A deli's margins split two ways. Made food keeps the most of its price: a turkey club costs $4.35 in turkey, bacon, cheese, bread, the wrap and the card fee, and sells for $11.50, a 62.2% margin before wages; soups and office catering trays keep about as much. Meats and cheeses sliced by the pound keep far less, 35.3%, and so do chips and drinks. Margin = (price − cost) ÷ price. In the example below, a month of five lines brings $49,792 of sales and about $25,860 of gross profit, before wages, rent and power.
The short version
- Margin = (price − cost) ÷ price; markup = (price − cost) ÷ cost.
- A turkey club: $4.35, sold for $11.50, 62.2%.
- Sandwiches, soups and trays keep the most.
- Sliced meats and cheeses by the pound keep about 35.3%.
- Chips and drinks keep the least.
- TaroStack costs each sandwich from what each batch used. More below.
A sandwich, costed
Tremont Deli & Provisions, the made-up deli in Cleveland, Ohio, I use in these examples, counts its staff as a fixed cost, so the costs below are what each item uses:
| A turkey club | Cost |
|---|---|
| Turkey, bacon, cheese, bread and produce | $3.80 |
| Wrap and bag | $0.20 |
| Card fees, 3% of $11.50 | $0.35 |
| Cost | $4.35 |
The deli's year is in deli business plan, and a sandwich-only shop in sandwich shop profit margin.
Margins by channel
| Product | Sold where | Price | Cost | Gross profit | Margin |
|---|---|---|---|---|---|
| Turkey club | Counter | $11.50 | $4.35 | $7.16 | 62.2% |
| Turkey, sliced, per pound | Deli case | $14.99 | $9.70 | $5.29 | 35.3% |
| Soup, a quart | Counter | $9.00 | $3.62 | $5.38 | 59.8% |
| Sandwich tray for 10 | Office catering, invoiced | $120.00 | $53.00 | $67.00 | 55.8% |
| Bag of chips | Shelf | $2.00 | $1.31 | $0.69 | 34.5% |
The sliced turkey keeps 35.3%, with the ends and trim that can't be sold counted in its cost; the trays keep 55.8%.
A month's numbers
A month for Tremont Deli & Provisions:
| Product | Units | Sales | Gross profit |
|---|---|---|---|
| Turkey club, counter | 1,900 | $21,850 | $13,594 |
| Turkey, sliced, per pound, deli case | 800 | $11,992 | $4,232 |
| Soup, a quart, counter | 550 | $4,950 | $2,959 |
| Sandwich tray for 10, office catering | 50 | $6,000 | $3,350 |
| Bag of chips, shelf | 2,500 | $5,000 | $1,725 |
| Month | $49,792 | $25,861 |
Sandwiches bring more than half the gross profit. Sliced meats sell about $12,000 a month and keep about $4,200 of it, but customers who come in for a pound of turkey buy a sandwich too. Every 10 cents of turkey saved a sandwich, in portioning, adds $190 a month. Wages, rent and power come out of the gross profit; keeping deli meats in date is in date marking food code.
Get the calculator
Download the deli margin calculator. One sheet: one line for each product and channel, with its price, materials, packaging, labor and fee rate; the cost, gross profit, margin, markup and the price your target margin needs fill in. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.
Where this stops working
The calculator holds one cost per item. Turkey and beef prices move by the week, a heavy hand at the slicer adds an ounce to every sandwich, and ends and trim change what a pound really cost.
How TaroStack does it
TaroStack costs each sandwich from what each batch used, so margins sit on real cost.
True cost from the batch. Each batch takes meats, cheeses and bread at the price of the deliveries they came from, so a price rise shows in the next batch's cost.
Labor on the batch. The minutes a batch took are recorded on it, so the hours behind each product are on record.
Margins by product. Margins are reported per product on that actual cost, and a price-creep report per supplier shows whose prices moved.
| The job | Spreadsheet | In TaroStack |
|---|---|---|
| What a sandwich cost | One price from last season | Cost from the batch's deliveries |
| The hours behind a batch | Remembered | Labor minutes on the batch |
| An ingredient creeping up | Noticed late | A price-creep report |
| Margins by product | Re-worked by hand | Margins on real cost |
Recipes, batches, costing and margin reports 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.