Butcher Shop Business Plan: Margins, Rules, a Projection

A butcher shop business plan is a plan for thin margins on heavy volume. A pound of steak sells for a lot, but the shop pays for the whole carcass, the trim and the bone, so the plan sets out what each kind of meat leaves per pound, the staff it takes to cut it, the cold rooms and cases, and how long it takes to reach full speed. The rules matter early: a retail butcher cuts, grinds, cures and smokes meat from inspected carcasses without federal inspection of its own, under the retail store exemption, as long as it sells mostly to household consumers, at least 75% of sales by dollar value, keeps sales to restaurants under a yearly dollar limit, sells in normal retail quantities, and doesn't slaughter. In the example below, a shop in Cedar Falls, Iowa, loses money for five months, needs about $25,000 to get through them, and ends the year about $28,700 ahead on $729,000 of sales. Below is a description example, each part of the plan, the rules, the year, the startup budget, and a free template.

The short version

• Describe the business in a paragraph: the meats, the customers, the shop, the goals.
• Work out margin per pound by category: beef cuts, ground, pork, sausage, restaurant orders.
• House sausage and specialty products carry the margin; ground beef moves the volume.
• The retail store exemption: inspected meat only, traditional retail operations, mostly household customers.
• Restaurant sales stay under 25% of sales and under USDA's yearly dollar limit.
• Butchers and counter staff are the biggest fixed cost; the walk-in and cases the biggest startup cost.
• Plan for months of losses: the example needs $25,000 before it turns.
• TaroStack keeps each cutting's yield, each cut's true cost, and the margin by customer. More below.

Part 1: the business description

Cedar Valley Butcher, a made-up butcher shop in Cedar Falls, Iowa, I use in these examples, writes:

Cedar Valley Butcher sells beef and pork from Iowa farms, processed at state and federally inspected plants and cut in our shop: steaks, roasts, ground beef, chops and house sausage, with orders for six local restaurants. We aim for half our customers to be regulars within a year.

Part 2: margin by category

Variable cost is the meat at what the carcass or boxed cut costs per pound after trim and bone, plus wrap, label and card fees. Sausage turns trim into a premium product, which is why it leaves the most. How a carcass's yield sets the cost of each cut is in butcher yield test.

Part 3: customers and volume

At full speed the restaurants are about 18% of sales by dollar value, inside the exemption's 25% line. How a meat counter fits a grocery is in small grocery store business plan.

Part 4: the retail store exemption

The exemption is in 9 CFR 303.1(d). Your state also licenses a retail meat market and inspects it under its food code. Custom processing for an animal's owner is a different exemption, in custom exempt meat processing. This is general information, not legal advice.

Part 5: the year, month by month

Fixed costs are $21,000 a month: rent ($3,500), utilities for coolers and cases ($1,200), two butchers ($9,000), counter staff ($6,000), insurance ($300), POS and software ($150), marketing ($400), equipment upkeep ($250), and waste and rendering pickup ($200). Sales start at 35% of full speed:

The year's sales are $728,837 and the profit $28,686, about 4%. The lowest cash point is −$25,130 in month 5, which is why the budget carries $30,000 of working cash.

Part 6: the startup budget

Get the template

Download the butcher shop business plan template. Four sheets: products with price per pound, variable cost and pounds at full speed; the year month by month with a ramp you can change; fixed costs; and the startup budget. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.

Where this stops working

A carcass breaks into dozens of cuts at different prices, the trim goes into grind and sausage, and the restaurants' share has to stay inside the exemption. A plan's average margin doesn't say whether this week's carcass made money.

How TaroStack does it

TaroStack keeps each cutting's yield, each cut's true cost, and the margin by customer.

Each cutting a batch. Cutting a primal into steaks is a batch: the primal goes in, the steaks come out, and their cost a pound comes from what that primal cost; trim ground into burger is a batch of its own. TaroStack shows from your own batch history whether a yield holds.

Lots on every package. Each cut gets a lot that records the supplier's lot, and lot labels print for the case.

Margin by customer. Restaurant orders and counter sales are orders by customer, so the restaurants' share of sales, and what they earn, is a report, not a guess.

Recipes, batches, lots and true cost are on every plan, from $49 a month. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.

Questions people also ask

Does a butcher shop need USDA inspection?

Not for traditional retail cutting, grinding, curing and smoking of inspected meat sold mostly to household consumers, under the retail store exemption; slaughter and most wholesale need inspection.

How much can a butcher shop sell to restaurants?

Under the retail exemption, sales to consumers other than households must stay under 25% of sales by dollar value and under a yearly dollar limit USDA adjusts for inflation.

What is the profit margin of a butcher shop?

In the example, about 4% net in the first year, from contribution margins of 28% to 54% by category.

How much does it cost to open a butcher shop?

In the example, $121,000, including the walk-in, cases, saws and grinders, build-out, opening inventory and $30,000 of working cash.