Lower Profit Items I Keep on my Menu...and Why
I’ll be completely honest…when I first started attending my local market, I did not have a grasp at all on my profit margins. I mean, I knew I was charging more for my baked goods than what the ingredients cost but I had not considered any overhead costs nor the time involved to make them. As time went on, I knew I had to sit down and figure all of that out. Side note: don’t stress if you are where I was at initially…it takes time to begin to work out all the details. Take it one step at a time.
Eventually, I sat down and calculated all costs, how much time it took me to make each item and what my hourly wage was. What I found was that any item that I baked from scratch typically had a much lower profit than items I did not bake from scratch. So sourdough bread and cake slices (my two main baked goods) were actually two of my lower profit items due to the amount of time it took to make them. This doesn’t mean that they aren’t profitable…it just means that other items, particularly items I don’t bake from scratch, are even more profitable.
When it comes to making decisions pertaining to my menu, particularly lower profit menu items, I always consider three specific factors: 1.) is it one of my core baked goods 2.) does it attract customers to my booth and 3.) does it sell easily?
So let’s talk about core baked goods first. These are items that your customers have come to expect from you. They are the items that customers will likely buy week after week. They are what you are known for. For me, that would definitely be sourdough bread. This item is naturally going to remain on my menu and I’m going to find some supplementary items that will help me bring up the average of my hourly wage, such as creamed honey, sourdough pancake mix, etc. I have a whole blog post, “How I Increased My Hourly Wage as a Baker” that you can read on this topic, if the topic interests you.
The next factor is: does it attract customers to my booth? This one is extremely important and I don’t just mean the customer sees a yummy baked from scratch brownie and it attracts them to your booth. No, I mean that you have an item that is so good at attracting customers to your booth that they will make a special trip to the market just to get that item. An example for me would be my Dutch hot cocoa and my Welsh cakes. Welsh cakes are not super time consuming but they also are not super profitable. I have to make a lot of them and I only sell them for a few dollars. But they are unique and boy do they attract customers to my booth. So even though they are not the most profitable, they stay on the menu because they bring in visitors who then purchase other items from my stall and the overall profits increase due to these little Welsh cakes.
Finally, I consider if the item sells easily. Some items sell with very little effort (sourdough bread and Welsh cakes for example). Other items take more effort and require a lot of interaction with visitors offering them samples and such. If weeks pass and you still have to assertively use samples to move a product then that product is likely not worth the time and energy involved to sell it. One such example for my stall was double chocolate zucchini bread loaf. We had to work hard to sell those darn loaves and I eventually just stopped bringing them. I LOVE chocolate anything and this bread was so delicious but using my three factor rule described above made it easy to remove my own emotions and make a logical decision…the double chocolate zucchini bread was not a core baked good of mine, it did nothing special to attract customers, and it did not sell easily. So off the menu it came.
Okay, hope this all makes sense and hope it provides a formula for you to follow as you make those difficult menu decisions in your own business.
