Health Food Store Business Plan, With a Projection

A health food store sells the same groceries as a supermarket at a smaller scale, so it earns its place with what a supermarket does less of: bulk bins, supplements, body care and a juice bar. Those are also its best margins. The plan works in categories, per $100 of sales, and it has two sets of rules to get right: organic food has to stay organic in the store, and nothing on a shelf or a sign should claim a supplement treats a disease. In the example below, a Montana health food store opens with $213,000, ends its first year about $3,400 ahead on $772,000 of sales, and makes about $6,000 each month at full speed, before the owner's pay. Below is each part of the plan, the rules, the first year month by month, the startup budget, and a free template.

The short version

• Describe the store in a paragraph: the town, the shoppers, what they can't find at the supermarket, the goals.
• Plan sales by category per $100: grocery, bulk bins, produce, supplements, body care, juice bar.
• Supplements, body care and the juice bar keep the most of each dollar; packaged grocery keeps the least.
• Bulk bins repacked in the store keep their supplier's lot and date on every bag.
• Organic products sold or repacked in the store stay apart from conventional ones and keep their labels right.
• No sign, shelf talker or staff advice should say a supplement cures or treats a disease.
• TaroStack makes each repacked bag a batch with the bulk sack's lot, and keeps every lot's dates. More below.

Part 1: the business description

Bitterroot Natural Market, a made-up health food store in Missoula, Montana, I use in these examples, writes:

Bitterroot Natural Market is a 3,500-square-foot natural food store selling organic and natural groceries, organic produce, bulk grains, nuts and flours repacked in the store, supplements and vitamins, body care, and juices and smoothies made to order. In its first year it aims to reach $80,000 of sales a month.

Part 2: the rules

Organic products. A retail store that sells organic products without processing them, or that processes them at the point of final sale, doesn't need its own organic certification, but it still has to follow the organic handling and labeling rules (7 CFR 205.101). For a store that repacks organic oats from a 25-pound sack into one-pound bags, that means keeping organic and conventional bins and scoops apart, labeling each bag correctly, and keeping the supplier's paperwork. How organic records are kept is in organic certification record keeping.

Supplements. The law treats a product sold to cure, treat, mitigate or prevent a disease as a drug (21 U.S.C. 321(g)(1)), so a store's own signs and staff advice shouldn't make disease claims for a supplement, whatever a customer asks. The juice bar makes food to order and falls under the store's retail food permit. This is general information, not legal advice.

Part 3: what each category earns

Each variable cost includes the goods, 2.5% card fees and the category's shrink; the bulk bins' also include bags, labels and the hours to repack them. At full speed the store sells $80,000 a month and keeps $29,264, 36.6%. Supplements bring $6,640 of it on a fifth of the sales, and the juice bar $5,080 on a tenth; packaged grocery brings the most, $7,980, on 35% of the sales and the thinnest margin. How contribution is worked out is in contribution margin example.

Part 4: the first year, month by month

Fixed costs are $23,250 every month: rent ($5,500), wages ($14,000), utilities and coolers ($1,600), insurance ($500), the register and software ($250), ads ($600), and other costs ($800). Sales start at 55% of full speed:

The year's sales are $772,000 and the profit $3,396, before the owner's pay. The store breaks even at about $63,600 of sales a month, the sixth month; the first five lose $21,142, which the working cash covers. At full speed, $6,014 each month is 7.5% of sales. Moving $5,000 of monthly sales from packaged grocery to supplements and the juice bar, half to each, adds about $1,200 each month.

Part 5: the startup budget

The $173,000 before working cash is earned back over about two and a half years at full speed.

Part 6: the bulk bins

Bulk bins are the store's own small production line. A 25-pound sack of organic rolled oats arrives with the supplier's lot and best-before date; it's repacked into one-pound bags, each labeled with the product, the weight, the store's own lot and the date. If the supplier recalls that lot, the store needs to know which bags came from it and which are still on the shelf. How lot numbers carry through is in what is batch tracking.

Get the template

Download the health food store business plan workbook. Four sheets: your categories, each per $100 of sales with its variable cost and hundreds a month at full speed; the first year, month by month, with sales, profit and cash; your fixed costs; and your startup budget with working cash. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.

Where this stops working

A plan in categories hides the items: thousands of them, supplements with expiry dates, organic and conventional versions of the same oats, sacks repacked into bags every week, and a juice bar using produce from the same cooler as the shelves. A spreadsheet can't say which bags came from a recalled sack, which supplements expire next month, or what a smoothie really cost.

How TaroStack does it

TaroStack makes each repacked bag a batch with the bulk sack's lot, and keeps every lot's dates.

Repacking as batches. A one-pound bag of oats is a recipe: a batch of 25 bags takes the sack, the bags and the labels off stock, records the sack's lot, and gets a lot of its own with its date. Fields of your own on each received lot can hold the organic certificate it came under.

Recalls in one report. If a supplier recalls a sack's lot, one recall report shows which batches of bags it went into and what's still on the shelf.

Dates, oldest first. Supplements, body care and food keep their dates, the oldest goes first, and an alert comes before a date runs out. The juice bar's smoothies are recipes too, so what each one costs comes from what it used.

Recipes, batches, lots, expiry and recalls are on every plan, from $49 a month, with no limit on items; TaroStack connects to Square. 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

Are health food stores profitable?

Thinly in the first year. In the example, about $3,400 ahead on $772,000 of sales, then $6,014 each month at full speed, 7.5% of sales, before the owner's pay.

How much does it cost to open a health food store?

In the example, $213,000: $60,000 of opening inventory, $45,000 of coolers, shelving and bulk bins, and $40,000 of working cash are the biggest parts.

Does a health food store need organic certification?

A retail store that sells organic products, or prepares them at the point of sale, is exempt from certification but still follows the organic handling and labeling rules.

What sells best in a health food store?

By margin, in the example: the juice bar at 63.5%, then supplements and body care near 41%. By money, packaged grocery, on a third of the sales.