Q: Dear Dave,
I am actively pursuing selling a food product from my home. At this point my objective is to try to get restaurants to serve it; however I am wondering how that works. If they agree to carry my item do they buy it from me and keep what they make by marking it up, or do they simply get a percentage of the sales? I’m also wondering approximately how much profit should be made by a product to make it successful for me. I have read your article on manufacturing and producing a product and found it very helpful. I would welcome any additional information that you may have as well. Thank you for your time.
A: Hello Doreen:
Most municipalities do not allow home production of food products. They require that foods be made is a licensed and inspected professional kitchen. Restaurants, in my opinion, will not buy such products because of health concerns. That said, if you have a product professionally packed and are trying to sell it restaurants, they would simply buy it from you. Typically, you should have a mark-up of at least twice what the products cost you to make, if not more. Be sure to include all of your costs when calculating the price, including ingredients, packing costs, labeling, and transportation.