In this section
- Production planning: how much to make each weekHow to decide how much to make each week in a small food business: recent demand, stock, whole batches and kitchen hours. With a worked example.→
- When to hire your first helper in a food businessHow to tell whether hiring your first helper will pay in a small food business: your hours, the real cost, units needed to cover it and profit per hour.→
- Launching a new food product: cost it before you cook itHow to cost and price a new food product before you launch it: loaded cost, launch waste, contribution per kitchen hour and the sales that pay it back.→
- Moving from a home kitchen to a production kitchenWhen it pays to move from your home kitchen to a shared commercial kitchen or your own unit: fixed costs, set-up costs and the sales you need to cover them.→
- Running two food brands from one kitchenHow to run more than one food brand from the same kitchen: which costs to share, how to split overhead by kitchen hours, and how to see which brand pays.→
- How to keep customers coming back to your food brandWhat a repeat customer is worth, what a new one costs you, and how to measure how many come back. Worked example with meal prep boxes and real arithmetic.→
- Word of mouth and referrals for small food brandsWhat makes people recommend a food product, how to make it easy, and how to work out whether a referral programme pays. Worked example with jars of jam.→
- The numbers to check every week in a food businessThe seven numbers a small food business should check every week, how to pull them together in half an hour, and what they tell you. Two-week worked example.→
- Growth traps: selling more and earning lessWhy a small food business can sell more and earn less per hour: cheap channels, discounts, big orders and cash. How to spot it early, with a worked example.→
Growing a small food business means increasing what is left at the end of the month after your costs and your own pay. Sales can rise without that happening: you can sell 30% more and earn the same, with more hours in the kitchen. The method has an order. Measure what each product and each channel earns per kitchen hour, fix the margin first, then the mix of products and channels, and only then go after more volume or more capacity.
In this guide
- How much to make each week
- When to hire your first helper
- How to cost a new product before you launch it
- Moving from a home kitchen to a production kitchen
- Running more than one brand from one kitchen
- Keeping customers coming back
- Word of mouth and referrals
- The numbers to check every week
- Growth traps: selling more and earning less
Selling more is not the same as earning more
Every sale brings in money and brings in costs. What matters is the contribution margin: the price minus the variable cost, meaning ingredients, packaging, waste and the channel's commission. That margin is what pays your fixed costs and your wage.
A new sale with a thin contribution margin adds to sales and barely adds to profit. If it also eats your hours, it leaves you with less time and the same money. So before you think about growth, answer the question in how to know if your product is profitable: what each product earns per unit, per hour and per channel, after your own pay.
Measure per kitchen hour
In a business of one to three people, the thing that runs out first is rarely demand. It is hours. That is why the most useful number for deciding how to grow is contribution per kitchen hour:
contribution per hour = contribution margin per unit × units you make in one hour
A product with a high margin per unit that is slow to make can earn less per hour than a cheap, quick one. Do this sum for every product and every channel: market stall, direct orders, wholesale, delivery apps. The ranking you get tells you where to put the hours you have.
Leave your own time out of the variable cost for this sum, because you are already measuring it in hours. Bring it back at the end: what you earn per hour has to pay you a wage you would accept from someone else.
If you charge sales tax or VAT, do every sum on the price without tax. Check your local tax rules or ask an accountant for what applies to you.
The four levers, in order
There are four ways to earn more. They cost different amounts, which is why it pays to pull them in this order.
1. Margin per unit
The cheapest lever. Check price, ingredient cost, the real yield of the recipe and waste. Adding $0.40 to a product you sell 480 times a month is $192 a month without an extra hour of work, if you lose no customers. If you lose some, do the sum; the example below does it.
2. Mix of products and channels
Push what earns most per hour and stop pushing what earns least. Often the decision is to take a product out of one channel, such as an app with a commission, and keep making it for everyone else. A new product belongs here only if it earns at least as much per hour as your weakest current product, and you find that out by costing it before you cook it.
3. Volume
More customers, or the same customers buying more often. The cheapest volume comes from people who have already bought from you: getting customers to come back costs less than finding new ones, and referrals bring people who arrive already trusting you. Grow volume when each extra unit carries a good margin in the channel you will sell it through, and you still have free hours.
4. Capacity
More hours, more hands or more kitchen, when you cannot keep up with what you could sell at a good margin. First organise your week with a weekly production plan; then look at whether a helper or a kitchen pays. This lever brings new fixed costs, which is why it comes last.
Worked example: three ways to grow
You sell brownies and bottled hot sauce through direct orders and a weekend market. All prices are before tax.
| Brownie | Hot sauce (150 ml) | |
|---|---|---|
| Price | $3.50 | $9.00 |
| Variable cost (ingredients, packaging, waste) | $1.10 | $3.20 |
| Contribution margin per unit | $2.40 | $5.80 |
| Units per kitchen hour | 12 | 10 |
| Contribution per kitchen hour | $28.80 | $58.00 |
In a normal month you sell 480 brownies and 80 bottles:
- Brownies: 480 × 2.40 = $1,152, in 480 ÷ 12 = 40 hours
- Hot sauce: 80 × 5.80 = $464, in 80 ÷ 10 = 8 hours
- Total: $1,616 in 48 hours
- Minus fixed costs (market fees, insurance, phone): $500
- You keep: $1,116, which is 1,116 ÷ 48 = $23.25 per kitchen hour
You have three ideas.
A. Sell 240 more brownies through a delivery app. Say the app charges 30%: $1.05 on a $3.50 brownie. The extra box and bag cost $0.25. Margin per brownie: 3.50 − 1.10 − 1.05 − 0.25 = $1.10. That is 240 × 1.10 = $264 more, in 240 ÷ 12 = 20 more hours: $13.20 per hour. Sales rise by 240 × 3.50 = $840.
B. Sell 60 more bottles to a deli at $6.50 each. Margin: 6.50 − 3.20 = $3.30. That is 60 × 3.30 = $198 more, in 6 hours: $33.00 per hour. Sales rise by 60 × 6.50 = $390.
C. Raise the brownie to $3.90 and accept losing 10% of orders. You sell 432 brownies at a margin of 3.90 − 1.10 = $2.80: 432 × 2.80 = $1,209.60, against $1,152 today. You make $57.60 more and work 4 fewer hours (36 instead of 40). Sales barely move: 432 × 3.90 = $1,684.80 against 480 × 3.50 = $1,680.
The whole month, compared:
| Sales | You keep after fixed costs | Hours | Per hour | |
|---|---|---|---|---|
| Today | $2,400 | $1,116 | 48 | $23.25 |
| A only | $3,240 | $1,380 | 68 | $20.29 |
| B + C | $2,794.80 | $1,371.60 | 50 | $27.43 |
Today's sales are 1,680 + 720 = $2,400. With A they reach $3,240; with B and C together, 1,684.80 + 720 + 390 = $2,794.80. What you keep with B and C is 1,209.60 + 464 + 198 − 500 = $1,371.60.
Plan A grows sales by $840 and leaves you $8.40 more than B + C at the end of the month. It also costs 18 more hours. Those 18 hours pay you 8.40 ÷ 18 = $0.47 each. B + C raises what you keep by $255.60 with only 2 extra hours.
That does not make the app bad forever. It makes this app, at this price, bad for this product. If you list the brownie on the app at $5.00, the commission is $1.50 and the margin becomes 5.00 − 1.10 − 1.50 − 0.25 = $2.15: $25.80 per hour, close to what direct sales earn. The decision comes from the sum, not from the channel.
When to grow volume
Go after more volume when three things are true:
- The contribution margin in the new channel is close to your best channels.
- You have free hours, or will free them with levers 1 and 2.
- You can serve those customers again next month without relying on a promotion.
The third matters more than it looks. A customer who comes back every week is worth far more than one who bought once with a discount. Before spending on ads, check how many of last month's customers bought again this month.
When to grow capacity
The signs are plain: you turn away orders several weeks in a row, your production is already organised and it still does not fit, and the orders you turn away carry a good margin. If what you turn away is your lowest-margin product, raise that price first.
The usual order is a helper for a few days a week first, because you can adjust it month to month, and a kitchen later, because it is a fixed commitment. The guide on when to hire your first helper does the sum on hours, cost and profit per hour, and the one on moving to a production kitchen does it for premises.
For any new fixed cost, the first sum is the same: new fixed cost ÷ contribution margin per unit = extra units you must sell just to cover it. In the example, a helper who costs you $640 a month needs 640 ÷ 2.40 = 266.7, so 267 more brownies a month before you earn a single extra dollar.
As sales grow, check whether your registration or tax situation changes too. Thresholds differ by country, so check your local tax rules or ask an accountant.
New products and new brands
A new product feels like the most fun way to grow, and sometimes it is. It also spreads your hours across more recipes, more shopping and more waste. Launch it when its contribution per kitchen hour is at least that of your weakest product, or when it fills hours that are empty today.
A second brand from the same kitchen makes sense when it uses the same ingredients, equipment or days, and reaches customers your current brand does not. The hard part is keeping each brand's numbers apart: the guide on running more than one brand shows how to split shared costs.
The most common traps
- Growing through a low-margin channel. Plan A in the example: more sales, less per hour.
- Discounts to win customers who never return. You pay for the discount and do not keep the customer.
- One big wholesale buyer with a low price and 30-day terms. It fills your hours, leaves little margin and borrows your own money.
- Hiring or renting before filling the hours you already have. The fixed cost arrives in the first month; the customers may not.
The guide on growth traps works through each one with numbers.
Check the numbers every week
Growing well means correcting fast. Once a week, write down sales by product and channel, total contribution margin, kitchen hours, contribution per kitchen hour and waste. With five numbers you can see within two weeks whether an idea is working, instead of finding out at the end of the month. The guide to the numbers to check every week has the full list and how to read it.
Do it with the calculator
In the food cost calculator, enter each product's recipe, its price and the channel commission, once per channel; it gives you the contribution margin per unit, which every sum in this guide starts from. Multiply it by the units you make in an hour and you have your ranking.
Frequently asked questions
Should I find more customers or raise my prices first?
Look at your margin per unit first. A price rise or less waste costs you no extra hours, while more customers at a thin margin give you more work for about the same money.
Do delivery apps help a small food business grow?
Only if the margin left after the commission is healthy. Work it out per item: if your contribution per kitchen hour on the app is far below your other channels, raise the app price or keep that product off the app.
When should I hire someone or rent a kitchen?
When you turn away orders that carry a good margin for several weeks in a row and your production is already organised. Divide the new fixed cost by your margin per unit to see how many extra units you must sell just to cover it.
How fast should a small food business grow?
There is no right number. Check whether what you keep after fixed costs is rising and whether your earnings per kitchen hour are rising. If sales go up and those two do not, you are not growing.