Are you thinking about starting a juice business, or scaling up your existing business, and wondering about the average juice bar profit margin?
The reality is, all smart business owners have to asses the cost benefit of every new endeavor, and opening up a juice bar is no different.
In this article I am going to share some insights into the industry standard for juice bar profit margin and some key things you must do to make sure you maximize your profits.
What to consider when analyzing your juice bar profit margin
In this business their are 3 standard expense categories that you are going to have.
You are going to have other smaller expenses, but I want to focus on the most important ones right now.
If you can keep these costs in order and have the right volume of gross sales, your profit margin will be right where you want it. I will get to the exact number for that in a moment.
How Much Should Your Rent Be to maximize your juice bar profit margin?
Your rent should be roughly 7-10% of your total gross income.
There is a caveat to this conversation that I want to explain.
Depending on the volume of business that you plan on doing, you can afford for this percentage to be slightly higher and your net income to be lower.
The reason for this is that even though your net income PERCENTAGE may be lower, your TOTAL INCOME (which at the end of the day is what really matters) will be higher.
Let me paint a picture for you.
Let’s say for example you have a juice bar business and your rent is $1,000 per month. If you were shooting for that 10% rent mark, your gross income would only be $10,000.
This means that even if you had 80% profit, you would still only make $8,000 net per month.
Let’s paint another picture.
Let’s say for example, your rent is $30,000 per month.
Even if your rent was 20% of your total gross, you would still gross $150,000 per month.
Let’s say in this same scenario, you only had a 10% net income. You would still make $15,000 per month.
This is more than your 80% net of your $1,000 rent.
This is also why we always why we tell our clients not to strictly focus on the amount of the rent, but the earning potential of the location to maximize their juice bar profit margin.
NEXT, Lets talk about LABOR COSTS in relation to your juice bar profit margin.
What is a standard labor percentage for a juice bar?
You want your labor to be 25% or less. (Some people in the industry might say 30% but we feel with a juice bar this is too high)
A couple things to be aware of about your labor:
You shouldn’t attempt to run your labor at 25% from day one, but it is a good goal to get your business to by the end of the first year.
The reason being is that your staff is going to take a little bit of time and training before they are running at 100% efficiency.
What are some strategies to save on labor?
1. Schedule your labor based on your desired percentage.
This means knowing exactly how much you plan to spend based on your projected daily sales. This will ensure that you are at least close to your goal.
This will be hard to do when you first launch because you don’t have any historical data to reference and will get easier as time passes.
2. Proactively send people home if sales are slow.
This can be hard, because naturally your staffs lively hood is connected to the hours they work. The reality is, the health of the business is also connected to this.
Actively keep an eye on the sales throughout the day so you can make the proper adjustments to the labor and staffing as needed.
so in terms of your overall juice bar profit margin, what can you expect?
After it is all said and done what is the percentage you should expect to take home?
The reality is, this will depend on if you have 1 store of 5 stores.
When you only have 1 store, your corporate labor will be lower.
When you have 5 stores, you are going to need more higher functioning people to make sure everything is in order.
These people on your corporate team are going to be paid more.
The good news is, even though your net profit may be reduced, you have scaled your business to increase your over all profit.
So if you are looking at a single store you should be at 20%.
Depending on your business model and primary products served, you could see this number go as high as 30% …but that is rare.
If you decide to open multiple stores, your overall juice bar profit margin could be around 12-15%.