A chicken and rice meal costs about $1.50 in food; what a meal prep business pays for is the kitchen hours, the cooking, portioning and delivery. Labor and kitchen time are more than half of a meal's cost, so the margin turns on how many meals a cook day makes. A gym fridge sells meals without a delivery run but pays less a meal, and salmon costs more than twice the chicken. Margin = (price − cost) ÷ price. In the example below, a subscription meal costs $5.97 to make and sell and goes for $12.00, a 50.3% margin. A month of four ways of selling brings $18,160 of sales and about $8,760 of gross profit.
The short version
- Margin = (price − cost) ÷ price; markup = (price − cost) ÷ cost.
- Count your time as a cost, even if you don't pay yourself yet.
- A subscription chicken meal: $5.97, $12.00, 50.3%.
- Food is the small cost; kitchen hours are the big one.
- Gym fridges pay less a meal.
- Salmon costs more than twice the chicken.
- TaroStack costs each meal from what each batch used. More below.
A meal, costed
Fuel Box Meals, the made-up meal prep business in Tampa, Florida, I use in these examples, cooks in a shared kitchen; a batch of chicken and rice costs $88.50 in food and makes 60 meals:
| A chicken and rice meal, subscription | Cost |
|---|---|
| Chicken, rice and vegetables | $1.48 |
| Container, lid and label | $0.60 |
| Labor, kitchen time and delivery | $3.53 |
| Card fees, 3% of $12.00 | $0.36 |
| Cost | $5.97 |
Setting the price is in how to price meal prep, and the license in meal prep business license.
Margins by channel
| Product | Sold where | Price | Cost | Gross profit | Margin |
|---|---|---|---|---|---|
| Chicken and rice meal | Subscribers, delivered | $12.00 | $5.97 | $6.03 | 50.3% |
| Chicken and rice meal | Gym fridge, wholesale | $8.50 | $6.23 | $2.27 | 26.7% |
| Salmon meal | Subscribers, delivered | $15.00 | $8.88 | $6.12 | 40.8% |
| Family tray, 4 servings | Subscribers, delivered | $45.00 | $16.05 | $28.95 | 64.3% |
The gym meal keeps 26.7%, after a separate delivery to the gym; the salmon keeps 40.8%, with $3.80 of fish in it.
A month's numbers
A month for Fuel Box Meals:
| Product | Units | Sales | Gross profit |
|---|---|---|---|
| Chicken and rice meal, subscribers | 800 | $9,600 | $4,824 |
| Chicken and rice meal, gym fridge | 160 | $1,360 | $363 |
| Salmon meal, subscribers | 300 | $4,500 | $1,836 |
| Family tray, 4 servings, subscribers | 60 | $2,700 | $1,737 |
| Month | $18,160 | $8,760 |
Subscriber meals bring most of the gross profit. The gym's 40 meals a week earn little each, but they bring subscribers who tried a meal after a workout. The family tray keeps the most a serving, since one container holds four. The year is in meal prep business plan.
Get the calculator
Download the meal prep margin calculator. One sheet: one line for each product and channel, with its price, materials, packaging, labor and fee rate; the cost, gross profit, margin, markup and the price your target margin needs fill in. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.
Where this stops working
The calculator holds one food cost a meal. Chicken thighs that jump a dollar a pound, or a week of unsold gym meals thrown out on their date, change the month.
How TaroStack does it
TaroStack costs each meal from what each batch used, so margins sit on real cost.
True cost from the batch. Each batch takes chicken, rice and salmon at the price of the deliveries they came from, so a price rise shows in the next batch's cost.
Labor on the batch. The minutes a batch took are recorded on it, so the hours behind each product are on record.
Margins by product. Margins are reported per product on that actual cost, and a price-creep report per supplier shows whose prices moved.
| The job | Spreadsheet | In TaroStack |
|---|---|---|
| What a meal cost | One price from last season | Cost from the batch's deliveries |
| The hours behind a batch | Remembered | Labor minutes on the batch |
| An ingredient creeping up | Noticed late | A price-creep report |
| Margins by product | Re-worked by hand | Margins on real cost |
Recipes, batches, costing and margin reports 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.