A sandwich keeps a wide margin on its ingredients: a turkey club costs $3.76 in bread, turkey, bacon, cheese, vegetables, the wrap and the card fee, and sells for $12.00, a 68.7% margin. Meat is the biggest cost in it. What the shop pays out of that margin is wages for the line and rent downtown, so the month's mix matters: chips and a drink add sales at a lower margin, and boxed lunches for offices are made before the rush. Margin = (price − cost) ÷ price. In the example below, a month of five lines brings $33,250 of sales and about $22,620 of gross profit, before wages and rent.
The short version
- Margin = (price − cost) ÷ price; markup = (price − cost) ÷ cost.
- A turkey club: $3.76, sold for $12.00, 68.7%.
- Meat is the biggest cost in a sandwich.
- Chips and a drink add sales at a lower margin.
- Boxed lunches fill the morning before the rush.
- TaroStack costs each sandwich from what each batch used. More below.
A sandwich, costed
Lunch Counter on Main, the made-up sandwich shop in Bozeman, Montana, I use in these examples, counts its wages as a fixed cost in its plan, so the costs below are what each sandwich uses:
| A turkey club | Cost |
|---|---|
| Bread, meats, cheese and vegetables | $3.30 |
| Wrap | $0.10 |
| Card fees, 3% of $12.00 | $0.36 |
| Cost | $3.76 |
The shop's year is in sandwich shop business plan, and the club's price in how to price sandwiches.
Margins by channel
| Product | Sold where | Price | Cost | Gross profit | Margin |
|---|---|---|---|---|---|
| Turkey club | Counter | $12.00 | $3.76 | $8.24 | 68.7% |
| Italian sub | Counter | $13.00 | $3.99 | $9.01 | 69.3% |
| Soup and half sandwich | Counter | $11.00 | $3.58 | $7.42 | 67.5% |
| Boxed lunch | Office catering, invoiced | $14.00 | $4.50 | $9.50 | 67.9% |
| Chips and a drink | Counter | $4.00 | $1.57 | $2.43 | 60.8% |
The boxed lunch keeps 67.9%, with a cookie and chips in the box; chips and a drink keep 60.8%, bought in.
A month's numbers
A month for Lunch Counter on Main:
| Product | Units | Sales | Gross profit |
|---|---|---|---|
| Turkey club, counter | 1,000 | $12,000 | $8,240 |
| Italian sub, counter | 800 | $10,400 | $7,208 |
| Soup and half sandwich, counter | 450 | $4,950 | $3,339 |
| Boxed lunch, office catering | 250 | $3,500 | $2,375 |
| Chips and a drink, counter | 600 | $2,400 | $1,458 |
| Month | $33,250 | $22,620 |
The club and the sub bring most of the gross profit. The boxed lunches, 250 of them, are made between nine and eleven, when the line would otherwise stand idle. Wages and rent come to most of the $20,100 of fixed costs a month in the plan, so the shop's slow afternoons decide the month. A catered spread beyond boxed lunches is in how to price catering.
Get the calculator
Download the sandwich shop 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 cost per sandwich. Turkey breast moves by the case, a generous slicer adds an ounce a sandwich, and the bread left at close changes every margin.
How TaroStack does it
TaroStack costs each sandwich from what each batch used, so margins sit on real cost.
True cost from the batch. Each batch takes meats, bread and produce 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 sandwich 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.