I Don't Want To Get Screwed

Business By mombabytiger Updated 20 Jan 2011 , 12:23pm by foxymomma521

mombabytiger Posted 20 Jan 2011 , 10:29am
post #1 of 4

I have an opportunity to bake and sell at a local coffee house. I can also use their commercial kitchen to bake stuff to sell outside of the shop (specialty, wedding cakes, etc). The owner is considering our relationship co-branding and is not charging me any rent. She does, however, want a percentage of everything I sell in the shop.

We haven't discussed numbers, but what do you think is fair? For example, if I sell a cupcake for 2.25, how much of that should go to the owner? There is so little profit in food that I don't want to sign up for a deal that leaves me making nothing after food cost.

Thanks for your advice, wise cakers!

3 replies
newbaker55 Posted 20 Jan 2011 , 11:13am
post #2 of 4

Hobby baker here, so just thinking... how much would it cost you to bake that cupcake if you had to pay for licensing, overhead, equipment, etc? Will you be covered under the owner's insurance? Advertising? Does the shop do a brisk business?

Figure out how much you'd make if you had to cover those expenses on your own and you may come up with a percent you can live with. Or, at least a starting point for negotiation icon_smile.gif

jason_kraft Posted 20 Jan 2011 , 11:45am
post #3 of 4
Quote:
Originally Posted by mombabytiger

We haven't discussed numbers, but what do you think is fair? For example, if I sell a cupcake for 2.25, how much of that should go to the owner? There is so little profit in food that I don't want to sign up for a deal that leaves me making nothing after food cost.



Before you start talking numbers you need to have an accurate picture of your actual costs. Add up the ingredient costs, labor cost (giving yourself a comparable hourly wage) and the overhead cost on a per-cupcake basis, then add 20-30% for your profit margin. This will be the minimum wholesale selling price for your cupcakes. The coffee shop will probably mark this up by an additional 20-30%.

foxymomma521 Posted 20 Jan 2011 , 12:23pm
post #4 of 4

Maybe the Cake Boss software would be a good investment to help you figure out cost?

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