Breaking point - takeaway?

[Stas Lawicki]

I haven't read all the posts in detail (and Im not going to now), but for the final time, why no delivery charge????

I see the bit about just eat but not sure how that at 14% equates to an equivalent delivery charge?!

If your products are that good, reduce your delivery team, add a small delivery charge and see how you go. Maybe offer a delivery window as apposed to ASAP and charge 50% less for those who ordering in the window. The idea being you have multiple drops and set times. If that works, and it might not, you can reduce this delivery overhead.

I've reached the end... as Debs would say with a smirk, 'I'm out'.

 

[Gordon - Commercial Finance]

Delivery charge would be too little too late I think here. The issue is that almost all the revenue is being used to pay 2 delivery drivers to sit idle. You’d be lucky if you were busy enough for 1 driver, never mind 2!
Let one of them go, and potentially reduce the hours of the other until you’ve got the orders to justify their time.

 

[The Byre]

Some of the products I am selling for £7.50 cost me 60p to make

No, they do not cost you 60p!

Please go back and reread what I wrote about mayonnaise - the revolting gunk inside the jar is the cheapest item and the least of Unilever's costs. All it is, is cornflour and egg-flour and a few powdered flavours, plus sugar, salt, gelatine and acetic acid. I doubt that there is 5p's worth of anything in a jar of the stuff.

But it costs far, far more than 5p to make. The jar costs more. The advertising costs more per jar. Transport costs more than 5p per jar. Labour and energy and other ancillary costs are more than 5p per jar. My uninformed wild guess (albeit based on experience of other food processes) is that they are making about 30% gross margin (not profit, but margin - there is a difference!)

You are obviously doing something right - you are making stuff that people want to buy! Well done!

But you are doing something very wrong - you are not calculating your costs correctly.

Go back and draw up a list of costs as they are to be applied to each item. Include electricity, labour (that's you BTW) transport, advertising (if any) water, kitchen rental, equipment costs, time spent cleaning, the lot. Getting that figure right will take you all day, but getting it right is a matter of survival for any and every business.

 

[Deleted member 59730]

But it costs far, far more than 5p to make. The jar costs more. The advertising costs more per jar. Transport costs more than 5p per jar. Labour and energy and other ancillary costs are more than 5p per jar. My uninformed wild guess (albeit based on experience of other food processes) is that they are making about 30% gross margin (not profit, but margin - there is a difference!)

I mentioned whisky. When I worked on the Grant's account years ago I was told that the bottles and labels came to 34p. The embossed and gold labels had secret pieces in the design to prevent faking. Inside was water. Distilled water. And a bit of sugars, colouring and flavouring. The biggest part of the cost was Time and it still came to under 34p.

 

[Gordon - Commercial Finance]

I mentioned whisky. When I worked on the Grant's account years ago I was told that the bottles and labels came to 34p. The embossed and gold labels had secret pieces in the design to prevent faking. Inside was water. Distilled water. And a bit of sugars, colouring and flavouring. The biggest part of the cost was Time and it still came to under 34p.

Grant’s whisky a bit different from the property stuff!

 

[Deleted member 59730]

Grant’s whisky a bit different from the property stuff!

Irish?

 

[dan19900]

In fairness you're not doing that bad, just spending too much on the drivers & starting at a disadvantage if the majority of your customers are 6.5 miles away.
Personally I'd get rid of your drivers & find some 16 year olds happy to do it for almost half that but if not then you can still aim to get to just below the threshold (for now) you can target something like this:

sales: 1600 per week
commission: 200 per week
Drivers: 350 per week
Food: 350 per week
Misc: 50 per week

Leaves you with 650 per week profit which isn't too bad for starters. I'd find some drinks you can easily make with a higher profit margin, low margin drinks are going to be bad news when you're close to the VAT threshold plus it probably irritates people seeing expensive cans of coke.

Then get some leaflets printed, have your drivers deliver them during quiet times in areas closer to you. Wait and see how that goes.
After that set up some facebook ads again targeting closer areas, search some of your customers names on Facebook so you can note down the demographic that buys from you most often, e.g women in their 20s, then target them with the ads, copywriting doesn't need to be anything special. Just make sure the photos of your food are good.

 

[JpeeL]

I have read through these suggestions I am already doing all of them
I prepare orders myself
I don’t have a delivery charge so people order through me... I save one what JustEat would charge me & eventually when more people start ordering through me I can leave JustEat them be able to add a delivery fee.
unable to deliver the orders because a) I would be out the kitchen for half an hour... if an order comes through it would be missed b) I have a baby who I can’t be dragging out to deliveries every hour so not sure what else I can do myself and pick up the slack

Minimum spend is £12 or £14 for furthest deliveries, £3 delivery fee on JustEat
6.5 mile radius is one way. Yes it is far but if any less than that I would be cutting out a major town
I also do have lots of vegan products
Some of the products I am selling for £7.50 cost me 60p to make
But that doesn’t matter when On a Friday and Saturday I am paying around £110 for drivers

for comparison my shop tonight took the equivalent of your weekly revenue, I had 3 drivers which Ended up costing me £120.

I have been in the exact position you are in, most people on here have. Just a year ago I used to tell staff that the wholesaler has sold out of item xyz because I was to embarrassed to admit I couldn’t afford it. Things just weren’t working and I had took on a lot of extra headache for zero reward.
I stripped it all back, didnt replace staff who left and started doing a lot more myself. I still had not much money but that did give me leeway to at least buy what we needed.
I put some towards a newly designed menu, raised some prices here and there and paid for menu distribution, even though we are right on a busy crossroads the amount of people in the immediate local area who didn’t know we existed was staggering.
I have now set up our own online ordering platform which has almost doubled the income. I now have more time to step back and analyse the business rather than get caught up in the ‘working’ side of it. I still don’t take much of a wage but I’m getting there, tbh I’m getting more satisfaction atm looking at ways to spend money on improving the business rather than just giving it all to myself. The next ass ****ing is going to be VAT threshold...

 

[GiggiAt]

Firstly, i would look at different types of costs that you are accruing and find where you can cut costs. For instance, i would perhaps suggest decreasing the hourly wage and instead hiring students perhaps? they most often go for a cheap gig and short hours - and ask around other takeaways and see what the going rate is and advertise around local universities or colleges.
Another way, is to look at your inventory costs, where can you source cheaper ingredients - usually buying in bulk can give you 'economies of scale' aka being cheaper. The above idea is also not terrible, over price these on apps and offer a cheaper discount if they collect. And one more piece of advice, when first staring a business it is usually a safe bet to hold on to another part-time job, therefore giving you a bit of income that you can surly rely on. Wish you the best

 

[Opinion87]

Firstly, i would look at different types of costs that you are accruing and find where you can cut costs. For instance, i would perhaps suggest decreasing the hourly wage and instead hiring students perhaps? they most often go for a cheap gig and short hours - and ask around other takeaways and see what the going rate is and advertise around local universities or colleges.
Another way, is to look at your inventory costs, where can you source cheaper ingredients - usually buying in bulk can give you 'economies of scale' aka being cheaper. The above idea is also not terrible, over price these on apps and offer a cheaper discount if they collect. And one more piece of advice, when first staring a business it is usually a safe bet to hold on to another part-time job, therefore giving you a bit of income that you can surly rely on. Wish you the best

Have you read any of the OPs posts? Apparently not.

 

[Root 66 Woodshop]

Family, Friends? can none of these help you out at a more cost effective price for deliveries?

How many deliveries an evening are you making?