Is a Gelato Business Profitable? A Year by Month

A gelato business can be profitable, and the serving isn't the problem: the base, the flavorings and the cup come to about 85 cents for a serving that sells for $6.50. The problem is the calendar. Rent, power for the freezers and the equipment loan are the same in January as in July, and in a city with real winters, January sells a fifth of what July does. In the example below, a gelato shop in Chicago takes about $252,000 in a year and keeps about $20,500, 8% of sales, after paying its staff. Six months make money and six lose it, and the summer has to carry the winter. Below is what a serving costs, the year month by month, the break-even, what helps in winter, and a free calculator.

The short version

• A serving costs about 85 cents and sells for about $6.50; the gelato is not the problem.
• Rent, utilities and the equipment loan are $7,070 a month, all year.
• In the example, the shop needs 81 servings a day to break even in winter and about 113 in summer.
• July makes $12,200; January loses $6,900. The year keeps about $20,500.
• Shorter winter hours, holiday pints and wholesale tubs to restaurants soften the winter.
• Bank the summer: the shop needs cash on hand to get through the winter months.
• TaroStack keeps the batches, the freezer and the wholesale orders counted. More below.

What a serving costs

Lakefront Gelato, a made-up gelato shop in Chicago, Illinois, I use in these examples, makes its gelato in-house from a base of milk, cream and sugar:

The average sale of $6.50 mixes small cups, larger cups and pints to go. Making a batch is someone's time, which is in the staff hours below. How a recipe's cost is built up is in steps in recipe costing.

The year, month by month

The shop is open every day; staff hours run from 12 a day in winter, one person on the counter plus making, to 22 in summer, two or three on the counter plus making, at $16 an hour with 10% payroll taxes. Fixed costs are $7,070 a month: rent ($4,500), utilities for the freezers and batch freezer ($1,000), the equipment loan for the batch freezer and display case ($600), insurance ($150), the till and software ($120), marketing ($300), repairs ($200) and accounting ($200).

April to September make $44,769; the other six months lose $24,318. February's break-even is higher than January's on the same hours only because it has three fewer days to spread the rent over.

What helps in winter

Shorter hours. The break-even depends on the staff hours as much as the servings: closing two weekdays in January and February cuts the staff cost without losing many sales.

Pints and holiday orders. Pints to go, holiday flavors and gift cards sell when cones don't.

Wholesale tubs. Restaurants buy gelato by the tub for dessert menus all year; made on quiet winter days, tubs use the batch freezer and the staff hours the shop already pays for. How to price for a business that resells your product is in how to price handmade items for wholesale.

Cash from the summer. A shop opening in spring has the summer first; one opening in the fall starts with the losing months and needs cash to get through them. How the whole month of a small food business works, with the same arithmetic, is in is a home bakery profitable.

Get the calculator

Download the gelato shop profit calculator. Type your average sale and cost a serving, card fees, wages and payroll taxes, and each fixed cost. Then for each month, the days open, servings a day and staff hours a day. It works out each month's sales, costs and profit, the year's totals, and the servings a day each month needs to break even. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.

Where this stops working

Twenty flavors made in batches, a display case and a back freezer full of tubs by date, wholesale tubs for six restaurants, and pistachio paste that costs more every order. The cost of a serving is a guess, the oldest tubs aren't always the ones served first, and the base mix runs out on a hot Saturday.

How TaroStack does it

TaroStack keeps the batches, the freezer and the orders.

Each flavor a recipe, each batch a lot. A flavor is a recipe of base, flavorings and mix-ins, and units convert: pistachio paste bought by the kilo, used by the gram. Recording a batch takes the ingredients off stock at what you paid and puts the tubs into a lot with their date, so the oldest are served first.

Wholesale tubs as sales orders. Restaurant orders are sales orders for their delivery day that show whether the tubs to fill them are in the freezer while you're still typing, and margins are reported by product and by customer.

And the base before a hot weekend. Base, cones and cups sit on the reorder list in days of cover at the rate each really moves, so July's rate drives July's order.

Recipes, batches, lots and margins by product and customer 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

Is a gelato business profitable?

It can be, but seasonally. In the example, a Chicago shop takes about $252,000 a year and keeps about $20,500, 8%, after staff and rent; the six warm months make $44,800 and the six cold ones lose $24,300.

How much does a gelato shop make a month?

It depends on the month. In the example, July brings in $37,300 and keeps $12,200; January brings in $8,100 and loses $6,900.

How many servings does a gelato shop need to break even?

In the example, about 81 a day on winter hours and about 113 on summer hours, at $6.50 a serving. Your own lease, staff hours and price change the number; the calculator works it out.

How much does a serving of gelato cost to make?

In the example, about 85 cents: 35 cents of base, 25 of flavorings and 25 for the cup or cone, spoon and the pints' share. Staff time to make the batches is counted separately.