Making good money out of food is very achievable, says food entrepreneur Christine Capendale, whose second book, Baking for Profit and Pleasure will be on shelves within the next couple of days.
She directs her advice to foodies who like to get their hands dirty, as opposed to mangers of restaurants or coffee shops who may be some distance removed from the stove.
Imagine a product that can be produced with very little capital outlay, from your own home, at a profit margin of up to 500% and that appeals to virtually everybody. Enter the little cupcake.
A home baker could easily bake and decorate 300 cupcakes per day in an average size oven, Capendale says. Taking all costs into account, a single cupcake may cost between R3.50 and R5.00 to bake, depending on type, decoration and packaging. They sell at between R15.00 and R25.00 each.
Conservatively speaking, calculated at a cost of R4.00 each and sold at R15.00, a home baker can make a pre-tax profit of R3 200 per day or R64 000 per month, if she works five days a week.
That would be at the bottom of the potential profit scale. If she bakes a bit more and focuses on exceptional but not necessarily costly decoration the profit margin can increase a lot, says Capendale.
And the cupcake is not the exception in the food business, she says. “Speciality cakes are also very profitable, but you will have to consider how much time you spend on a cake before determining the cost,” she says. A wedding cake can cost you R800 to make (cost of time excluded) but could potentially sell at R7 000. “A handsome profit for two days’ work that can be done in the comfort of your home.”
The same kind of numbers can emerge from baking koeksisters, quiches, pies and many other products.
Of course it is not as easy as it sounds. How do you position yourself to be able to charge a premium on a product that is also on offer at the local supermarket or church fête?
Capendale, a former home economics teacher who consulted on recipes and styling for several cookbooks, ran a catering business and cooking studio on the West Coast and taught a variety of cooking courses, says that aspiring foodie entrepreneurs should start with what is available to them.
Work your network
“Invite people in your network to dinner or take them a cake. If your product is superior, the word will spread quickly,” she says.
Share pictures of your products on Facebook and other social media, which is free and very powerful marketing.
She says you have to be humble at first and spend time and money on promotional drives. “Give a spectacular cake to the school or church to auction for funds and if you sell, be conservative with your pricing until you have a feel for the market. But always cover your cost and don’t position yourself as a cheapie.”
Know your goal
Capendale says you have to have a clear goal – based on potential profit, rather than on what you like to do. She says in this respect, foodies allow their passion to overrule their business sense and are then surprised if the venture fails.
Know your own ability: how much you are able to produce and how much you have to invest. For cupcakes, you most probably have all you need, save for a few extra pans. A full kitchen refit is totally unnecessary.
It is extremely important to take all costs into account before quoting, says Capendale. That includes ingredients, decorations, little things you use like baking paper, packaging material, delivery cost, electricity or gas, telephone, printer ink and most importantly, your time. Equipment has to be discounted over a period to ensure it can be replaced when necessary.
“Corporate clients are usually more time conscious than private clients. For a 21st birthday, clients sometimes insist on four separate appointments with the caterer before the function without realising time is money,” she says.
“But never compromise the quality of your ingredients to save cost. Margarine is not butter,” Capendale quips.
She says buying in bulk can save up to 75% on some products, but it should be balanced with stock control. It is of no use to buy something at a discount that will sit in the pantry unused for months or years.
Also, having ingredients delivered may be less costly than spending time and money driving around to do your purchases.
Entering the market
Having won the Ideas magazine Domestic Goddess competition in 2007, and the Goldcrest recipe development competition in 2002, Capendale says competitions provide wonderful exposure and if it includes a prize, it can kick-start your venture. The prize she won in 2007 enabled her to open her food studio in the West Coast town of Langebaan, which was her base until her recent move to Pretoria.
Markets can also be a good entry point. While one risks being left with product at the end of the day, you can test the market and build a client base. She cites Pesto Princess, which started trading at the local school market and now sells its products in four provinces, pumping out 70 tons of pesto a year, according to its website.
Providing for the corporate market can be financially rewarding with the added bonus that work is usually limited to office hours, notes Capendale, and clients are comfortable with receiving and processing invoices.
Another option is to provide to other businesses, for example canapés or deserts to restaurants or for weddings. “You don’t have to be able to do everything. If you can make one thing well, there is money to be made,” Capendale insists.
Delivering to coffee shops may be a good place to start, but is less rewarding in the long run unless there is enough money going round for the owner and his supplier to make a proper profit, she says.
“Never think your town is too small. Baking koeksisters can be very profitable. If you do it well, there is good money to be made.”
Keep up with the trends
A formal qualification is not a requirement for success, says Capendale. The food industry, however, changes all the time and one has to keep up with the trends, or you may be relying on a product that falls out of favour with the market.
“There are many courses available. Attend some. Look at sites like Pinterest and Instagram for ideas. Follow tutorials that are on the Internet and read magazines and cookbooks,” Capendale says. “When a client asks for something you don’t know how to make, agree and go and educate yourself. Surprise your clients every now and then with something new and inventive.”
She says many pastry chefs also take in beginners to shadow them.
Many people look at the money coming in without knowing their costs and whether they are really making money, according to Capendale. “You have to know your costing, or you may be wasting your time and if a project is not profitable, you have to walk away.”
Keep a constant eye on cash flow and stock management, she adds. “You also have to know who owes you what. I usually ask for payment on the day of the function and a few days before for wedding cakes.” Companies mostly work on 30 days from invoice, and one has to be prepared to chase the payment if it is delayed.
In a nutshell, maintain the highest product standard and thereafter keep your eye on the profit, she advises.
Christine Capendale, food entrepreneur