Kimchi Business Plan, With a 12-Month Projection

A kimchi business plan sets out what you'll ferment and who buys it, what a jar costs and sells for, the rules that apply to fermented food, and the first year month by month. Kimchi is cabbage, radish, garlic, ginger, chili and salt, fermented by its own bacteria and kept cold, and it's labor more than ingredients: salting, rinsing, mixing and packing by hand. Because it's fermented rather than pickled in added vinegar, and sold refrigerated, it sits outside the federal acidified foods rules that govern shelf-stable vinegar pickles, but it still has to stay cold from the crock to the customer. In the example below, a fermented food maker in Portland sells kimchi direct and wholesale, sauerkraut and restaurant gallons, makes a profit from month 4, and ends the year about $15,700 ahead on $66,300 of sales, after paying $20 an hour for the work. Below is a description example, each part of the plan, the rules, the projection, the startup budget, and a free template.

The short version

• Describe the business in a paragraph: what you ferment, where you sell, the kitchen, the goals.
• Cost a jar from the cabbage up, with the salting, mixing and packing time.
• Price direct, grocer and restaurant separately; grocer jars leave the least.
• Sauerkraut is cheaper to make and leaves almost as much per jar as kimchi.
• Fermented without added vinegar and kept cold, kimchi is outside the acidified foods rules; keep it cold.
• Budget for a refrigerator and food-grade fermenting tubs before the first batch.
• TaroStack keeps every batch with its date and lots, and the oldest jars out first. More below.

Part 1: the business description

Brightwater Ferments, a made-up fermented food and drink maker in Portland, Oregon, I use in these examples, writes:

Brightwater Ferments makes napa cabbage kimchi and sauerkraut in small batches in a licensed kitchen, sold at two farmers markets, wholesale to natural grocers, and by the gallon to restaurants. Every jar carries its pack date. In our first year we plan to supply 12 grocers and 5 restaurants.

Part 2: what a jar costs

A batch of 40 kimchi jars takes about three hours of hands-on work, about 4½ minutes a jar. Korean chili flakes are the priciest seasoning by weight. A gallon holds eight jars' worth of kimchi with no jars to fill. How to cost each ingredient from its trimmed weight is in how to calculate cost per ounce.

Part 3: customers and prices

Grocer jars are the biggest line and leave $2.00 each, because a grocer needs its own margin on a $7 jar. Sauerkraut, green cabbage and salt, is cheaper to make and leaves almost as much as a kimchi jar at the market. How to set a wholesale price that holds up is in how to price handmade items for wholesale.

Part 4: the rules

Federal rules for acidified foods, shelf-stable foods like vinegar pickles, require processors to register and file their processes with the FDA (21 CFR 108.25). Those rules define an acidified food as a low-acid food with acid added, and they exclude foods that are stored, distributed and retailed under refrigeration (21 CFR 114.3). Kimchi made without added vinegar, sour from its own fermentation, and kept refrigerated all the way to the customer falls outside them. That makes the cold chain the rule that matters: a refrigerator in the kitchen, a cooler at the market, and "keep refrigerated" on every label. It's still a food made in a licensed kitchen under your state and city rules, and fish, shellfish in some recipes, and soy are allergens to declare. A kimchi made with added vinegar, or sold unrefrigerated, is a different case; pH testing for acidified foods covers that side. This is general information, not legal advice.

Part 5: the first year, month by month

Fixed costs are $1,295 a month: the kitchen and cooler ($900), insurance ($70), market fees ($150), the vehicle ($100), the website ($40), and software and card fees ($35). Sales start at 15% of full speed and reach it by month 11:

The year's sales are $66,345 and the profit $15,701, on top of $20 an hour for the work.

Part 6: the startup budget

Get the template

Download the kimchi business plan workbook. Four sheets: your products with price, variable cost and monthly volume at full speed; the 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

Batches ferment for days before they're jarred, jars sit in the refrigerator by pack date, and grocers want the freshest jars with the longest life. A notebook can't say which batch's jars went to which grocer, which jars are oldest, or what a jar costs now that napa cabbage has doubled for the winter.

How TaroStack does it

TaroStack keeps every batch with its date and its lots.

Batches with dates and lots. Each ferment is a recipe, and units convert: cabbage bought by the case, used by the pound after trimming, with a scrap % for the outer leaves. Recording a batch takes the vegetables, seasonings and jars off stock from the lots used, at what you paid, and gives the jars a lot and best-by date.

Oldest out first. Picking takes the oldest jars first, lots close to their date show in your alerts, and one report walks any lot to every grocer and restaurant that got it.

And the cost of cabbage. Every batch is costed at what it used, a price-creep report per supplier shows whose prices are rising, and margins are reported by product and by customer, so the grocer price that's slipping shows up.

Recipes, batches, lots, recalls 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 kimchi business profitable?

It can be. In the example, a maker selling kimchi direct and wholesale, sauerkraut and restaurant gallons ends the first year about $15,700 ahead on $66,300 of sales, with $20 an hour paid for the work.

Do I need to register kimchi with the FDA as an acidified food?

The acidified foods rules cover low-acid foods with acid added and exclude foods kept refrigerated through sale, so kimchi fermented without added vinegar and sold refrigerated falls outside them. State and local food rules still apply.

How much does it cost to make a jar of kimchi?

In the example, $5.26 for a 16-ounce jar sold direct: $2.35 of vegetables and seasonings, $1.05 for the jar, lid and label, $1.50 of salting, mixing and packing, and the card fee.

How much should I charge for kimchi?

Cost a jar with your time, then price each channel. In the example, a jar costing $5.26 sells for $12 at a market and $7 to grocers, and a gallon for restaurants sells for $45.