A serving of gelato costs about 85 cents to make from its base and flavors, and a cup sells for $6.50, so the margin per serving is wide. What it has to cover is the counter: staff time per serving, the cup and spoon, and the slow winter months. Pints and restaurant tubs sell gelato without a scoop at the counter. Margin = (price − cost) ÷ price. In the example below, a two-flavor cup costs $2.57 to make and sell and goes for $6.50, a 60.5% margin. A summer month of four ways of selling brings $35,100 of sales and about $21,040 of gross profit.
The short version
- Margin = (price − cost) ÷ price; markup = (price − cost) ÷ cost.
- Count your time as a cost, even if you don't pay yourself yet.
- A two-flavor cup: $2.57, $6.50, 60.5%.
- A serving costs about 85 cents in base and flavors.
- Counter time is the biggest cost per cup.
- Pints and restaurant tubs sell gelato without the scoop.
- TaroStack costs each cup and pint from what each batch used. More below.
A cup, costed
Lakefront Gelato, the made-up gelato shop in Chicago, Illinois, I use in these examples, makes its gelato in-house and sells cups, cones, pints and tubs for restaurants:
| A two-flavor cup at the counter | Cost |
|---|---|
| Gelato base and flavors | $0.85 |
| Cup and spoon | $0.12 |
| Counter staff time | $1.40 |
| Card fees, 3% of $6.50 | $0.20 |
| Cost | $2.57 |
The shop's year, winter included, is in is a gelato business profitable, and ice cream's margins in ice cream business profit margin.
Margins by channel
| Product | Sold where | Price | Cost | Gross profit | Margin |
|---|---|---|---|---|---|
| Gelato cup, two flavors | Shop counter | $6.50 | $2.57 | $3.94 | 60.5% |
| Gelato cone | Shop counter | $6.00 | $2.63 | $3.37 | 56.2% |
| Gelato pint | Shop freezer, to go | $12.00 | $4.36 | $7.64 | 63.7% |
| Restaurant tub, 5 L | Restaurants, wholesale | $60.00 | $22.50 | $37.50 | 62.5% |
The pint keeps 63.7% and the restaurant tub 62.5%, with no counter time per scoop; the cone keeps 56.2%.
A month's numbers
A July for Lakefront Gelato:
| Product | Units | Sales | Gross profit |
|---|---|---|---|
| Gelato cup, two flavors, shop counter | 3,000 | $19,500 | $11,805 |
| Gelato cone, shop counter | 1,500 | $9,000 | $5,055 |
| Gelato pint, shop freezer | 400 | $4,800 | $3,056 |
| Restaurant tub, 5 L, restaurants | 30 | $1,800 | $1,125 |
| Month | $35,100 | $21,041 |
Cups bring most of the gross profit in July. In January the counter sells a fraction of that, and the pints and restaurant tubs, which need no one at the counter, carry the shop. The pints themselves are in how to package ice cream for sale.
Get the calculator
Download the gelato 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 a serving. Pistachio paste at three times the cost of vanilla, and scoops that run heavy on a busy night, change the month, and only the batch records show it.
How TaroStack does it
TaroStack costs each pint from what each batch used, so margins sit on real cost.
True cost from the batch. Each batch takes base, pistachio paste and fruit 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 pint 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.