Tortilla Chips Business Plan: Grocers, Markets, Restaurants

Tortilla chips are corn masa, oil and salt, and a 12-ounce bag costs about $1.28, masa, oil, salt and a lined bag, sold to a grocer for $3.50. The oil is nearly as big a cost as the corn, since a chip is about a quarter oil, and the bag is the biggest single item. The plan turns on fryer hours in a shared kitchen, a sheeter and cutter to make the tortillas into chips, and getting onto grocers' shelves, where a bag sits beside national brands. Restaurants buy 5-pound bags, and farmers markets sell at full price. Chips go stale and their oil turns, so every bag carries a date. The plan below works per bag. In the example, a Tucson chip maker starts with $44,400, ends its first year about $19,900 ahead before the owner's pay, and makes about $5,500 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 chips, who buys, where you fry, the goals.
• Cost each bag: masa by the pound, the oil absorbed and lost, salt, the bag and label.
• Plan sales by product: grocer bags, market bags, restaurant bags.
• A chip is about a quarter oil; watch the oil price and change it on schedule.
• Date every bag: chips go stale and their oil turns rancid.
• Grocers ask for a barcode, liability insurance and demos.
• TaroStack costs each bag from its recipe and what each batch used. More below.

Part 1: the business description

Sol de Mesa Chips, a made-up tortilla chip maker in Tucson, Arizona, writes:

Sol de Mesa Chips fries white and blue corn tortilla chips in a shared commercial kitchen and sells 12-ounce bags to ten independent grocers and at two farmers markets, and 5-pound bags to restaurants. In its first year it aims to reach $20,950 of sales a month.

Part 2: what a bag costs

A 12-ounce bag is 9 ounces of masa harina at 80 cents a pound and about 3 ounces of oil absorbed, plus what's lost when the fryer oil is changed. The lined, resealable bag and label cost as much as the corn. Grocers sell the bag for about $5.49. Making the tortillas themselves is in tortilla business plan.

Part 3: customers, freshness and the shelf

Bags are dated 10 weeks from frying, and grocers reorder every two weeks. Each new grocer wants a barcode on the bag, product liability insurance, and a demo or two to get the chips tried; how barcodes work for small makers is in gs1 barcodes for small food producers. Restaurants take 5-pound bags weekly. The fryer oil is changed on a schedule, and the kitchen's used-oil hauler takes it away.

Part 4: what each product earns

At full speed the business sells $20,950 a month and keeps $13,669, 65.2%; grocer bags bring $7,770 of it.

Part 5: the first year, month by month

Fixed costs are $8,150 every month: shared kitchen hours ($1,600), wages for a fryer and a packer ($5,000), delivery fuel ($350), market fees ($300), insurance ($250), store demos ($300), software ($50), and other costs ($300). Sales start at 35% of full speed:

The year's sales are $180,380, and the business ends it $19,890 ahead, before the owner's pay. It breaks even at about $12,490 of sales a month, in the fifth month. The lowest cash point, −$7,722 in month 4, is covered by the $12,000 of working cash with about $4,300 to spare. Grocers add a new chip one store at a time, so the plan's ramp is mostly new stores; summer and football season sell the most.

Part 6: the startup budget

The $32,400 before working cash is earned back in about 6 months at full speed. Another fried snack is in potato chips business plan, and the salsa that goes with them in salsa business plan.

Get the template

Download the tortilla chips 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, the lowest cash point and whether the working cash covers it; 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 uses one cost per bag. Oil prices swing, a batch absorbs more oil when the fryer runs cool, and which bags are oldest at a grocer is anyone's guess.

How TaroStack does it

TaroStack costs each bag from its recipe and from what each batch used.

Recipes by weight. Each bag is a recipe, with unit conversion from the case or sack to the gram.

True cost from the batch. Each batch takes ingredients at their real cost, from the deliveries they came from, so a price rise shows up in the next batch.

Price creep. A price-creep report per supplier shows which ingredient is quietly costing more.

Recipes, batches and true cost 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

How much does it cost to start a tortilla chip business?

The example budgets $44,400, including $12,000 of working cash; the used van is the biggest item.

Is a tortilla chip business profitable?

It can be: the example makes about $5,500 a month at full speed before the owner's pay, and ends its first year ahead.

How much does a bag of tortilla chips cost to make?

In the example, about $1.28 for 12 ounces: 45 cents of masa, 38 cents of oil and salt, and 45 cents for the bag and label.

How long do homemade tortilla chips last?

In a sealed, lined bag, the example dates them 10 weeks from frying; they go stale and their oil turns after that.