you. You become dependent on them, which translates to greater profits for them.
You Can’t Blame Someone Who’s Spent Their Whole Life Looking Through a Covered Window
Society has a romantic vision: dreams of owning a food business, usually a restaurant, where the owner meets friends, sips wine on the terrace, and watches a beautiful sunset. A place to show off to friends and enjoy good times. But this dream quickly turns into a financial nightmare.
If at this point you feel like you’ve done something wrong—don’t. The sheer amount of information we’re bombarded with every day, promoting this vision, makes it easy for even the most astute observer to be misled.
I met a couple of cattle farmers who grew tired of agricultural production and decided to pursue their dream of owning a food business. They had no idea how to manage it. “Luckily,” they took over a business along with its staff, including a manager, head chef, and cooks. It seemed like their “promised land,” and they thought they’d soon be able to transition fully from profitable yet exhausting farming to gastronomy.
They reached out to me because, shortly after the takeover, the business became unprofitable. When I started talking with them, troubling details came to light: a 40% food cost, relying solely on one supplier, a business effectively run by the employees, and a contract structured so that the manager didn’t have any performance-based compensation.
The staff assured them it was temporary, that it wasn’t the season, that it was because they were using the highest-quality products, among other things. The myths surrounding this industry are plentiful—I’ve detailed them extensively in “The 23 Biggest Myths About About Catering Management ” Ultimately, the manager and the team convinced the owners to change nothing, saying the situation would soon turn around. And so, they were left with a romantic dream and a financial nightmare.
A visit to one of my favourite cafes in Warsaw.
Some people buy yachts, others buy cars, and some buy restaurants. They all share one thing in common—most of them end up pouring money into these ventures.
If you’re serious about building a profitable food business, a restaurant—whether it’s fast food, delivery-only, or dine-in—is not the best idea. Statistically, it’s one of the least likely ventures to succeed. 60% fail within two years, 80% within five years , and due to the lack of scalability, it has the smallest chance of ever becoming even a million-dollar business. source
Truths Are Universal
They are timeless and the same across all cultures. Whether we live in the Middle East or the far North, we all want more time for ourselves and our families. We want not only to live longer but also to be healthier, full of energy, and to inhabit strong, capable bodies. We want to avoid doing things we dislike, such as sitting in traffic when a courier could handle it, cleaning when it’s unnecessary, or cooking when we could simply eat something ready-made. Ultimately, we want to feel secure—because it’s our lives at stake. We want to know what we’re putting in our mouths and how it was made.
Traditionally, restaurants have had three main cost categories: food (typically 28–32% of total costs), wages (another 28–32%), and occupancy or property-related costs (22–29%). Based on unit economics, a restaurant should operate within a range of 78–93%, leaving a profit margin of 7–22% (franchise restaurants also pay additional franchise fees to their corporations). Source
Often when I look at the food market I am overcome with reverie.
The system is built in such a way that the property owner earns, the franchisor earns, the marketplace earns, but the restaurant owner—who comes up with the idea, puts in the work, invests capital, and takes the most risk—if they profit at all, it’s minimal. And when something goes wrong (like restaurant closures during COVID), they lose their lease, franchise agreement, or partnerships and are replaced by another cog in the machine.
You don’t build a house on rented land, and the same goes for not basing your business’s future on other entities. Did you know that McDonald’s doesn’t actually make its money selling hamburgers? They profit from real estate. They own the land their restaurants are built on and rent it out to franchisees. They figured this out long ago and have consistently executed this strategy over the years. Source
It’s up to us whether we keep lining the pockets of corporations profiting from the culinary passion of entrepreneurs. We need to build our own, independent channels for connecting with customers and meeting their needs in the simplest and most convenient ways. Selling through your own website, mobile app, phone, or email—these are tools no one can take from you.
Platforms like Instagram, Facebook, WhatsApp, and YouTube could decide tomorrow that your account no longer complies with their policies and shut it down. This doesn’t mean you shouldn’t use them—paid advertising on these platforms can rapidly scale your business. However, if you’re able to contact your customers directly, without intermediaries, your revenue will be secure.
I’ve written more about this in this article.
A Personal Chef at Your Fingertips—Or Rather, Your Smartphone
Delicious, customized, and affordable food for everyday life. Who wouldn’t want a personal chef? Everyone would, but few can afford one. Diet catering is essentially a personal chef, made accessible to the average person thanks to economies of scale—cooking for dozens, hundreds, or even thousands of people every day.
This model works brilliantly for entrepreneurs because it works brilliantly for customers. Let’s look at how meeting customer needs leaves more money in the entrepreneur’s pocket while allowing for rapid business scaling.
Mass personalization is simple and cost-effective—if you know how to implement it. In diet catering, anywhere from a few to several hundred different meals are prepared daily. This extensive menu ensures that each customer can choose an optimal meal plan that meets their expectations not only in terms of taste but also by excluding ingredients they don’t want or can’t eat, fitting their budget, and balancing calories and macronutrients. Remember the Rubik’s Cube? This is what solving it looks like in practice.
The different colours represent the customers and their food choices.
Are you thinking, “But how can you reconcile all that? There are more possible combinations than stars in the sky!” I completely understand. When we started, we faced the same challenge, which is why we decided to solve it. Let me be blunt—without the right tools, optimizing such a selection manually is almost impossible.
At Flambia, it took us 5 years to create and refine an algorithm that considers all these factors, aligns customer needs with production realities, and delivers a seamless solution. By combining production experience, programming, and combinatorics, we made it possible—and ultimately solved this challenge with dedicated software.
Beyond matching their preferences, customers expect affordable prices—ideally only slightly higher than the cost of cooking at home—and free delivery, because, as we know, no one likes paying for it. If you’ve worked in the food service industry, you might think, “That’s absolutely impossible, I know how much it costs to produce a dish in a restaurant.”
Exactly—let’s take a closer look at the differences and why a meal in diet catering can be cheaper than cooking at home.
Diet catering clients order 4–5 meals a day. This makes the number of meals produced enormous, even at a relatively small scale. In my catering service, with 2,000 clients, the kitchen effectively produces nearly 10,000 meals daily.
Labor
A restaurant chef preparing soup can only make enough for a few, at most a dozen, customers. A chef in diet catering uses a massive kettle capable of cooking 500 liters of soup at once. A restaurant chef must prepare fresh meals for customers ordering at various times, whether dining in or for delivery, performing the same tasks multiple times a day. A catering chef prepares a dish only once.
In a restaurant kitchen, prep work—washing, chopping, peeling, slicing—is done manually. At the scale of diet catering, automation becomes cost-effective, so cutting, slicing, peeling, washing, shredding, and grinding are all handled by kitchen machines. This allows the chef to focus on what truly matters—ensuring great flavor and skillfully combining ingredients.
Utilities
Thanks to this production model, the labor, electricity or gas consumption, and food waste per meal are incomparably lower. Moreover, processes are standardized, ensuring better and more consistent flavors.
All of this allows the final product to be offered to customers at more attractive prices than they could achieve by cooking at home. Additionally, the entrepreneur’s margin is significantly higher, reaching 50% or even 60% per dish while maintaining excellent taste and high quality.
Deliveries
Another element that makes diet catering cost-efficient is its delivery model. In restaurants, couriers operate on a “point-to-point” model. This means they deliver one order, return to base, and pick up another. In diet catering, couriers use a “milk run” system—they take all packages at once and deliver them sequentially to different points.
They operate outside peak hours—either early in the morning before people leave for work or late in the afternoon or evening when people are home. This means they avoid traffic and can move around the city much faster. With greater load capacity, they can handle up to 150 orders at a time , compared to a restaurant courier’s 5— 30 times more!
Moreover, delivery points are predetermined, allowing for optimized routes. Considering that each customer orders 4–5 meals a day, compared to 1–3 from a restaurant, the cost of delivery per meal is negligible compared to the traditional delivery model used by apps like UberEats. While UberEats’ delivery radius is limited to a few kilometers, diet catering can cover an entire medium-sized city right from the start. As the business scales, intercity deliveries become feasible, thanks to specialized refrigerated fleets.
In my catering business, meals are delivered daily across Poland, covering hundreds of kilometers—all prepared in a single central kitchen.
Food packages for clients of my two diet catering companies: Cebulka and Primate.
Property
One of the biggest cost drivers for restaurants is the property itself. This isn’t the case for diet catering. When I started, we operated out of a friend’s apartment. Of course, this isn’t scalable, and we could only handle up to 30 packages a day. We quickly had to find something professional.
Here lies a fundamental difference between the two models—restaurants must be close to the city center. If it’s a sit-in restaurant, the location needs to attract foot traffic. If it’s delivery-focused, couriers need to avoid long distances. These locations are expensive.
Diet catering, however, only requires a spacious kitchen. That’s it. Industrial halls adapted for cooking are perfect for this model. Locations on the outskirts are far cheaper to rent and adapt than those in central areas. As a result, property costs are much less significant in diet catering than in restaurants.
This is what the food parcel preparation area looked like in the beginning.
Food Cost
Raw material costs are also incomparably lower, while quality is higher, because you bypass middlemen. At this scale, you don’t buy food from a store; you source it from specialized wholesale suppliers who deliver directly to your kitchen.
You’ll work with the same suppliers that serve supermarkets, which means significantly lower prices and a level of influence over product quality that most restaurants can only dream of. From the perspective of a supplier’s sales team, you’re worth as much as 10 restaurants . They’ll do everything they can to keep you as a client.
Taste
The most important factor for customers is taste. How many days in a row could you eat at the same restaurant before the dishes start to bore you—or worse, disgust you? Diet catering has a unique advantage: menus offer several to even hundreds of dishes daily. The larger the scale, the greater the variety.
This means customers can choose meals tailored to their preferences without ever getting bored. Such variety is impossible to achieve at home—no one has the time to cook five different meals every day.
It’s like comparing public transport to driving your own car. Remember when you didn’t have a driver’s license and taking the subway or bus didn’t seem like a problem? But now that you have a car, you’re willing to pay 10 times more for the comfort of traveling on your own terms, listening to your favorite music, at convenient times, and without the hassle of walking from a bus stop to your destination.
The same applies here—once someone experiences the convenience of diet catering, they’re unlikely to return to their old habits.
Examples of dishes in Cebulka diet catering
Feedback
One of the eternal challenges for chefs is figuring out where and how to gather structured feedback on what customers like and what needs improvement. Have you ever seen a situation where customers, when asked about their experience, politely said everything was fine, but never returned to that restaurant again?
In diet catering, customers can rate individual dishes, leave comments, and provide suggestions via the website or mobile app without feeling like they’re hurting the feelings of a kind server. This provides the kitchen with continuous feedback—not anecdotal insights from one or two customers but structured input from hundreds. This allows for consistent recipe refinement and improvement.
This is how customers rate dishes in our system. We receive the ratings immediately.
Upfront Payment
One of the biggest pain points in the food service industry is managing cash flow. Taking supplies on credit, worrying whether there will be enough customers this week to pay off debts to suppliers—these are constant stressors. On top of that, there are countless other expenses requiring cash flow: small or large repairs, replacing worn-out dishware, cleaning supplies, and many other hidden costs that add up to create a mountain of obligations.
While some of these costs exist in diet catering as well, there’s one significant difference—you have the guarantee that the service is prepaid. How rare is it to have a guarantee for anything these days? Yet here, you provide a service that has already been paid for! You purchase ingredients not hoping someone will come to try your dishes, but knowing that a customer has already paid for your product and labor.
The funds received from customers can be reinvested into the business, functioning as an interest-free loan.
Advertising and Marketing
What does advertising look like for a typical restaurant? It’s hard to call it efficient. Flyers, sidewalk signs, and Instagram posts are necessary but challenging to measure in terms of return on investment (ROI). For food delivery services using marketplace apps, you’re stuck paying for visibility boosts in the app. You have little control over these efforts, and their effectiveness is limited. Scaling your operations even threefold is tough, let alone growing 10x or 100x.
In diet catering, customers place orders conveniently via a website or mobile app. This makes it incredibly easy to track the user journey and understand which actions are effective and which aren’t. You have access to a full range of advertising tools, such as email marketing, affiliate marketing, or paid ads on YouTube, Facebook, or Instagram.
Thanks to paid ads, I was able to acquire 2,000 customers by the fourth month of operation. I knew exactly how much I could spend on acquiring a customer and reinvested the funds from prepaid customers to acquire even more.
If you’re interested in effective advertising strategies, read this article . In that article , I explain how to calculate their profitability.
Good for the Body, Good for the Soul
We’ve talked a lot about technical, measurable aspects, but how do you calculate happiness, avoiding burnout, being well-rested, or feeling like you’re helping someone? These intangible elements are crucial to all of us. When starting a business, we want it to be profitable, but we also hope to leave behind a legacy—something that speaks well of us to our families, friends, other people, and future generations.
Do you know the leading cause of death worldwide? Cancer? No, try again. COVID? Not even in the top ten. The answer is cardiovascular diseases, which account for 32% of global deaths. Roughly half of these illnesses are directly caused by poor dietary habits. That means 16% of all global deaths —about 8.5 million people annually —could be prevented with a healthy, balanced diet. That’s 23,287 people dying every day because they chose burgers, chips, and sugary drinks over your delicious, nutritious meals. Source , source , source .
I only indulge in such meals occasionally, but when that moment comes – I go all the way. 🙂
When I realized this, it became clear that this isn’t just about selling food or whether someone orders a small or large portion of fries. This is about delivering tasty, balanced meals that could mean thousands of children won’t grow up as orphans, and countless families won’t lose their siblings prematurely. Through food, you can help entire communities live longer and healthier lives!
Gone are the days of inhumane working conditions in the food industry—12, 14, or even 16-hour shifts. In diet catering, the production process runs like clockwork. Everything is predictable and planned in advance. This allows the team to work at a steady pace, complete their tasks, and go home, instead of scrambling during peak hours in an understaffed restaurant.
Another advantage is the positive impact on the environment. Couriers follow optimized delivery routes, minimizing unnecessary travel. Food preparation consumes far less energy, and waste is significantly reduced both in production and on the customer’s end, thanks to portioned meals tailored to daily needs.
Ride the Wave or Be Left Adrift
As you can see, diet catering is an appealing model for both customers and entrepreneurs. It’s cheaper, more convenient, faster, and better tailored to taste and health preferences. Unlike restaurant meals, often laden with excess fat to enhance flavor, diet catering offers a healthy and flavorful alternative—prepared by chefs who may not be nutritionists but know how to craft delicious and balanced meals. The vision of a personal chef available to everyone is not only realistic but is quickly gaining popularity as societal habits shift.
Looking at various markets, it’s clear there won’t be as many players in diet catering as there are restaurants. The first-mover advantage plays a significant role here. Whoever establishes this business first in a given region will quickly gain market share, achieve economies of scale, expand their offerings, and create enormous entry barriers for competitors.
If you don’t catch this wave now, you’ll be left adrift in the ocean with no choice but to float aimlessly.
Want to start a diet catering? Here’s what you should do next:
1. Book Your Strategic Conversation
Reserve a focused strategy session where we’ll discuss:
The potential of diet catering in your area.
The steps you need to take to create a predictable, profitable food business.
How to build a model that works for YOU.
2. Fill Out the Form Carefully
To get the most out of this session, we need to understand your current situation. Be sure to fill out the form accurately and thoughtfully —this is your chance to show you’re serious about making a change. Important: Only detailed and complete applications will be accepted for the call.
3. Prepare for a Game-Changing Conversation
This is your opportunity to get clarity, strategy, and answers. No hard pitches. No fluff. Just a clear plan for how you can take control of your food business and achieve predictable results. Book your spot now—spaces are limited.
I had some technical problems and couldn’t join the meeting.
I received impatient text messages: “Are you joining? We’re waiting for you. We need to talk.” It was the June board meeting where we were supposed to discuss sales results for the last period. Once I managed to join, there was nothing pleasant waiting for me. Everyone had stern faces, and the message was simple—sales are poor. Fixed costs are eating us alive. We need something to turn things around.
In the team, I am responsible for marketing and sales. I’d tried everything before—collaborating with Google Ads experts, Pinterest, influencers. We even took out ads on streetcars and buses, which are trendy among caterers. My stomach would knot up, as we were constantly spending money on advertising without results. I started wondering if doing nothing would at least save what we were already spending on customer acquisition.
While eating lunch one day, I found myself watching random YouTube videos. Autoplay was on, and since my hands were busy eating, I let the video play. It was something about physics, light concentration, and lasers. I wasn’t particularly interested, but thought, “let it play.” Then, the narrator said, “Light is harmless. But if concentrated into a single beam, it creates a laser that can cut through almost anything.” He went on about its industrial and medical uses, but it hit me—my efforts were like scattered sunlight. What I needed was to “focus” them into a single beam!
So, I chose Facebook Ads. First, the Meta platform includes both Facebook and Instagram, two of the most popular platforms. Second, these channels allow you to create demand, not just satisfy it, as with search engines. I decided not to rely on any agency, consultant, or external expert. I would learn everything myself, so if I failed, I’d only have myself to blame.
I joined groups of international Facebook ad specialists, was active on most forums, read tutorials, and bought highly-rated courses. I kept trying and spent money on both education and the ad budget. But the results still weren’t as expected. Eventually, I realized the problem wasn’t the ads.
Advertising, at its core, is paying an intermediary—Meta, in this case—to display the message we want to convey. There’s more to it, of course—algorithms, content matching, targeting—but ultimately, it boils down to three components:
Advertiser : Someone paying to display a message.
Platform (Facebook) : Interrupts people’s activities to show that message.
Customer : Does something unplanned, like buying your product.
An ad that doesn’t work is usually advertising a poor offer. Can you sell snow to an Eskimo? Sure, but it’ll take some extra incentives. You might be thinking, “but my offer is excellent; I made it myself!” I felt the same. The key is understanding that neither you nor I are our own customers, and we can’t rely on assumptions. By “offer,” I mean everything involved: product, service, price, delivery method. It’s about perceived value versus expected price. There is no such thing as an “objective price.” This is particularly evident in the restaurant business, where raw materials are only a small fraction of the final price customers pay. We pay for the chefs’ skill, unique experiences, ambiance, and so on. Whenever someone asks me, “what’s the one thing I can do to improve my ad effectiveness?” my answer is, “make your offer more attractive.”
So, I took my own advice. We analyzed everything we could do to lower the product’s price and increase customers’ satisfaction with the taste of the dishes. That’s how Cebulka Catering was created:
Traditional Menu : Composed solely of traditional dishes. First, it’s the most popular cuisine in Poland. Second, it has a lower food cost than those including imported ingredients.
Delivery Every Other Day : We only deliver on Mondays, Wednesdays, and Fridays. This raised concerns about freshness, but most caterers deliver similarly for weekends, and it allowed us to cut transport costs in half.
Menu of 14 Dishes Instead of 50 : This is faster to cook and thus cheaper. It’s also easier to remove dishes that customers don’t enjoy.
One Diet Plan—Classic : Eventually, a Meatless option was added. This allowed us to keep the menu short and costs low.
We launched in August 2023 with an offer of “PLN 39 for 3 dishes, 1000 kcal, free delivery.” Despite the very low price, we still had a 20-25% gross margin.
Results? The cost of acquiring a new customer dropped to 1/3 of what it was with our other brand! Of course, we earn nominally less on each day with Cebulka than with Primate.
However, the cost of customer acquisition dropped by almost 70%, compensating for the margin decline. It was time to create a repeatable method from this. And so, the Flambia Facebook Ads System was born. It’s still in use today, in both our business and the businesses of people I’ve trained or managed advertising for.
The Flambia Facebook Ads System method consists of four modules:
Business Assumptions : What defines profitable advertising?
Technical Configuration : How to make this system work.
Data Panel Configuration : Setting up the data in Facebook Ads to display the necessary metrics.
Creative Optimization : Creating effective ads.
Business Assumptions
In this section, we ask what makes advertising profitable. What should we aim for before even launching Ads Manager?
Starting Budget : The monthly budget should be at least 10 times the Customer Acquisition Cost (CAC).
Defining Customer Acquisition Cost : The acquisition cost should equal the Lifetime Value (LTV) of a customer.
Calculating Lifetime Value : LTV is always considered over a specific period, depending on how long we’re willing to wait for the investment to pay off. The longer we’re willing to wait for a return, the higher the value. A typical LTV period is one year. We calculate it by dividing the value of all transactions by their number in a given period. For example, Primate had 3101 customers over the year, who spent a total of PLN 6,384,642.36 with a gross margin of about 35%.
Use this information and optimize ads for Cost Per Result. The goal is not “maximum conversions,” but “maximum conversions at a set customer acquisition cost.” While this doesn’t guarantee conversions within the set cost, if the offer and ads are weak, no algorithm will make the cost desirable. What will happen, however, is that less will be spent on days when the algorithm can’t find an audience that meets the goal at the set cost. It’s better for your budget to go unspent than to be wasted.
Always optimize for purchase from the start. Facebook doesn’t need a warm-up or learning period. It has better information about us than we do ourselves. Are you optimizing for clicks or traffic? Facebook will find you clickers and visitors, but no one will buy anything.
Technical Configuration
This section ensures that our data pipeline is secure and information exchange is fast and complete.
Make sure the following options are enabled. Cookies transmit information about users, which helps algorithms better display your ads. With iOS blocking cookies, ad blockers increasing, and data transmission issues, much of this data is lost. If Facebook doesn’t know someone bought something, it assumes they didn’t buy. If it assumes they didn’t buy, it doesn’t show ads to that type of person. For this reason, we want 100% correct data. Check that all the following options are enabled.
The absolutely essential tool is the Conversion API . Here’s a brief explanation of advertising technology: imagine training a dog. It’s not very different from training an algorithm—you reward desirable behavior and withhold rewards for undesirable behavior. Imagine a situation where the dog sits as commanded, but you throw the treat where it can’t see it. The dog thinks it did something wrong and gets confused.
Configure a Custom First Purchase Conversion event. Why is this important? Facebook, like any other advertising tool, is designed to get you new customers. You don’t want to pay Facebook, Google or anyone else for selling to existing customers. Read more about this in the article. Why shouldn’t you look at buying? Because the attribution window is 7 days. What does this mean? If you acquire a customer with an ad and in 2 days they deposit money, that will also be counted as coming from the ad. We are interested in customers , not transactions.
Create audience groups. We will use these for targeting – to tell the algorithm who to pay more attention to and who to avoid. In the first instance, we want to reach people who know us, but only those who haven’t bought. We want to reach new customers:
A customer base – all the people who are on your list should be fed back to the audience via the API on a continuous basis. This is the most accurate data. Data should be passed along with transactional values (value-based audience)
Lookalike Audience 5% of Customer Base – 5% of people from the population most similar to those who made a purchase
Purchase 180 – people who have made a purchase in the last 180 days. This data will be less accurate and won’t have as much information as the above, but there’s nothing to further exclude us if Facebook didn’t catch someone above
Lead 180 – people who have left their contact details in the last 180 days. We don’t want to spend money to contact people we can reach for free.
Website Visitors 180 – people who have visited your website in 180 days
Instagram 360 – people who have interacted with your Instagram account in 360 days
Facebook 360 – people who have interacted with your fanpage in 360 days
Facebook Like/Follow – people who currently like or follow your profile
Setting up the Data Panel
Now that the data is collecting correctly, we now need to set up the panel to look at the data correctly. What we are interested in starts at the very top. The order of the data may vary from path to path. I show my setup below. In some shops it may look different, e.g. add to cart or start checkout then leave contact details (lead):
Amount Spent – The total amount spent on a particular ad. This is the amount of money you have spent on promoting this particular campaign.
First Purchase – The number of new customers you acquired from the ads.
Cost per First Purchase – The cost of acquiring one new customer generated by an advertisement. It is calculated by dividing the total amount spent on advertising by the number of First Purchase events.
Purchase ROAS (Return on Ad Spend) – The return on ad spend, expressed as the ratio of the revenue generated by the ad to the amount spent. If your ad generated £2,000 in revenue for a spend of £500, the ROAS is 4:1. I’ve talked about this before – two things are important to us – whether the campaign is profitable and whether it is fluid. Profitable is when the CPA is below LTV. Liquid is when the value of the first payment is higher than the cost of customer acquisition. Then we will never run out of money to advertise.
Lead Conversion Rate – The percentage of people who converted to the number of people who visited the landing page. This is a metric that shows how many of the leads acquired actually make a purchase. It is calculated by dividing the number of purchases by the number of leads acquired. This is an important metric because it allows you to assess the effectiveness of your campaign not only in generating leads, but also in converting those leads into actual customers. This answers the final, most important question – is my offer attractive? The minimum is 3%.
Leads – The number of people who have left their contact details (e.g. email) in exchange for something of value that you offer, such as an e-book or webinar. Never build a house on rented land. I wrote about this in the article
Cost per Lead – The cost of acquiring one lead. It is calculated by dividing the total ad spend by the number of leads acquired.
Lead Conversion Rate – The percentage of people who convert (e.g. purchase or leave data) to the number of people who visited the landing page. You create this metric by dividing Leads by Landing Page Views. This is the third important question on the path – is your offer consistent with your Facebook message and attractive enough for me to leave my contact details? The minimum is 20%.
Landing Page Views – Number of landing page views. Indicates how many times users who clicked on the ad visited your page.
Cost per Landing Page View – The cost per landing page view . It is calculated by dividing the total amount spent on advertising by the number of landing page views.
Outbound Clicks – The number of ad clicks that redirected the user to an external page (not directly related to Facebook).
Outbound CTR (Click-Through Rate) – The click-through rate on external links. It is calculated by dividing the number of clicks on external links by the number of ad impressions. This answers the second important question – are you encouraging people to take action and leave the site? The standard for video is 1-3%
Cost per Outbound Click – The cost per click on an external link. This is calculated by dividing the total amount spent on the ad by the number of clicks on the external link.
Video Average Play Time – The average time a video is played by users. As well as attracting attention, does the video make people watch it and take action?
3-Second Video Plays – The number of video plays lasting at least 3 seconds.
Scroll Stop Ratio – Scroll Stop Ratio . An indicator showing how many people stopped scrolling the page and stopped on your ad. You have to create this metric yourself and it is a ratio of 3 second impressions. This is the answer to the first important question – are you attracting attention? It is calculated by dividing the number of 3-second impressions by the number of impressions (ad impressions). The minimum is 30%.
Reach – The number of unique users who saw your ad.
Impressions – The total number of impressions of your ad. Can be greater than the number of unique users if the same user has seen your ad more than once.
CPM (Cost per Mille) – The cost per thousand impressions of your ad. It is calculated by dividing the total cost of the campaign by the number of impressions and then multiplying by 1,000. For Facebook advertising, we pay not for conversions, not for clicks, but for the number of views of our material. The unit of account is 1,000 impressions, i.e. unavoidable ad impressions. What does CPM depend on? We need to answer what is the interest of the platform. Facebook’s interest is that people spend as much time on the platform as possible. This will happen if the content is engaging for them. An advert is usually displayed every 4 posts. Let’s say each of us scrolls through 40 posts before we switch off the app. This means that Facebook has gained the opportunity to expose 10 ads. If it encourages us to scroll an additional 4 posts, it gains the opportunity to display an additional ad. To summarise: Display ad = Facebook product Longer time on the platform = Facebook sells more products (displays more ads) If you help Facebook make people stay longer on the platform because your content makes people happy – you’ll pay less per display because Facebook will have more products (ads to display) If there are a lot of businesses in the same category besides you, the number of ‘windows’ in which they can show you to that group of people is limited. Whoever pays the most will win. The more companies bidding for the attention of that particular audience, the more you will pay.
Display ad = Facebook product
Longer time on the platform = Facebook sells more products (displays more ads)
If you help Facebook make people stay longer on the platform because your content makes people happy – you’ll pay less per display because Facebook will have more products (ads to display)
If there are a lot of businesses in the same category besides you, the number of ‘windows’ in which they can show you to that group of people is limited. Whoever pays the most will win. The more companies bidding for the attention of that particular audience, the more you will pay.
Quality Ranking – A rating of the quality of an ad based on various indicators such as interactions, click-through rates, etc. A higher rating means a better quality ad compared to the competition.
Engagement Rate Ranking – An assessment of how engaged users are with an ad. A high rating means that the ad is more engaging than other ads.
Conversion Rate Ranking – An assessment of the conversion rate of an ad. A higher rating means that the ad is more effective at converting views into actions (e.g. purchases, sign-ups).
Creative optimisation
Here it’s all about what we have to communicate and who has to listen. If you don’t have anything interesting to say, then even if you were speaking to your ideal client, they won’t understand that you have what they are looking for. The other way round, on the other hand, if the message is one that takes my breath away, even though I hadn’t even considered your product before, there’s a good chance I’ll buy it. Let the one who has never bought anything unnecessary in his life just because I thought it was cool raise his hand.
Stage I: Before we have the winning creations
Our goal is to identify what reaches our audience as quickly as possible. We define a winning ad as one that has a minimum of 10 conversions at a cost below our target CPA, which is less than the LTV.
We use Campaign Budget Optimisation (CBO), or campaign-level budget optimisation. Why? Because Facebook has more data than we do about which ad set and which ad is likely to meet the target.
We should promote one offer per campaign. If we want to advertise ‘organise a wedding with us’ and ‘drop in for lunch’, these are two completely different offers. They should not be in one campaign or on one page.
We divide the campaign into creative angles. Each creative angle = a person ad set (ad set). The same product can be bought for different reasons. In catering, we have separate ad sets for people: Wanting to lose weight, Wanting to save time Looking for cheap food Fond of homemade flavours Do not eat meat
Wanting to lose weight,
Wanting to save time
Looking for cheap food
Fond of homemade flavours
Do not eat meat
You can give 5 texts, headlines and descriptions to each ad. I recommend doing this for each creative angle.
In the initial stage, try to make the ads as different from each other as possible. If I had to bet on which ad would work and which wouldn’t – I would lose all my money. The only solution is to come up with all sorts of things and see if they work. You really have no idea what might work. In our case, the absolute best-selling ad of all time was a simple phone photo of a crumpled bag standing on a table taken just like that, hand-held. It worked, I think, because people couldn’t imagine that a catering bag could be un-creased, instead of ironed like a stock photo, and a lot of people stopped by the ad and commented.
Stage II: Once we have a winning creation
If the creative is a winner, i.e. it has more than 10 conversions at the target CPA, then we do three things:
We try to create very similar creatives, but different. E.g. we had a photo, try to make an animation. We had a red background, try yellow. There was a woman in the photo, give a man.
We check if the ad would do even better in an ad set with different targeting. What is key is to copy the Post ID of the ad. If we create a new one, all the engagement gathered under the post: reactions, comments, shares – will disappear.
We increase the budget and look to see if the ad maintains the parameters with a higher spend
I have realised that customer acquisition is not as difficult as I thought before, if I already know where to focus my attention. I spend less time on advertising than I did before, but simply put, all my actions are effective, I follow a plan – I just know what I’m doing. I associate this with jiu-jitsu, which I have been training since 2001. A person who comes to the first training session literally after a while is all jazzed up. This is not because she is inferior in fitness, she just knows how to use her energy effectively yet. I’m sure if I went to play with someone who had even a little bit of tennis experience, I’d be covered in sweat and my opponent wouldn’t even take off his sweatshirt because he’d be so cold. It’s the same with adverts – at first we click everywhere we can, then we know which metrics to focus our attention on.
All the time it seemed extremely intricate to me. I watched all sorts of amazing case studies showing impressions, reach, clicks. I never understood, what impact does this have on the product I want to sell? If you also felt confused, know that this is simply a smokescreen. Although these figures don’t say much, they look impressive. They serve as a veil for the lack of ability to explain simply and to take responsibility for what matters – selling.
Once I understood this and we implemented the above method, the Cebulka’s sales began to grow exponentially. We reached nearly £1 million in sales within 4 months of launch using mainly Facebook ads.
What was surprising was that a side effect was the increased satisfaction of our customers. By constantly thinking about what we could do to improve the quality and keep costs low at the same time, we have a 4.7 rating on Google Maps at the time of writing this article – that’s how much people have come to love the Cebulka.
If you have to remember one thing from this article, remember this story Your responsibility is to create an offer that people will want to buy. If it doesn’t sell, you have an offer problem, not an advertising problem. The offer is something you improve all the time. I created the Culinary Entrepreneur Accelerator based on this experience. It’s a programme where I share all the knowledge I’ve gained both in terms of optimising ads and optimising foodcosts. Hiring email marketing specialists and hiring chefs. All the things I have learnt in 15 years of being an entrepreneur, 5 of them running diet catering.
I spent close to 3 million PLN on advertising budgets, tools, team, finding the most optimal configurations. I tested hundreds of tools, advertising channels. I invested in creating Flambia software, which uses all my knowledge to make running a catering business the simplest and most effective. There were times when revenues grew, but there were also times when I was close to bankruptcy. It cost a lot of time and emotion.
There was a runner after whom the Bannister Effect was named. For all time it was believed that it was impossible for a person to run faster than 4 minutes for 1 mile. The impossibility of this was confirmed by various experts, doctors citing anatomy. Bannister was the first man to run under 4 minutes. Later that year, several other runners broke the barrier. Since that achievement there have been thousands of such runners, and the current world record is 3:45. The effect says that at first something seems impossible, but when someone does it and shows you how, it doesn’t seem so difficult. The same is true here. I’m not saying that running a catering business is easy, it’s the hardest thing I’ve done. However, I am claiming that it can be easier, much easier. Provided one has the tools and knowledge to focus one’s attention on the right things, like a laser beam. What took me years before, now takes days or even hours.
You can enjoy your business without experiencing the same frustrations I did. Polish Your Cooking and Foodtech.ac, among others, have benefited from my knowledge. I paid tens of thousands of zlotys for the courses alone, and several million for the advertising budget. The second amount I invested in the development of the company. If this were to provide you with the joy of running your business and financial peace of mind, is it worth it? Join the Culinary Entrepreneurs Guide. There is one condition, I am only looking for motivated entrepreneurs who want to grow their business. Those who take action. The payoff is commitment and a promise that you won’t stop working on your business, because if you’re running it, like me you’re passionate about it.
If you are motivated, joining is free. Don’t click if you don’t want to work. If you’re not happy – you can unsubscribe.
How long have you been struggling with challenges in your business? Don’t put off making a decision. Imagine you’ve finally found the support you’ve been looking for, and when you do – email me. I’m happy if you find I’ve helped you. Sign up now.
The two most common reasons why restaurant owners think advertising doesn’t work for them are distraction and a lack of clear objectives. It’s hard to blame them, it’s not something they teach in school, and I’ve never met a high level advertising agency that takes responsibility for what they do. I’m not saying there aren’t any, there certainly are. I just think there are very few.
Agencies often talk about ROAS (return on ad spend). This is not the metric you should be looking at. You don’t care about having the highest ad spend. Then you only need to show advertising to customers who already know your brand and either have bought in the past or would have bought without advertising. There are two metrics you should look at, especially with paid advertising:
Profitability (ratio of lifetime value to customer acquisition cost).
Liquidity
The first ratio tells you whether the cost of acquiring customers is justified. If this ratio is negative, you should change your operations.
The second indicator tells us whether we are not losing cash flow during customer acquisition. A good scenario is when the value of the customer’s first transaction (revenue) is greater than the cost of advertising. The ideal situation is when the profit (after deducting the cost of producing the product, service or, more generally, the gross margin) from the first transaction is greater than the cost of the advertising spent to acquire it. This is not always possible, and a company that has the financial resources, e.g. in the form of working capital loans, to invest in customer acquisition at a cost below the LTV (Lifetime Value), i.e. the PROFIT that the customer will bring during all interactions with the company, will always win because it will have access to a larger pool of customers:
Acquisition of customers below LTV cost
Acquire customers below LTV cost and first transaction value greater than acquisition cost
Acquiring customers below LTV cost and profit on first transaction greater than acquisition cost
When we run a foodservice business, we need to understand how much it costs us to acquire a new customer, and what value that customer brings during his or her relationship with our company. This is what we call Customer Acquisition Cost (CAC) profitability in the context of a customer’s Lifetime Value (LTV).
What is CAC and LTV?
CAC is the total cost of bringing a new customer into our restaurant. This can include advertising, promotions, loyalty programmes and digital marketing spend.
LTV, on the other hand, is the total value a customer brings to us over the course of their relationship with us. It includes all the purchases a customer has made with us from their first visit until they stop using our services.
An illustrative example from the hospitality industry
Imagine you run a restaurant and decide to invest in a Facebook advertising campaign to attract new customers. The campaign cost 10,000 PLN and attracted 200 new customers. In this case, the cost per customer acquisition (CAC) is:
First impression: Advertising seems unprofitable
Let’s assume that each new customer spends an average of PLN 40 during their first visit. This means that after the first transaction every customer brings us money:
At first glance, it looks like the cost of acquiring a customer (50 PLN) exceeds the value the customer brings in the first transaction (40 PLN):
Retention activities and customer satisfaction
However, let’s assume that the customer is very satisfied with the food and service, which keeps him coming back to our restaurant. We also introduce retention activities, such as a loyalty program, regular promotions, or personalized offers to encourage them to return. The average customer returns to our restaurant five more times, spending an average of PLN 40 on each visit.
LTV calculation
Now we can calculate the customer’s lifetime value (LTV):
Profitability over the long term
Looking at the entire period of the customer relationship, the LTV is PLN 240, while the CAC is PLN 50. This means that the cost of customer acquisition was fully justified:
At first glance, advertising may seem unprofitable because the cost of customer acquisition exceeds the value of the first transaction. However, due to customer satisfaction and effective retention efforts, the customer returns to our restaurant, increasing its LTV. As a result, the cost of customer acquisition is justified and leads to a significant profit. ROAS is not a good metric because we are interested in maximising the number of customers we acquire with a positive lifetime value to acquisition cost ratio. Put simply, we don’t just want customers who order champagne and caviar. We want all the customers we can earn from, and we want as many of them as possible.
Understanding and controlling the relationship between CAC and LTV is crucial for any foodservice business. It not only allows you to evaluate the effectiveness of your marketing campaigns, but also to optimise your marketing spend and customer acquisition strategies. Imagine driving a car and not knowing how much petrol is in the tank. If you’re a driver, you’ve probably seen the type who drives at 50km/h with his nose over the steering wheel, even though the limit is 100km/h. He’s hunched over, his nose is over the wheel, he can’t see anyone around him and he’s driving erratically. Then there’s the other type of impatient frustrator. They overtake you by millimetres, gasping loudly, only to find out after a while that the whole manoeuvre was unnecessary because they have to stop next to you at a red light anyway. If you don’t know the lifetime value of your customer, you don’t know how much you can pay to keep them. You’re flying blind, you can’t tell if it’s expensive or cheap to acquire a customer. You don’t know if your actions make sense, and instead of slowing down – shouldn’t you be speeding up?
The Profitability Equation
After many years of trying, books, learning on the job and my own mistakes, I have finally managed to create a pattern, a thought pattern, that allows me to understand what I should focus on at any given time. What will be the one thing that will make my business profitable.
Profit is made up of two elements:
Revenue
Cost
If your business is making a loss, the problem is definitely on one side. We can look at it differently. This way we can understand the business from the perspective of the person we are helping to solve the problem, to provide the service. If the business is losing money:
Profit:
Customer acquisition cost – ineffective advertising or low perceived value of the product or service.
Customer value – what we earn per customer throughout their relationship with the company is too low.
Customer acquisition costs are all advertising and promotional costs, including salaries and discounts. We can break down the value of a customer further:
Customer value:
Retention – how many times we sell our offer to the customer
Margin per transaction – how much profit we make on a single sale of an offer
We can break the margin down further.
Price – how much we sell our quotes for
Production cost – how much it costs us to produce a quote for a customer
We can break down manufacturing costs into:
Constants. The most important are:
Media. This is not a mistake. In my experience, media costs are fixed regardless of the number of orders. I write more about this in the
Local
Leasing cars, machinery
Variables. The main ones are
Food costs
Salaries per offer
Logistics costs
Details of the margin can be found in this article.
If, like us, you believe in running your foodservice business intelligently and consciously, if you are at the forefront of modern solutions that deliver savings and improve service quality, then join us. Together we form a community that supports each other and strives to increase efficiency in every aspect of our work. We are Culinary Entrepreneurs – I am part of the future of catering. Take the first step and subscribe to the newsletter.
I will help you increase the profitability of your business. Follow me on my social media for more interesting content!
2008 – 3 years after my biggest disappointment. I knew I wanted to go into psychology 5 years before college. I read Charaktery magazine, books by Tomasz Witkowski, Cialdini and everything related to human interaction. I did some research in Warsaw, Szczecin, Wroclaw and even London. SWPS seemed to be the best university in terms of psychology. Unfortunately, I soon realised that I didn’t find myself at the university. The lecturers taught about the human absorption of knowledge, most effectively with the 5 senses from the black and white slides they read. The ‘business psychology’ lecturers were professors who had little to do with real entrepreneurship. I was totally disappointed. This was reflected in my grades, as I was barely passing year after year. At the same time, I was working as a financial advisor, and I was much more focused on that than my studies, which bored me. I really wanted to be very good at something – the best – and I already knew that psychology was
not going to be it.
Once upon a time, in my third year at university, I found myself in an optional course taught by Maciej Misztak, head of marketing for a pharmaceutical company. I particularly remember the class to which he invited Tom Bartnik, then managing director of a large international advertising agency, Saatchi & Saatchi. They introduced a lot of concepts that I did not understand at all at the time: “strategy”, “creation”, “account department”, but I still remember the story of the launch of the Heyah brand (a once famous mobile virtual network). I listened with rapt attention, the subject was so different from all the theoretical ones I had been taught before. What I was learning was tangible and something I could see every day on the street. It was then that I decided to focus on advertising and marketing – at that time I did not know the difference between the two.
Similar to what I did with psychology 8 years ago, I bought all the books on advertising and marketing: Kotler’s Marketing, Juicy Brand, Like an Orange, Whisper Marketing, Brief magazine. I even read about marketing for the public sector. I started a blog to share my knowledge and to test what I was learning – in practice. A small breakthrough for me was when I placed an ad in Google Ads on the names of famous bloggers directing to my blog. These were provided by Maciej Budzich and Natalia Hatalska from Mediafun. Eventually, my efforts began to bear fruit – I was offered a job as an intern at Ogilvy, an international agency.
Raptly, I was fired after two months for posting the job as “Junior Account Manager” instead of “Intern” on Facebook.
It wasn’t long before I was working in property marketing. I wanted to be the best, so I would do anything to learn from the best. In 2011, I spent PLN 8,000, all my savings plus a grant from my mother, to go to the advertising industry’s Oscars – Cannes Lions – for a week. Living for a week on a protein diet, McDonald’s cheeseburgers for €5 each and pure excitement, I recorded interviews with ad creatives, ad campaigns and tried my hand at being a video blogger (now we would say YouTuber). The Tesco campaign was groundbreaking at the time.
When my contract with P&G was not renewed after my internship, I decided it was time to try something on my own. I toyed with the idea for a long time, calculating the costs and possible income on a piece of paper. On Valentine’s Day 2012, I opened my Brazilian Jiu-Jitsu club. Then there was a sportswear brand based on characters from the Dragon Ball Z anime, a marketplace for extreme sports equipment and, finally, diet catering. I had theoretical knowledge from books and conferences, from working full-time and from my own experience of running businesses. I also had a bankruptcy and debts of PLN 100,000 behind me, which I managed to pay off in full after several years of stress. At that time I said to myself: “Never again”. I worked a lot, but it brought no tangible benefits. I knew there must be a pattern, a correlation, as to why some companies make money and others lose money. What you will learn in the following article is just a collection of these correlations that I have developed by testing them on myself.
Schemes are necessary because they allow us to organise our thinking and our work. We cannot do everything at once. Just as when you build a house you start with an architect, when you organise a business you need to start with a structure. Marketing is nothing more than the organisation of a business. It literally means “to reach the market”. Since the purpose of a company’s existence is to meet a market need, it includes all the activities that describe how a company should operate. A simple scheme that suits me and allows me to better organise my thinking is the 4Ps:
1. Product
Menu: An assortment of food and beverages offered in a catering establishment. May include different cuisines, special dishes, desserts, alcoholic and non-alcoholic beverages.
Appearance and presentation: how the food is presented to the customer, the aesthetics of the plates, the way it is served.
Variety: the range and variety of options available, such as meat dishes, vegetarian, vegan, gluten-free.
Additional services: additional options such as catering, delivery, online reservations, special culinary events.
2. Price
Pricing strategy: The way products and services are priced, e.g. premium, mid-range, low-end pricing strategy.
Discount coupons and rebates: Coupons, loyalty cards, seasonal or occasional discounts.
Price elasticity: How prices can change depending on the time of day, day of the week, season or demand.
3. Place
Location: The location of the restaurant, its accessibility and attractiveness to customers.
Channels of distribution: The different ways in which products are delivered to customers, such as eat-in, take-out, home delivery.
Logistics: The process of managing deliveries, storage of ingredients, delivery time to the customer.
Availability: Opening hours, number of seats available, ability to book tables.
4. Promotion
Advertising: Advertising campaigns in traditional media (TV, radio, press) and digital media (social media, Google Ads).
Public Relations: Building a positive image through media relations, participation in local events, sponsorship.
Direct marketing: Direct communication with customers, e.g. newsletters, SMS, emails.
Sales promotions: Hold special events, competitions, tastings, give away samples.
Feedback and reviews: Managing and utilising customer reviews on review platforms, social media.
On the internet, in books or in conversations with friends, you’ve probably come across various truths that have some truth to them, but don’t quite reflect reality:
Product – cooking is an art, it is the chef’s touch that counts.
Price – if you want to increase sales, you have to reduce prices.
Place – location is everything.
Promotion – a good product will defend itself.
And here is how I see each of these elements and why I disagree with these myths:
The product is an answer to a need. The need is not: “to eat something”. A need can be:
Try new flavours – casual dining,
Impress your partner on a date – fine dining,
Spend time in a pleasant atmosphere – cafés,
Satisfy hunger quickly – kebabs, fast food, staff canteen,
Nourish the body – healthy food.
Therefore, the product must be repeatable. When I think of McDonalds, I know I will get the same burger, coke and fries every time. When I think of fast food, I know exactly what kind of experience I will get. Humans hate unpredictability. Does that mean the menu should not change? Not at all, McDonald’s also has fixed and seasonal offers. The Lumberjack sandwich, which is only available for a limited time, is so popular that it has entered the language as a synonym for something iconic, unusual and expected. My advice: don’t overestimate the quality of the food. I have learnt in diet catering that what seems absolutely phenomenal to me is not so to customers. What’s more, there are plenty of companies whose food seems average or even inedible, and their sales are growing.
Price – “expensive” means giving little value for the price we have to pay. This is important – the value we, the consumer, perceive, not the seller. I may not want to pay for organic vegetables if they taste exactly the same. On the other hand, people who don’t want to consume zoonotic products pay extra for plant-based coffee drinks or meat alternatives, and no one seems to make a problem of it. Is PLN 10,000 a lot or not? It depends what it’s for. For shoes? A lot. For a square metre of flat in Warsaw? Not a lot. For a square metre of flat in Gorzow Wielkopolski? A lot.
Stanley thermos flasks cost 50-100% more than regular ones and are a hit on social media. Why is that? Their perceived usefulness is much higher than that of competing products.
iPhones are the most expensive in the world and also the best-selling in the world.
For this reason, customers will be more willing to pay more for “an evening of authentic Uruguayan sushi by Master Keryoshi accompanied by Bengali rumba dancers and a tasting of Honduran shaman’s brew” – a unique product – than for “just sushi” – an easily comparable product of which there are dozens, if not hundreds.
Places. It’s probably not the best idea to open a fine dining restaurant in a tunnel under a railway station, but location is not counterintuitive. Matching distribution to location is. We have 4 basic distribution models:
Dine-in restaurant
Food to go
Instant Delivery – delivery via marketplace
Planned Delivery – event or diet catering
The distribution method forces the scalability of the restaurant concept. By scalability, I mean the number of customers that can be served in relation to fixed costs, including the size of the premises.
The least scalable is a non takeaway and delivery type restaurant (such as fine dining), where we are directly limited by the amount of space in the premises.
In second place is instant delivery. The limitation is the capacity of the courier and how many customers they can handle in an hour.
Thirdly, we have take-away, such as a bakery or patisserie, where customers come to buy baked goods. They can serve dozens of customers per hour in a relatively small space.
The most scalable will be event and diet caterers. The former are able to cater events for thousands of people, while the latter cook thousands, tens of thousands and the largest even hundreds of thousands of meals a day and distribute them across the country every day.
Promotion. It won’t do anything by itself, and it certainly won’t promote the product. The winner will always be the company that is able to pay more to acquire a customer, that is, the one that most likely has a higher margin. You can read about margin in foodservice here. The customer should hear about your brand often and a lot. There are infinitely more people who will never know about your brand, despite your sincerest efforts, than those who will be offended by the amount of content you produce. Don’t worry about the offended, they’re not your customers anyway. Take this drink as an example. Brown sugar water with cocaine in the name – does that sound like a recipe for a brilliant product? How much can you say about such a product? Coca-Cola is doing quite well, and has been talking about the product for more than 100 years. The key is that it advertises constantly at an intensity greater than anyone else and longer than any of us reading this article.
Needs are created. None of us needs sweetened brown water (or the light version with aspartame), coffee for the price of lunch, or pale rolls with something like meat inside. Pepsi Cola, Starbucks and McDonalds are global brands worth billions of dollars. The key is intensity and repetition.
Another myth is that you have to “be everywhere.” As long as you don’t have very large budgets, you simply can’t afford it. Any form of promotion will initially be ineffective until you learn how to use it properly. Learning TikTok, Instagram, print advertising, influencer partnerships and Google Ads at the same time is a recipe for disaster. You don’t need multiple channels. My team and I promoted Cebulka Catering to 1 million in revenue per month in 4 months from launch using only ads on TikTok, then adding Facebook. We didn’t have influencers, we didn’t throw in organic posts, we didn’t do ads on Google – exclusively one communication channel at first, where we tested all the time what we could do better.
If, like us, you believe in running your foodservice business intelligently and consciously, if you are at the forefront of modern solutions that deliver savings and improve service quality, then join us. Together we form a community that supports each other and strives to increase efficiency in every aspect of our work. We are Culinary Entrepreneurs – I am part of the future of catering. Take the first step and subscribe to the newsletter!
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“Paweł, we need to hire more people immediately. There is so much work that we will probably have to introduce a night shift. With the rapid growth of the business, we need to think about moving – this 600m2 site is becoming too small for us,” I was really worried. At the time we had 25 kitchen staff, 600 parcels a day and one catering brand.
I was happy that the number of customers was increasing, but I had the impression that costs were rising disproportionately faster. There were more of these things – at least once a day I heard the boss say to the production assistant: “go to the store, we’ve run out for production”. How could this be, when we had exact recipes and shopping lists? In a moment it turned out that the day after we bought things for the social, 6 packs of coffee disappeared – that’s how much even the most seasoned coffee drinker wouldn’t drink.
One thing was for sure – money was leaking through our fingers. At least it was not a thin stream. I felt like I was fighting a hydra – for every problem, two more seemed to pop up. They seemed to pile up and the more I tried to find out where we were going wrong, the more problems appeared. I tried talking to the staff. I got a number of suggestions, such as that the theft and low efficiency were due to wages being too low, because “employees just have to compensate themselves”. I tried talking to catering experts: “Look Paul, this is a specific industry. This is how it is. You can’t control everything”, “You’ve got to get good people”, “You can’t do anything about it, you’ve got to do everything yourself if you want it to be good”.
I finally understood. The real problem was the lack of a map, a structure that would make me aware of which fires I needed to put out immediately because they threatened to collapse the entire structure, and which fires, while undesirable, would not kill me immediately and I could return to them in a moment.
Segregation of parcels in my Primate catering.
It became my ambition to pass the McKinsey problem-solving test. In the materials I used to prepare, there was a lot of reference to the MECE method. The name comes from the English words Mutually Exclusive, Collectively Exhaustive . For example, a population can be divided into men and women – each person can belong to only one of the two, and at the same time there are no people who do not belong to one of the two. An example where this principle is not fulfilled is nationality – people can change their nationality, they can be citizens of many countries. In such a division, the sum of the sets will be greater than the number of people.
The purpose of this method is twofold:
Make sure we don’t miss anything
To spend the minimum amount of time necessary to solve the problem by not having to go back or repeat – everything is sorted.
I began to group my problems into category trees, common themes. As I wrote down and organised the problems and my thoughts about them, things began to fall into a logical whole. I began to see connections and understand where the problem lay.
My views on the need for change were not met with approval. For example, my disagreement with a 50% pay rise was not met with approval. I felt trapped. I wanted the business to be healthy. Conflict with employees and the risk of production stoppages – the very thought of that paralysed me.
I wouldn’t be surprised if you’ve encountered similar situations. Looking back, I think a lot of things are done provisionally, for “holy peace of mind”, like a provident loan. It solves the problem in the short term, but then it turns out that the cost is gigantic. Then another loan, and the spiral of debt is so great that it’s hard to get out. No one has ever shown me the problems I can face, and I suspect that you will not either. Ignorance and old habits are our common enemy. That’s why I’m going to show you 14 places where I’ve missed out on money, to help you out.
I have created many different categories. So don’t get too attached to mine. The key is to group the subject and have fairly consistent groups. Items on individual lists can come and go, but the list of topics is relatively constant.
Purchasing and Suppliers
Warehousing and Inventory
Production and Preparation
Management and Administration
Now I will show you the 4 stages of problem diagnosis:
“Triage – what are the most urgent problems? When paramedics arrive at the scene of an accident, they don’t treat casualties on the spot. They make a quick assessment of the injuries and decide who needs help first. It’s the same with running a business – I think about which category I need to focus on first because it threatens the running of the business.
My daughter says, “Trousers down, cards on the table” and I think it fits this point perfectly. Once I have identified a category, I try to uncover all its problems. I knew about problem A, but I wonder what is B, C, D. What if you cure gangrene when the flu kills you?
“We play in pairs. – There’s a reason they say problems come in pairs, or even in herds. Once I’ve identified them in point 2, I group similar ones that have a single cause.
“You did not stand here”. – At this stage I know which area needs attention first, I have identified all the potential sources of problems that I could, grouped the issues and understood the interrelationships. This is how I arrived at the final list of problems, which I arrange in order. It’s important not to jump from issue to issue. Think of it as a street fight. Even if you are an experienced karateka, boxer or other fighter, and no average thug has a chance against you – the force of evil against one. What will you do in such a situation? You will shout: “One at a time! Then the problems will not overwhelm you and you will have the strength to deal with each of them.
Below are examples of problems you may encounter in each of the categories listed. The list is not exhaustive and there will be issues in your business that I have not included below.
Purchasing and Suppliers
1. Lack of regular price monitoring
In the foodservice industry, ingredient prices can change faster than the weather in the mountains. Lack of regular price monitoring is like driving a car without a seatbelt – sooner or later something will happen. By implementing a systematic review of supplier prices, you can react to changes in real time and avoid unnecessary costs. At Flambia Market we have learned that regular price analysis can save up to 10% per month.
2. Ignorance of the supplier market
Not knowing the supplier market is like going fishing without a rod. You need to know all the players in the market to get the best deals. By regularly comparing offers, you can get better terms and avoid overpaying. I remember one time we found a new vegetable supplier who offered better prices without compromising on quality. As a result, we were able to reduce costs and increase margins.
3. Don’t compare supplier offers
Comparing suppliers’ offers is an important part of your purchasing strategy. It is like the stock market – you need to know where and when to invest. More than once we have found that different suppliers offer the same products at different prices. By comparing quotes, we found a supplier who sold coffee 20% cheaper. This decision allowed us to save a significant amount of money without compromising on quality.
4. Buying branded products instead of cheaper substitutes
Buying branded products is simply paying for a logo. Instead, it makes sense to look for cheaper but equally good substitutes. In my practice, switching to non-branded products in some categories has allowed me to cut costs without compromising on quality.
Warehousing and Inventory
5. Poor inventory management
Poor inventory management is like trying to keep water in a strainer – nothing will come of it. Regular inventory control and the introduction of an inventory management system have helped us avoid wasting products. At Primate, we have implemented the Flambia System, which allows us to closely monitor inventory and order only what we really need.
6. Improper storage conditions
Improper storage conditions really can end in a major disaster. Preventing it avoids losses and waste. In my companies, we regularly control the temperature and storage conditions, which significantly extends the life of products.
7. Excessive or frequent orders
Orders that are too large and too frequent increase logistics costs. The key is to find the golden mean. Here again, the Flambia System came to our aid, which allows us to plan purchases precisely, avoiding excess and frequent deliveries.
Production and Preparation
8. Failure to follow established grammars
Using accurate recipes helps control costs and reduce waste. In our kitchens, every recipe is accurately measured, which helps to maintain consistency and control costs.
9. Poor organisation of work in the kitchen
Poor work organisation in the kitchen is like trying to lead an orchestra without a conductor – chaos is guaranteed. By introducing clearly defined procedures and division of labour, we have been able to increase efficiency and minimise waste. Regular training and systematic organisation are the keys to success.
10. Overly elaborate menus
Focusing on a narrower range allows us to better manage stock and avoid waste. At Primate, we have limited the menu to the most popular items to optimise purchasing and reduce costs.
11. Sub-optimal use of seasonal ingredients
Seasonal products are cheaper and often of better quality. In my businesses, we regularly adapt our menus to seasonal ingredients, which helps to reduce costs and offer customers fresh, local produce.
Management and Administration
12. Lack of price negotiation with suppliers
Negotiating prices with suppliers is essential – it’s like bargaining in a bazaar. Applying the Pareto principle and negotiating the prices of the most important products will bring the greatest savings. In our case, negotiating meat prices saved us 15%!
13. Lack of effective reporting
Lack of effective reporting is like driving a car without a mileage meter – you don’t know how fast you’re going or how much fuel you have in the tank. Regular reporting and food cost control is key to keeping costs down. At Flambia System we use advanced analytical tools that allow us to monitor all relevant indicators on an ongoing basis.
14. Poor internal communication
Poor internal communication is, in effect, a deaf telephone – information is distorted and results are far from expected. Effective interdepartmental communication allows us to better manage resources and avoid mistakes. Regular meetings and clear communication procedures have helped us to significantly improve operational efficiency.
Over time, this method got into my blood and proved useful in many other areas, such as remembering things! By grouping topics into: family, training, production, marketing, legal – it’s easier for me to remember everything. I don’t have an endless list of things, just baskets that I check in my head.
I believe that together we can bring best practice to the foodservice industry and end the myths that dominate the industry. This article is an excerpt from a guide I wrote for the community of Culinary Entrepreneurs, a new generation of foodservice business owners who are using technology and best practices to deliver the best quality for their customers and professional fulfilment and financial security for themselves.
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I have a confession to make. I love to eat. A lot. I eat so much that I had to set up a whole company to cook for me, because my wife couldn’t manage to produce the amount I consume. My standard is 3,500-4,000 kcal a day and my favourite place to eat is a restaurant. My lover has even come up with a trick to motivate me to be active. For me, activity has to have a purpose, so I love jujitsu, the gym (to get stronger at jujitsu), running (so I don’t run out of breath at jujitsu) and swimming (because it’s my time together with my daughter). If you say to me, “Let’s go for a walk to a café for dessert!” – I’m first.
The example for my breakfast. 🙂
The other thing I’m obsessed with is when things just work. An example would be the techniques in Jiu-Jitsu, which I’ve been training for 23 years, improving all the time and still finding ways to improve the small components. I can’t stand doing things in a sub-optimal order, like wandering around a shop without a written shopping list. But what frustrates me most is when things don’t work in business. When things don’t work, we have a loss-making business, an unprofitable business with negative margins.
Having run two diet catering brands, which at one point reached a turnover of 1 million zlotys per month, I have learnt that there is not one, not two, but even three catering margins!
Gross Margin , also known as Level I Margin
Operating Margin , also known as Level II Margin
Net Margin , also known as Level III Margin
Before we get into what these margins are, let’s get back to the basic question for which you are probably reading this article: “How do you run a profitable foodservice business?
A profitable business is one that makes a profit. If a business is not profitable, the problem is 100% one of two things, or worse, both at the same time:
The sales are too low.
Costs are too high.
If you ask, “Which is more important – revenue or cost?”, I will answer: “Revenue, but at what cost? Costs can be generated by any of us. Revenue, i.e. sales, requires some effort. We have to find a need in a group of people and then convince them to pay us to satisfy it with our product or service. I deliberately wrote “at what cost” because if increasing revenue is going to be done in an unprofitable way, we don’t want to do it.
“Thanks, Sherlock, I thought we were trying to sell at a price below our costs.” – Although this sentence sounds absurd and you’re right to think I’m stating the obvious, it’s not.
In winner-take-all businesses, managers sometimes make the decision to maximise revenue growth at the expense of profitability. Look at Allegro, they have more than 60% of the entire Polish e-commerce market (yes, 6 out of 10 products sold online in Poland are Allegro). Its profit for 2023 is around PLN 600 million. Despite many attempts, neither Amazon, eBay, Temu nor AliExpress have achieved such popularity. From this point of view, would you be willing to accept a loss of PLN 60 million per year for 5 years in order to grow your business to the point where it will generate PLN 600 million per year as a near monopoly?
In the food service market we can find a similar strategy in diet catering. There are several brands, e.g. Diety from Broccoli, Viking’s Kitchen, Maczfit or the second brand after Republic of Gourmet – NTFY’s child brand Syta Król, which communicate aggressive price discounts and may sell products with zero or even negative margins, e.g. with the intention of becoming the leader and causing the competition to withdraw. This is a fine line, as price dumping is prohibited in Poland.
Although, as I said earlier, revenue is ultimately more important, a profitable business starts with costs. We usually spend money first (costs) to get customers, and only then do they pay us (revenues). This is the first way your business can be unprofitable.
Gross Margin – Level I Margin
Gross Margin is the difference between turnover and the cost of goods sold. It tells you how much you are actually earning from the sale of your products after deducting direct production costs.
If your gross margin is high, it means that your production is going well and that you are able to sell your products at much higher prices than the cost of production. A high gross margin is a sign that your business is running efficiently and effectively.
Operating Margin – Level II Margin
The operating margin shows how much you earn from your core business after all operating expenses, but before tax and finance costs.
A high operating margin shows that you are managing your business well and controlling the costs associated with day-to-day operations. It’s a key indicator of how effectively you’re managing your day-to-day costs.
Net Margin – Level III Margin
Net margin is a ratio that shows how much you earn after deducting all costs, including operating, financial and tax expenses.
A high net margin is proof that your business is financially sound and can make a profit after all costs are taken into account. It is the ultimate indicator of the financial health of your business.
The importance of different margin levels
Gross Margin:
A high gross margin is a sign that your production is efficient and you can sell products at prices well above the cost of production.
Negative gross margin – “The cost of producing a good or service exceeds the amount you receive from sales”. How can this situation occur?
You sell a diet catering service for days ahead at today’s prices. In the meantime, the cost of an employee, raw materials and transport increases. In a few dozen days, you realise that the amount of money you received from the customer at the beginning does not cover the cost of production.
You organise an event. It turns out that your equipment breaks down and your people get sick. You don’t have a choice because you’re bound by contract and you don’t want to lose face, so you hire equipment from a rental company and find people on the spot. Rental equipment is very expensive, and so are employees for the time being.
Operating margin
A high operating margin indicates that you are managing your day-to-day operating costs well, which is key to a healthy business.
Net Margin
A high net margin is an indication of the overall financial health of your business, showing that you are able to make a profit after all costs are taken into account.
This margin structure helps to understand and control the company’s finances, which is crucial for long-term success.
Based on my experience, I have identified 4 key elements that affect gross (stage I) margin in the foodservice industry.
Food cost – the cost of purchasing raw materials for production.
Labour – the time spent by employees cooking, packing and possibly delivering food to the table or home.
Logistics – in the case of home delivered food, this is the cost of an external or internal courier and their means of transport and associated costs.
Customer acquisition costs – marketplace commissions such as Glovo, Delicious, UberEats, Facebook ad budget, ad agency fees, social media, photo production costs, graphics. All costs incurred to get the customer to buy from you.
Why gross margin matters?
The company that can spend the most on customer acquisition will always win. The company that can spend the most on customer acquisition is the one whose product prices are the highest, whose margins are the highest, and whose customers return most often and stay the longest. To put it in human terms, the ideal scenario is that you sell expensive products or services to customers, it costs you little to produce them compared to the amount you receive, and customers return to you regularly and for years.
Let’s suppose we have two restaurants, Green Pepper and Pink Orange:
Green Pepper attracts customers with discounts and attractive prices. Its owners rely on word of mouth and don’t have much money to spend on advertising, as they sell food with a minimal mark-up.
Cost of acquiring a customer – 30 PLN – very low, as it’s mostly word of mouth.
Average bill – PLN 100
Average cost – PLN 80
Profit per customer visit – 20 PLN
Average number of visits per customer – 1.5 – the restaurant doesn’t even have a social media presence. Although the food is decent, customers just forget about it.
Total customer value – 1.5 * 20 PLN = 30 PLN – the amount Green Pepper can spend to acquire a customer and still end up with zero.
Pink Orange creates an exclusive brand where the cheapest water sells for 25 PLN, but the owners invest heavily in advertising and customers like the place and come back often.
Customer acquisition costs of 300 PLN – they invest heavily in all possible customer acquisition channels.
Average bill – 500 PLN
Average cost – 80 PLN – thanks to their size they can optimise costs and it is similar to Green Peppers.
Revenue per customer visit – 420 PLN
Average number of visits per customer – 5 – it is a trendy place, food is decent, customers are eager to return
Total value of the customer – 5 * 420 PLN = 2100 PLN – the amount that Pink Orange can spend on acquiring a customer in order to come out at zero.
In this example, Pink Orange’s business is much more secure because of the margin it generates throughout the customer lifecycle.
How do you implement revenue counting, gross margin, operating margin and net margin?
The absolute most important thing, and the first thing you should do at this point, is to keep these numbers in front of you and your management at all times. You can’t control what you can’t see. It is not something you should “look at”. Your control cockpit should have 4 indicators that you control all the time. Monthly is the absolute minimum:
Revenue
Gross margin, also known as Level I margin
Operating margin, also known as Level II margin
Net margin, also known as Level III margin
If at this stage you are still thinking: “At my level, I don’t need to check it that way”, ask yourself whether you run a business or have an expensive hobby. If it’s the latter, you really don’t need to. I also refer you to 23 Biggest Myths About Catering Management .
The easiest way is to ask your accountant to give you a breakdown. Armed with this knowledge, you will be able to explain how she should qualify the costs. It’s not a perfect solution, as you’ll see the data with a delay of a month or more, but it’s better than not seeing the data at all.
The second method is to use a system that scans your invoices and helps you control your workflow, such as Cheff.it for restaurants or Flambia System for diet catering, event catering, pre-school catering, hospital catering. Then you can react in real time.
Data is nothing without action. At Primate and Cebulka Catering we have a monthly meeting where we discuss important issues for the business, look at what has changed, why there have been increases and what has caused decreases. We come out of the meetings with a to-do list for which individual managers take responsibility. For example, I am responsible for customer acquisition costs, while Łukasz Załęski, our operations director, is responsible for food costs and employee costs per package.
Just as data alone won’t make a difference, reading alone won’t make a difference. Take action now and increase your chances of making your foodservice operation profitable.
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“Stockholm syndrome” – only years later did I understand how the protagonist of Orwell’s 1984 felt. My tormentor was a maths teacher. She was no ordinary teacher, she was a crusading knight whose mission was to cleanse the world of the filth of those who did not know.
Only those worthy of respect and awe who could count without error were called to the blackboard. All others were treated with the contempt of second-class citizens. The pattern was always the same: first a friendly smile and a question as to who would come to the board to solve the problem on the board. No one came forward, so she continued with a beaming smile and said: “Then maybe Krzysiu (or any other student who happened to be there) will solve it”. If Krzysiu did not start writing immediately, the teacher’s forehead would start to sweat and she would start wiping it, which meant trouble.
The next sentence was: “Now write, Delta equals! What do you think?” If there was no surprise at this point, and it is usually difficult for her to follow under such pressure, the shouting began: “YOU CAN’T DO ANYTHING, SIT DOWN AND COMPLAIN!
I was a humanist and one of the worst in the class. She despised me with all her heart. However, I decided not to be broken and practised maths every day. As a result, by the end of third grade I was really good, and although the teacher didn’t want to admit it, I was at the top of the class. She told me not to take the maths exam because I would make a fool of myself. To this day I have the satisfaction of thinking that when she found out about my maths score, she said it must be some kind of mistake – she was so unwilling to believe she was wrong. So if you hate maths, know that I really do understand. At the same time, I think it’s the most valuable skill in business, so I’m grateful for what I got at school.
Years later, in my professional work, I found that simple actions and the ability to measure things were very useful to me. Despite everything, I still thought that I was inferior in this area, that I couldn’t do anything. I graduated with a degree in psychology, where I was inferior to people from SGH, economics or science. I equated Excel with them. “It’s a tool for weirdos, what’s there to bury in numbers. Entrepreneurship is the spirit of adventure, ingenuity, action, not spreadsheets!”.
I was lucky enough to meet 3 wonderful people who helped me with the financial side of my ventures and taught me how to use counting in a practical way to give ingenuity a real dimension. The first was Wojtek Smolinski, the second Radek Cielicki and the third Adam Matusiak. From each of them I learned about cost control, budgeting, liquidity and profitability. Until recently, these words made me shudder, but I understood that I would not be a full-fledged entrepreneur without assimilating them – I accepted my fate. In the end, it wasn’t so bad.
CFO Adam Matusiak, right (in shirt), head of operations Łukasz Załęski, and head of technology Mateusz Cygan, left, in glasses.
I still only know how to do basic things like adding, multiplying, etc. My spreadsheets are ugly, but the most important thing is that I know how to read those made by people smarter than me, I know how to check basic business metrics and I know what to ask the people I work with. In the context of the catering business, these metrics are food and beverage costs, or in Polish, food and beverage costs. I’m going to tell you how I use these measures in practice in my diet catering business for the Primate and Cebulka Catering brands.
In theory, the cost of raw materials consists of the following:
Purchase price of food.
Storage costs: costs associated with storing food, such as refrigeration costs.
Food waste: loss and waste due to expired products or inefficient stock management. This category also includes theft, which I have experienced on a number of occasions.
Labour costs: costs associated with food preparation, e.g. washing, peeling, cutting.
I say ‘theoretically’ because in practice it is difficult to separate the cost of energy for the fridge from the cost of energy for the oven, and losses and waste are difficult to measure without the right software and recorded inventory. We count energy costs as utilities, kitchen staff costs as cooking costs, and I will talk about counting food waste in the section explaining how to count it.
In addition, when we talk about food costs, we usually refer to their percentage value, i.e. the net purchase price of the raw material to the net selling price of the dish. This is a common mistake. Some people do not use the net value when counting, but one or two gross values. VAT is a pass-through tax and should not be tabulated.
For example:
I bought meat for a steak for 30 PLN net.
I sold a steak for 100 PLN net.
VAT on restaurant meals is 8%.
The customer paid 108 PLN gross.
My cost of the meal is 30% (30 PLN net / 100 PLN net).
The analogy will be for drinks, the only difference being that the VAT rate for them is 23%.
The second type of food cost will be nominal. In the case of the steak above, it’s simply 30 PLN. What are the practical differences? The aim of you and the managers of your catering business – diet catering, event catering, pre-school catering, hotel or restaurant – is to maximise guest satisfaction whilst minimising food and beverage costs, or at least not exceeding a certain assumed threshold. To put it in human terms, you want the customer to be as happy as possible, to recommend you to friends and to come back, and at the same time to pay as little as possible for food and drink.
What is the easiest way to reduce the food cost percentage? Increase the price of the food. If I increase the denominator, the selling price or the value I am dividing by, the result will immediately be lower.
For example:
I bought meat for a steak for 30 PLN net.
I sold the steak for 115 PLN net.
The VAT for restaurant meals is 8%.
The customer paid 124.2 PLN gross.
My cost of the meal is 26% (30 PLN net / 115 PLN net).
As I’m sure you can see, this is not how it should work. This is where nominal food costs come in. Even if my steak cost 108 PLN and now costs 124.2 PLN, the food cost is still 30 PLN , so it hasn’t improved.
Another common mistake is to include the cost of packaging. Packaging is a separate item and should be treated separately from the cost of raw materials. Firstly, some dishes will have different packaging and therefore different costs, and secondly, it is part of the logistics cost, not the production of the dish or drink.
Correctly counting and monitoring the price of food is a must for any foodservice business. I was surprised to find out how many thousands of zlotys we were losing each month on peeling potatoes, for example. It turned out that, in the vast majority of cases, it was more profitable to buy a peeled pomegranate than to peel it ourselves, and the “one-off failure to observe the best before date” turned out, on closer inspection, to be no one-off. As I wrote in the article Optimising Food Costs: The Secrets of Effective Catering Management , this is one of the 4 key variable costs that determine whether your business will be profitable at gross margin level.
Food cost nominal vs. food cost percentage
Nominal food cost
Nominal food cost is the absolute amount of money spent on the purchase of raw materials used in the preparation of meals. It is a figure expressed in monetary units (e.g. zlotys, dollars, euros). It is calculated as the sum of the costs of raw materials in a given period.
For example: If a restaurant spent 10,000 PLN on food in a given month, the nominal cost of food is 10,000 PLN.
Meaning:
Food cost nominal shows how much money a restaurant actually spent on raw materials.
It makes it easier to track expenses and control the budget.
It is the basis for further financial analysis, such as comparison with turnover.
Food cost percentage
Food Cost Percentage is an indicator that shows what percentage of food sales revenue is spent on food costs. It is expressed as a percentage and is calculated as the ratio of raw material costs to sales revenue in a given period.
Formula:
Food cost percentage formula.
For example: If a restaurant spent PLN 10,000 on raw materials and received PLN 50,000 in sales, the food cost percentage is:
Meaning:
Food cost percentage allows to evaluate the effectiveness of raw material cost management in relation to sales.
It makes it possible to compare profitability over different periods or with other restaurants.
It is an indicator that helps to determine whether raw material costs are under control.
Summary
Food cost nominal tells us the total amount spent on raw materials, which is important for managing the budget and tracking expenses.
Food cost percentage shows what percentage of sales is spent on food costs, allowing you to assess the operational efficiency and profitability of your restaurant.
Monitoring both metrics is key to effective cost management in the foodservice industry, allowing you to control expenses and evaluate efficiency in relation to revenue generated.
The second dimension is food and beverage costs, both direct and indirect.
Differences between direct and indirect costing
Both methods have their own unique characteristics, advantages and disadvantages. Here is a detailed discussion of the differences between the two:
Direct calculation
Description: Direct costing involves directly counting the cost of raw materials used to prepare meals in a given period. This method accurately records the quantities and costs of raw materials used to prepare each meal.
Process:
Purchasing: Recording of all raw materials purchased.
Consumption: Monitoring the consumption of each raw material based on recipes and prepared dishes.
Calculation: Add up the cost of raw materials used to get the nominal cost of food.
Advantages:
Precision: Allows you to accurately track the costs associated with each dish.
Control: Allows detailed control of raw material costs and identification of areas for optimisation.
Disadvantages:
Time consuming: Requires accurate tracking of all raw materials used, which can be labour intensive.
Complexity: Can be difficult to implement in restaurants with a wide variety of dishes and raw materials.
Intermediate calculation
Description: Indirect costing calculates the cost of raw materials consumed during a given period by taking into account the changes in inventory at the beginning and end of the period. This method is more general and less detailed than direct costing.
Process:
Initial inventory: Record the value of the stock at the beginning of the period.
Purchases: Record any raw materials purchased during the period.
Closing Inventory: Record the value of stock at the end of the period.
Calculation: The cost of food is calculated as the difference between the sum of opening stocks and purchases and closing stocks.
Calculation:
Intermediate calculation formula
Advantages:
Simplicity: It is easier to implement and less time consuming than direct calculation.
Efficiency: A quick method to get an overall picture of raw material costs in a short period of time.
Disadvantages:
Less accurate: It does not provide detailed information on the cost of individual dishes.
Difficult to identify problems: Less accurate cost tracking can make it difficult to identify areas for improvement.
Conclusion
Direct calculation is more accurate, but time consuming and complicated. Ideal for restaurants that require detailed cost tracking and have the resources to accurately monitor raw material consumption.
Indirect calculation is simpler and quicker, but less accurate. It works well for restaurants that need a quick assessment of total raw material costs and have fewer resources for accurate monitoring.
We use both in our business. Direct costing is essential for menu planning. We use it once a week to plan the dishes that will appear on our menus. Normally this would be time consuming, so having the recipes written down is crucial.
In the basic version you can do it in Excel and update the prices manually every week, but we use Flambia System and Flambia Market. The former works out the total cost of a dish for us and also shows which ingredients contribute the most to it – both as a percentage and by highlighting them with darker colours. This is a huge help to the person controlling the food cost of dishes and making changes to dishes, as it is often enough to minimally reduce the content of the ingredient with the highest food cost in a dish to significantly reduce the value of that ingredient.
Changing the content of an ingredient that has little impact on the food cost will have almost no impact and will be a waste of time. In the example below, you can see that the ingredient to focus on to reduce the food cost of the dish will be blueberries, as they account for almost 50% of the total cost of the dish at this point.
A screenshot of the Flambia System.
The Flambii system also gives you the ability to create different price groups for dishes and control their allocation, depending on pre-set price limits for the cost of the dish. If the cost of a dish exceeds the limit set for it (either upwards or downwards), the system will inform us in an easily recognisable graphical way, both in the Menu Planner, if the dish has already been added to it, and in the list of all the dishes in the “Dishes” tab, which is used when selecting dishes for the menu. This reduces the risk of overlooking a change in the cost of a dish and incurring losses as a result. In the list of dishes there is also information about the percentage of the food in relation to the established norm.
Screenshot of the Flambia System.
The Flambia Market shows where an ingredient is cheapest and provides information on the current prices for recipes.
On average, a human and a dog have 3 legs each. Therefore, the ‘average’ food cost should be approached very carefully. You need to find the right level of detail. Looking at the big picture will not tell you much. Let me give you an example. I used to track costs averaged over all diets and calories separately. I saw that for the group as a whole they seemed to be in line, but there was little money left over. Looking for the reason, I looked at each calorie separately. It was a hit! It turned out that we were selling the lowest calorie of some of the diets below the cost of production, we were subsidising up to 5 PLN per pack! If that doesn’t seem like a lot, multiply it by hundreds of packs – a day, thousands – a month, tens of thousands – a year. The hardest part was recognising the problem because of the wrong way of looking at the numbers. Once we diagnosed the problem, the solution was quick and easy.
Don’t be fooled by “we can’t reduce food costs without reducing quality”. – This is one of the most common myths. Read more about it in 23 Biggest Myths About Catering Management . This and other untruths are repeated because it takes extra effort to change, to find the reasons. It is easier to use two “proven” suppliers than to compare prices from 20 or 30 different suppliers. I say this without sarcasm. With the amount of hours you work in catering, it is really difficult. We had this problem ourselves, which is why we created Flambia Market, to finally have shopping under control.
If, like us, you believe in smart and informed purchasing for the catering industry and are a pioneer of modern solutions that bring savings and improve the quality of our services, then join us.
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