A spice shop buys spices in bulk and sells them in jars, refill bags or by weight, along with house blends. Opening one takes a retail food license, since repacking spices is handling food: in Minnesota, the example's state, the fee runs by sales and a risk category, $265 to $415 a year for a shop selling $125,001 to $250,000. FDA registration depends on who buys: a shop whose sales to consumers are more than its sales to other businesses is a retail food establishment, outside registration even though it packs its own jars; a shop that wholesales most of its jars to other stores registers as a food facility. Labels: a single spice needs its name, the net weight and who packed it; a blend lists its ingredients by weight, where cumin and oregano can be declared together as "spices" but garlic, onion and salt go by name, and paprika, turmeric and saffron by name or as "spice and coloring". And the jar cost: the jar and the work of filling it can cost as much as the spice, so a refill bag can give customers a cheaper ounce and the shop a better margin. In the example below, a Duluth spice shop costs its jars and bags. Below are the steps, the rules, the example, and a free jar cost calculator.
The short version
- A spice shop repacks bulk spices into jars, bags and blends, so it needs a retail food license.
- Minnesota's fee runs by sales and risk category: $265 to $415 at $125,001 to $250,000.
- Sell more to consumers than to businesses, and you're a retail food establishment, outside FDA registration.
- Single spice label: the name, net weight and who packed it.
- Blends: ingredients by weight; "spices" for cumin and the like, garlic, onion and salt by name.
- Paprika, turmeric and saffron: by name, or "spice and coloring".
- The jar and filling can cost as much as the spice; a refill bag gives a cheaper ounce and a better margin.
- TaroStack makes each fill a batch from the bulk lot, so a jar's lot leads back to the bag. More below.
The steps
| Step | What to settle |
|---|---|
| The license | Your state's retail food license for repacking, applied for before you open |
| Suppliers | Bulk spice importers and distributors, with each lot's origin and any test results |
| Jars and bags | Jar sizes, lids, refill bags, labels; a label printer and a scale |
| Blends | Recipes by weight, written down, so each batch tastes the same |
| Labels | Name, net weight, ingredients for blends, your name and address |
| Who you sell to | Mostly shoppers, or wholesale to other stores and restaurants too |
What a spice business earns overall is in spice business profit margin, and licensing a spice brand that makes and wholesales in spice business license.
The rules
| Rule | Where |
|---|---|
| License fee, Minnesota | By last year's gross sales and a high, medium or low risk category; $265, $350 or $415 at $125,001 to $250,000 (Minn. Stat. 28A.08) |
| FDA registration | Not for a retail food establishment: sales to consumers exceed sales to all other buyers, including food it packs; businesses aren't consumers (21 CFR 1.227) |
| Spices on a label | May be declared as "spice" (21 CFR 101.22(h)) |
| Spices that color | Paprika, turmeric and saffron as "spice and coloring" or by name (101.22(a)(2)) |
| Garlic, onion, celery powder | Declared by name, as foods, not spices (101.22(h)(3)) |
| Nutrition Facts | Not for a retailer with $500,000 or less in sales to consumers, or for foods with insignificant amounts of every required nutrient, without nutrition claims (21 CFR 101.9(j)) |
How the rest of a label fits together is in food labeling requirements for small business, and selling jars to other stores in Minnesota in wholesale food license. Other states set their own fees. This is general information, not legal advice.
An example: a Duluth spice shop
Lakewalk Spice Co., a made-up spice shop in Duluth, Minnesota, I use in these examples, sells most of its jars in the shop and a few to two restaurants, so it's a retail food establishment. Its opening costs come to $38,150: shelving and fixtures $9,000, opening inventory of bulk spices $11,000, the first order of jars, lids and labels $3,200, a label printer and scale $1,400, build-out and signs $7,500, the lease deposit and first month $4,800, the register $900, and the license at the medium risk category, $350. Then the jars, with 3% lost to spills and samples:
| Jar or bag | Bulk a lb | Fill | Spice | Jar, lid, label | Labor | Cost | Price | Margin | An ounce |
|---|---|---|---|---|---|---|---|---|---|
| Tellicherry pepper, jar | $9.80 | 2.2 oz | $1.39 | $0.78 | $0.35 | $2.52 | $8.49 | 70% | $3.86 |
| Tellicherry pepper, refill bag | $9.80 | 4.0 oz | $2.52 | $0.22 | $0.25 | $2.99 | $11.99 | 75% | $3.00 |
| Ceylon cinnamon, jar | $14.50 | 1.8 oz | $1.68 | $0.78 | $0.35 | $2.81 | $8.99 | 69% | $4.99 |
| Smoked paprika, jar | $8.20 | 2.0 oz | $1.06 | $0.78 | $0.35 | $2.19 | $6.99 | 69% | $3.50 |
| House taco blend, jar | $5.10 | 2.5 oz | $0.82 | $0.78 | $0.45 | $2.05 | $6.49 | 68% | $2.60 |
The jar, lid, label and labor come to $1.13 to $1.23 a jar, as much as the spice in the paprika and the taco blend; the refill bag cuts that to $0.47. It sells pepper at $3.00 an ounce against the jar's $3.86 and still earns 75%, so regulars refill their jars. The taco blend's label reads "Ingredients: chili pepper, cumin, salt, garlic, paprika, onion, oregano", heaviest first; "spices" could stand in for the cumin and oregano, never for the salt, garlic or onion. How to price for wholesale buyers as well is in keystone pricing.
Get the calculator
Download the spice jar cost calculator. One sheet: type the loss in filling, and each jar or bag's bulk price a pound, fill, jar, lid and label and labor; the spice cost, the cost a jar, the margin and the price an ounce work out, so a jar and a refill bag of the same spice compare side by side. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.
Where this stops working
Two hundred spices in three sizes each, blends made from twelve of them, bulk bags from four importers with their own lots: when an importer recalls a lot of cumin, a spreadsheet can't say which blends and jars it went into.
How TaroStack does it
TaroStack makes each fill and each blend a batch from the bulk lots, so every jar leads back to the bag it came from.
Bulk lots in, jars out. Each bulk bag is received with the importer's lot. Filling a run of jars is a batch: the spice, jars and labels go in, the jars come out with a lot of their own that records the bulk lot.
Blends as recipes. A house blend is a recipe by weight, with its versions kept, so each batch is weighed the same way and its cost a jar comes from what the spices cost.
Recalls by lot. If an importer recalls a lot, one recall report shows which blends and jars it went into, what's on the shelf and which restaurants got it.
| The job | Spreadsheet | In TaroStack |
|---|---|---|
| Which bulk lot is in a jar | Not recorded | The jar's lot records it |
| A blend made the same way | A recipe card | A recipe by weight, with versions |
| Cost a jar of blend | Worked out once | From each batch |
| An importer's recall | Pull everything | One report, by lot |
Recipes, batches, lots and recalls 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.