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Beefy


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Costing vs. Profits
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I have been working in the meat industry for a little over a year helping a friend.  He has had struggles in getting any profits to the bottom line.  We know that our over head is high and are actively looking for a new location to scale down our operation, however, the main problem is in our COGS.  We are currently buying boxed beef, running a cut test, then getting our yeild of indivdual cuts.  Then we double or new cost to get our sale price.  Should we not be making money if product is leaving the store?  Any info would be helpful



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qualitycuts


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You are i he right place seek for experienced personnel "in" will help you.

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CHIEF BUTCHER SOKONI AFRICA LIMITED[QUALITY CUTS]
apcowboy


Founder of The Meat Cutter's Club

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ABE has you a answer here  http://meatcuttersclub.activeboard.com/t58851533/profit-vs-cost-and-calculating-cost-of-sales/



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Leon Wildberger

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Beefy


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Experienced personnel?  The staff i have at the store currently have been butchers for over 20 years.  Is there a link within meatcuttersclub.org?



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Mainemeatman


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what he may need to do is go to his accountant and have his accountant go thru a "proforma"

this is the nuts and bolts to the business,

first plug in the expense side of the business

lease/mortgage payments, equipment expenses, and all the rest of the expenses, payroll, utilities, advertising etc.

then you do the income side- (yes, much like an income p& l statement (profit and loss)



again have an accountant go thru the figures , that's what he does for a living he will tell you any red flags


too many variables in the mix to make a judgement, from lease rates to clientele income ave.

but here are the basics

sales- cost of goods solds(purchases) = gross profit

subtract your expenses from the gross profit

the result is net profit- or cash flow
or ebit (earnings before interest and taxes) or ebitda (earnings before interet. taxes, depreciation and amortization)


this is why you need an accountant to go thru this and look at your expense structure




beefy, usually, you do a cutting yield test, this will tell you how much margin you are making
margin is a measure of gross profit
send me your email address and I will send you cutting tests on excel format easy !!


many variables go into setting retails - sometimes you can increase more shrink by setting high retails- if it doesn't sell, then you reduce it )

here an easy test, take a choice rib eye it weights 15 lbs and costs 7.00lb it cost you 105.00

cut the rib eyes , trim them , then get expected retail (sales)

take sales- cost = gross profit

gross profit divided by sales = gross margin %



most meat dept are targeting 30-35% gross

remember YOU DONT TAKE GROSS MARGIN TO THE BANK- YOU TAKE GROSS PROFIT DOLLARS

















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Gregdabutcher


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Mainemeatman really knows his stuff. I find his info very useful and I can put this to use myself. We reduce items that are close to their shelf life expiration to help with spoilage. We also have sausages, stuff roast, seasoned burgers and marinated meats that are high margin and could help with your bottom line. What I call merchandising cuts can help too. Not only stew meat from top rounds, you could make stir fry off the cap buy slicing thin and cutting across the grain and a few thin slices for beef scaloppini before you start cutting your round steaks and London broils. The chuck shoulder cross rib is also a good margin maker with the flat iron steak that I find sometimes in the beef trim. Taking a few boneless short ribs off the chuck, cube steaks and thin sliced carne asada off the bottom round. These are a few cuts that could help with margin and if it doesn't sell you can make extra lean off the round cuts and burgers from the chuck.

I wish you all the success in the world.

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Gregory R. Wilson
ButcherD


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Beefy: .......... I have read all that ervyone has said ...... All great info and sound advice could not have said it any better myself. 

You say you know your over head is HI ..... how many employs do you have.... I only ask this becuse you say you r looking to downsize ..... this (reads-means) to me that you got a big building and not enough coustomer base......Ie all your costs r not enough to keep your head above water..... also keep in mind that if you do infact find a new place 

. make sure you know and can account for bringing your coustomer base with you 

. as well as make new coustomers 

. you r gonna half-to meet or beat the other stores in the area with either prices or coustomer service. 

 

thats all I got for you beefy ...... but I agree with all that was said beforhand .... and yes merchendize the hell out of what you can....... befor pork turns out-a-code ..... turn it into a delioush hand made sausage ...... when beef is going out turn it into handmade preseasoned gourmet patties ...... use your meat creativeness to do something diff and when coustomers come in to get that push sale itams and vice-versa ........ 



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ButcherD
DonSalumi


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Costing vs. Profits
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Right now very tough to navigate with current and expected beef and pork forecasts. Think how long it takes to replenish and process to previous levels. Aside from any readily available market reports.

The old adage keep it simple.
Are you calculating all factors into the COG to obtain the true cost and associated margins?
Are you factoring in the labor dollar per pound it takes to produce those cuts or sausage etc?
Processing calculations to include labor per pound may be something to look at.
There are some general fees most plants factor, smaller plants like us and many others doing 4000lb or 1000lb regular batch runs, private label production runs always factored in a per pound cost to include labor (processing/packing), packaging materials, storage. Generally small med plants will require a 200lb min batch run say fresh sausage custom run:
Ingredients Cost:
Pork Butt Bnls $2.25lb
Spices/Non meat Ing: $.35
Labor/Packaging: $1lb (an avg I have witnessed charged out as a general processing fee from small to medium size plants as per USDA descriptions/guidelines of such plants)

Total: $3.60lb true cost to make fresh sausage

Markups of product from producer/processor the general averages.
-to distributor/wholesaler 5 - 30% (general range pending volume or deviation breaks etc)
-distributor to end user (restaurant/retail) 5 - 35% (general range)
-end user to consumer (general public Johnny Q) 50 - 200%

General scale of reference to consider.

Consider those factors and variables to run a couple different scenarios in the numbers are you breaking even or making money?


Great question and dialogue thanks for letting me put in my 5 cents (factor 4 cent for inflation)


A move will eat up potential revenue streams pending many factors. Have seen many different concepts meat, restaurant, bakery otherwise lose their butt from a location change even if downscaling, the potential to not be open without revenue coming in can hinge on many factors especially if dealing with city or public officials related to a business. Not saying anything negative but truth be told it simply takes time (time is money) to approve permits, construction etc even if that stuff is minimal and it is "turnkey" you can be at the mercy of a system....hopefully an efficient one.
Thank you



-- Edited by DonSalumi on Tuesday 28th of October 2014 11:44:01 PM

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