A ketchup business has a rule a BBQ or hot sauce business doesn't: ketchup has a federal standard of identity. To call it ketchup, it has to be made from tomato ingredients, seasoned with vinegar, a sweetener and spices, flavoring, onions or garlic, with salt if you like. A sauce with mango or apple in it isn't ketchup by that standard, so it needs another name. The standard also sets how thick it must be, no more than 14 centimeters of flow in 30 seconds on a lab instrument, and how full the bottle must be, at least 90%. Inside those lines, a small brand has plenty of room: smoky, spicy, honey-sweetened. The plan below follows five products, priced for shops, markets, restaurants and gifts. In the example, a Louisville ketchup maker starts with $21,500, ends its first year about $17,200 ahead before the owner's pay, and makes about $4,000 a month at full speed. Below is each part of the plan, the first year month by month, the startup budget, and a free template.
The short version
- Describe the business in a paragraph: the flavors, who buys, where, the goals.
- Check every recipe against the standard before you name it ketchup.
- Tomato ingredients plus vinegar, a sweetener, and spices, flavoring, onions or garlic: ketchup. Other fruit: a new name.
- Too thin to meet the consistency standard means a "below standard" statement on the label.
- Fill bottles to at least 90% of their capacity.
- Have a process authority review the recipe and process before you sell a shelf-stable bottle.
- TaroStack makes each kettle a batch from its recipe, with its lot, and counts the bottles it made. More below.
Part 1: the business description
Butchertown Ketchup Co., a made-up ketchup maker in Louisville, Kentucky, writes:
Butchertown Ketchup Co. makes small-batch ketchup in a shared commercial kitchen: a classic ketchup and a smoky chipotle ketchup in 12-ounce glass bottles for local shops, markets and our website, gallon jugs for burger restaurants, and a gift three-pack. In its first year it aims to sell about 2,500 bottles a month.
Part 2: what the standard lets you call ketchup
| Product idea | What's in it | Called ketchup? |
|---|---|---|
| Classic | Tomato paste, vinegar, sugar, salt, onion, spices | Yes |
| Smoky chipotle | The classic plus chipotle pepper and smoke flavoring | Yes: spices and flavoring are allowed |
| Honey ketchup | Honey instead of sugar | Yes: a nutritive sweetener |
| Mango chili | Tomato with mango and chili | No: mango isn't one of the allowed ingredients; sold as "mango chili sauce" |
| Thinned low-sugar version | Flows 16 cm in 30 seconds | Ketchup, labeled "Below Standard in Quality—Low Consistency" |
Butchertown tests each batch's flow on a consistometer, and thickens the low-sugar idea with more paste instead of putting a "below standard" line on its label. The mango sauce launches under its own name. What a bottle costs to fill and label is in packaging cost per unit.
Part 3: the rules
Ketchup is made from tomato ingredients and seasoned with vinegars, nutritive carbohydrate sweeteners, and spices, flavoring, onions or garlic, with salt allowed; sealed for storage at room temperature, it's heat-processed to prevent spoilage (21 CFR 155.194(a)). It flows no more than 14 cm in 30 seconds at 20 °C on a Bostwick consistometer, or the label carries a substandard quality statement, such as "Below Standard in Quality—Low Consistency"; and the container is filled to at least 90% of its capacity, except frozen ketchup and single-serve packs of 2 ounces or less (155.194(b), (c)). Whether your recipe also falls under the acidified foods rules depends on how it's made, which is in acid food vs acidified food; a process authority can tell you. This is general information, not legal advice.
Part 4: products and what each earns
| Product | Price | Variable cost | Contribution | Margin | A month at full speed |
|---|---|---|---|---|---|
| Classic ketchup, 12 oz, to shops | $4.25 | $2.05 | $2.20 | 51.8% | 1,200 |
| Smoky chipotle, 12 oz, to shops | $4.50 | $2.20 | $2.30 | 51.1% | 600 |
| Ketchup at markets and online, 12 oz | $9.00 | $2.60 | $6.40 | 71.1% | 500 |
| Restaurant gallon jug | $24.00 | $11.50 | $12.50 | 52.1% | 60 |
| Gift three-pack | $24.00 | $8.40 | $15.60 | 65.0% | 80 |
Variable costs are tomato paste, vinegar, sugar and spices, the bottle, cap and label, and card fees and shipping supplies where they apply. At full speed the business sells $15,660 a month and keeps $9,218, 58.9%. The shops buy the most bottles; the markets and website keep the most of each one, $6.40 a bottle against $2.20. How the shop price sits on the ladder is in distributor margin.
Part 5: the first year, month by month
Fixed costs are $5,200 every month: shared kitchen time ($1,400), storage ($250), part-time help ($2,400), insurance ($150), market fees ($300), the website and software ($100), marketing ($400), and other costs ($200). Sales start at 35% of full speed:
| Month | Sales | Profit | Cash, year to date |
|---|---|---|---|
| 1 | $5,481 | −$1,974 | −$1,974 |
| 2 | $6,582 | −$1,325 | −$3,298 |
| 3 | $7,830 | −$591 | −$3,889 |
| 4 | $9,078 | $143 | −$3,747 |
| 5 | $10,179 | $792 | −$2,955 |
| 6 | $11,280 | $1,441 | −$1,514 |
| 7 | $12,210 | $1,986 | $472 |
| 8 | $13,140 | $2,535 | $3,007 |
| 9 | $13,923 | $2,996 | $6,003 |
| 10 | $14,706 | $3,457 | $9,460 |
| 11 | $15,195 | $3,745 | $13,205 |
| 12 | $15,660 | $4,018 | $17,223 |
The year's sales are $135,264 and the profit $17,223, before the owner's pay. The business breaks even at about $8,830 of sales a month, in the fourth month; the lowest cash point, −$3,889 in month 3, is well inside the $8,000 of working cash. Grilling season lifts the markets and restaurants, so a spring start reaches full speed in summer.
Part 6: the startup budget
| Item | Example |
|---|---|
| Kettle, filler, pH meter and refractometer | $4,500 |
| Bottles and caps, first order | $3,000 |
| Label design and first labels | $2,500 |
| Process review and testing | $1,500 |
| Licenses and permits | $800 |
| Market tent and display | $700 |
| Insurance deposit | $500 |
| Working cash | $8,000 |
| Total to start | $21,500 |
The $13,500 before working cash is earned back in about three and a half months at full speed. A sauce with fewer naming rules is in BBQ sauce business plan.
Get the template
Download the ketchup business plan workbook. Four sheets: your products, each with its price, variable cost and units a month at full speed; the first year, month by month, with sales ramping up, profit, cash, the first profitable month and the lowest cash point; your fixed costs; and the startup budget. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.
Where this stops working
The plan counts bottles. The kitchen counts kettles: each one's paste lot, its pH and consistency readings, how many bottles it filled, and which shops and restaurants got them, which is what a process authority and a recall both ask about.
How TaroStack does it
TaroStack makes each kettle a batch from its recipe, with its lot, and counts the bottles it made.
Each kettle a batch. A kettle of classic ketchup is a batch from its recipe, taking tomato paste, vinegar and bottles off stock by their lots, and its yield in bottles goes on the record.
Your own fields. Fields of your own on the batch record hold the pH and the consistency reading.
Lots to every customer. Each shop's and restaurant's order records the lots it took, and one report shows every customer who got a lot.
| The job | Notebook | In TaroStack |
|---|---|---|
| Which paste went into a kettle | A label in the bin | Batches by lot |
| pH and flow for each kettle | A clipboard | Fields on the batch record |
| Who got a kettle's bottles | Invoices | One recall report |
Recipes, batches and lots 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.