Food Startup

How Profitable Is A Food Startup? (Updated for 2024)

Pat Walls

•

Updated: July 23rd, 2024

How Profitable Is A Food Startup? (Updated for 2024)

So you want to start a food startup?

And the first question that came to your mind was, “well, are food startups actually profitable?”

With a market size of $8.05T - there’s plenty of business to go around.

Especially considering:

You could start a food startup with as low as $400
Based on our data, food startups generate an average of $2.32M per year

There’s money to be made. Don’t worry.

But, I don't want to spoil it all. Below we’ll cover everything you need to know when it comes to the profitability of a food startup.

Let’s dive in!

Is a food startup profitable?

Yes, a food startup is generally a profitable business. However, you still need to consider several factors since these things always impact the overall outcome.

For instance, since average revenue is $2.32M per year with an estimated gross margin of 40%, you could expect to recover your investment within 7 months or even less.

But of course, it all comes down to how much you earn compared to the potential revenues of your food startup.

To determine whether your business is profitable, you should earn more than your expenses in the beginning months. However, while you're in your first month, it can be challenging to know what to expect.

Therefore, you should maintain a record of your monthly expenses and income to determine whether you're meeting your goals. By doing this step, you can see how your food startup is doing and if any changes or adjustments need to be made to enhance or maintain your efforts.

Is a food startup worth it?

If you’re wondering if a food startup is worth it, the answer is a big YES. With food startups, you have the potential to earn $2.32M per year (this is based on data reported by real founders).

Further, you could have your initial investment back within months. Simply put, it’s a business worth a shot, especially if you have the resources and make the necessary efforts to achieve or surpass the target.

With a market size of $8.05T, it will be possible for you to build something that grows and turns into a flourishing business. As such, it’s the type of business you might want to consider starting.

Of course, you must learn and understand every aspect of running a food startup to ensure success. Still, as long as you have the initial investment and can endure a few months before your actual gains, this business could be worth it.

You might want to consider reading more specifics about successful food startups case studies.

Examples Of Profitable Food Startups

Here are a few examples of profitable food startups, and a few more details about them:

1. Urban Smokehouse ($1.5M/year)

Andrew Buehler, founder of Urban Smokehouse, came up with the idea for his business after noticing the growing market trend and opportunity for online delivery of perishable items during the COVID-19 lockdown. As a foodie with a background in financial services, Buehler saw the rising demand for BBQ, a food that tastes great but is often inconvenient to make, and decided to create a digitally native BBQ brand that offers pre-cooked and sauced ribs that can be easily prepared at home in under 20 minutes. He launched Urban Smokehouse as a Kickstarter project and quickly surpassed his goal, raising over $30,000 in pre-orders.

Is it profitable? Yes
How much money it makes: $1.5M/year
How much did it cost to start: $15K

How We Hit Our Goal Within 24 Hours On Kickstarter And Raised $30K+ Worth of Preorders

Andrew Buehler launched Urban Smokehouse, the world’s first digitally native BBQ brand, through a Summer Kickstarter campaign, raising over $30,000 in pre-orders; since then, the company has achieved monthly sales of over $5,000 split between their website and in-person pop-ups and events, relying heavily on word of mouth and organic social media.

Read this case study

Read by 2,878 founders

2. Jaju Pierogi ($960K/year)

Jaju Pierogi, founded by sisters Casey and Vanessa White, started as a side project selling pierogi at farmers' markets and pop-up events. With a background in the corporate world and a love for their Polish heritage, they saw a gap in the market for high-quality, handmade pierogi. Fast forward to August 2022, Jaju Pierogi is now in multiple grocery chains and over 650 specialty independent stores, with a monthly revenue of $80,000-$100,000.

Is it profitable? Yes
How much money it makes: $960K/year
How much did it cost to start: $3.5K

Our Grandfathers Recipe Inspired Us To Start A $1M/Year Pierogi Business

Jaju Pierogi started off as a side hustle at farmers' markets and festivals back in 2016, and as of August 2022, they are in multiple grocery chains and over 650 specialty independent stores with a monthly revenue hovering between $80,000-$100,000.

Read this case study

Read by 3,581 founders

3. Karachi Kitchen ($24K/year)

Sadaf, the co-founder and designer behind Karachi Kitchen Foods, started the business with her mother, a long-time chef and culinary instructor. They launched their business after collaborating on a self-published cookbook, which won a Gourmand Award. Despite facing setbacks due to Covid and learning about federal and state regulations, they have seen sales more than double since launching their online store.

Is it profitable? Yes
How much money it makes: $24K/year
How much did it cost to start: $5K

This Mother And Daughter Started A Side Hustle Selling Chutneys And Spices

Karachi Kitchen Foods saw over 200% growth in sales in the past year, offering seven different chutneys and spices, and plans to launch an online subscription box and publish recipes on their website in coming months.

Read this case study

Read by 2,003 founders

Learn more about starting a food startup:

Where to start?

-> Food startup plan
-> How to finance a food startup?
-> How much does it cost to start a food startup?
-> Pros and cons of a food startup

Need inspiration?

-> Other food startup success stories
-> Marketing ideas for a food startup
-> Food startup slogans
-> Food startup names
-> Food startup Instagram bios

Other resources

-> Food startup tips
-> Blog post ideas for a food startup
-> Food startup quotes

How much can you make with a food startup?

With a food startup, you can make an average of $2.32M revenue per year (based on data reported by real businesses).

You can start with an initial investment as low as $400. Then, with proper knowledge and sustained effort, you could have an ROI (return of investment) within 7 months.

How much does a food startup make a week?

Based on our data, average weekly revenue for a food startup ranges around $48.2K. As such, you could see monthly revenues of $193K.

To know if your food startup achieves the weekly profit target, you need to keep track of the total earnings you get per day. Afterward, you'll want to consider subtracting the expenses you have daily.

Learning your weekly profit can also show whether you're hitting your target goal for your food startup.

How much do food startups owners make?

The income of a food startup owner can vary depending on various factors such as location, size, competition, and the owner's business skills.

But to give you some idea, the weekly revenue of an established food startup is about $48.2K. But this can be lower or higher depending on so many factors - it's almost impossible to say exactly.

While the potential for earning a good income as a food startup owner exists, success in this field requires a commitment to providing quality products and services and building a strong reputation within the community.

Food Startup Profit Margins

Generally speaking, a food startup can expect profit margin of around 40%. Profit margins refer to the percentage of revenue that remains after deducting all expenses associated with running a business. In the case of a food startup, profit margins can vary depending on various factors, such as the type and quality of products sold, the size of the store, and the level of competition in the area.

However, these figures can vary depending on the pricing strategy, inventory management, and overall efficiency of the business. To maintain healthy profit margins, food startup owners must focus on managing costs, negotiating favorable supplier terms, and providing high-quality products and services to attract and retain customers. By doing so, food startup owners can ensure long-term sustainability and profitability for their business.

Food startup owner salary

The salary of a food startup owner is an unpredictable figure. It's significantly influenced by numerous factors, including the store's location, its size, and the degree of competition. An owner of a well-established food startup, in a prime position, might see an average weekly salary around the ballpark of $19.3K.

But it's worth noting, such numbers aren't always consistent. The earnings can vary wildly, potentially swinging by as much as 80% either way.

Achieving consistent success and maintaining a reliable income stream in this industry requires a deep commitment. It's imperative to offer high-quality products, deliver impeccable customer service, and nurture a trusted bond with the community you serve.

Conclusion

In a nutshell, a food startup is quite promising if you plan on starting such. With a market size of $8.05T, you can enjoy a potential revenue of around $2.32M per year with a gross margin of 40%.

Considering this information, you can enjoy a return of investment within 7 months, especially if you have a monthly profit of $77.2K. Overall, the success of your food startup also depends on your effort and knowledge about it. If you persevere with these things, you can ensure that this food startup is profitable.

Make sure you have a proper food startup plan and know how to get clients for your food startup.

Part of

Starting A Food Startup: Everything You Need To Know

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