You Sell a Meal for R90. How Much Profit Are You Really Making?
A customer pays R90. Your ingredients cost R38. Have you just made R52 profit?
Not so fast. Packaging, electricity, delivery, labour and monthly overheads can change the answer completely.
Follow one hypothetical home food business as we calculate what a R90 meal really contributes to the bottom line.
Imagine that you prepare home-cooked meals for busy customers.
Your chicken-and-rice meal sells for R90.
You calculate that the ingredients cost R38.
That seems to leave R52.
Perhaps you think: “If I sell 100 meals, I could make R5,200.”
But you still need to pay for containers, electricity, delivery, payment charges and your time.
And even after those expenses, the business still has monthly costs that must be covered.
The mistake: subtracting ingredients from selling price and calling the remainder profit.
That calculation ignores important operating expenses.
Let’s calculate the result properly.
How Much Profit Is in a R90 Meal?
There is no universal profit figure for a meal selling at R90.
The answer depends on your actual costs and the number of meals sold.
In our hypothetical example:
The amount received from the customer before accounting for costs.
Costs attributable to making and selling one additional meal in this example.
The amount remaining to help cover monthly fixed costs.
You must also account for monthly overheads, other applicable expenses and the number of meals sold.
R18 is contribution, not final profit.
That distinction is the foundation of sound food-business pricing.
What Does the R90 Meal Actually Cost to Sell?
We will use a hypothetical prepared meal sold directly to a customer for R90.
Assume the business provides delivery and incurs the following costs per saleable meal.
These figures are invented for teaching purposes. They are not current market quotations or typical industry costs.
| Cost item | Per meal |
|---|---|
| Ingredients | R38 |
| Packaging and label | R6 |
| Variable electricity or gas | R3 |
| Payment processing | R2 |
| Variable delivery cost | R8 |
| Direct production labour | R12 |
| Normal waste allowance | R3 |
| Total variable cost | R72 |
| Selling price | R90 |
| Contribution | R18 |
The R12 labour amount represents direct production labour, including the owner’s production time where applicable.
If you pay yourself a separate salary or include further owner remuneration in overheads, make sure you do not count the same work twice.
Notice the Difference
R90 selling price minus R38 ingredients leaves R52.
But the other variable costs total R34.
That reduces the contribution to R18.
Variable Costs Versus Fixed Costs: Why the Difference Matters
A cost calculation becomes more useful when you separate expenses according to how they behave.
Variable Costs
Costs that change with production or sales volume within the relevant operating range.
Examples can include ingredients, containers, payment fees and delivery expenses.
Fixed Costs
Costs that remain broadly unchanged over a particular range of sales.
Examples might include equipment depreciation, certain software subscriptions, insurance and allocated premises costs.
Costs do not always fit neatly into one category.
Electricity, labour and delivery may contain both fixed and variable components.
Classify costs according to how your own business operates.
Important: do not simply divide every monthly expense by an optimistic sales forecast.
Understand which costs you incur per additional meal and which costs must be paid regardless of sales.
Contribution: The R18 That Must Carry the Business
Contribution is calculated by subtracting variable costs from sales revenue.
Selling price: R90
Variable costs: R72
Contribution per meal
Each meal contributes R18 towards the business’s fixed operating costs.
Only after those fixed costs are covered does the business begin generating an operating surplus under these assumptions.
Why This Matters
Selling more meals can increase contribution, but that does not automatically mean you are making a worthwhile profit.
You must consider the monthly costs and whether increased sales create additional expenses.
Now Account for Your Monthly Overheads
For this hypothetical business, assume the following fixed monthly expenses.
| Fixed cost | Per month |
|---|---|
| Allocated premises and utilities | R900 |
| Equipment depreciation | R500 |
| Phone, internet and software | R400 |
| Insurance and administration | R500 |
| Fixed marketing expenditure | R600 |
| Repairs and contingency provision | R700 |
| Total monthly fixed costs | R3,600 |
The variable electricity and direct production labour from our earlier calculation are not added again to this fixed-cost table.
Fixed-cost amounts are illustrative. Actual accounting treatment, depreciation and provisions may differ. Interest, tax, additional owner remuneration and other omitted costs must be considered where applicable.
How Many R90 Meals Must You Sell to Break Even?
We now have the two figures needed for a basic contribution-based break-even calculation.
Monthly fixed costs: R3,600.
Contribution per meal: R18.
Illustrative monthly operating break-even.
At 200 meals, contribution totals R3,600 and covers the assumed fixed costs.
This is not a guaranteed sales target.
It is a calculated requirement based on the example’s selling price, variable cost and fixed expenses.
A real business must update the calculation whenever those assumptions change.
What About Your Own Income?
Direct production labour is already included in the R72 variable cost.
However, the business may still need to generate additional income for the owner, repay financing and provide funds for future investment.
Breaking even is therefore not necessarily the owner’s final financial goal.
What Happens If You Sell 100, 150, 200 or 300 Meals?
Let’s keep the same assumptions: R90 selling price, R72 variable cost and R3,600 monthly fixed expenses.
| Meals sold | Revenue | Operating result |
|---|---|---|
| 100 | R9,000 | −R1,800 |
| 150 | R13,500 | −R900 |
| 200 | R18,000 | R0 |
| 250 | R22,500 | +R900 |
| 300 | R27,000 | +R1,800 |
The operating result is calculated as:
At 300 meals, the business earns R27,000 in revenue.
Yet the illustrative operating surplus is only R1,800.
Busy does not automatically mean profitable.
A business can process hundreds of orders and still produce a relatively small operating surplus.
What If Ingredients Become More Expensive?
Suppose the ingredient cost rises from R38 to R43 per meal.
All other costs stay unchanged.
Total variable cost rises from R72 to R77.
Contribution per meal before the R5 ingredient increase.
Contribution per meal after the increase, with the selling price unchanged at R90.
The revised break-even calculation becomes:
Rounded up to the next whole meal.
Under the same simplified assumptions, the business now needs 277 sales rather than 200 to cover its fixed costs.
This demonstrates why food businesses should revisit recipe costs rather than assuming last year’s selling price is still adequate.
Collection, Delivery or Platform Sales: Which Costs Are Different?
Not every meal reaches the customer in the same way.
A collection order, your own delivery and a third-party delivery platform may have different costs and prices.
Customer Collection
Your delivery cost may be lower, but packaging, collection handling and other expenses still need to be counted.
Your Own Delivery
Include fuel, driver time, vehicle wear and realistic delivery capacity.
Third-Party Platform
Account for applicable commissions, payment fees, promotions and other charges.
Bulk or Corporate Orders
Larger orders may change purchasing, labour, packaging and delivery costs.
Do not use one profit calculation for every sales channel.
Calculate the contribution separately for each material combination of product, price and delivery method.
Stop Guessing What Your Food Really Costs
Your selling price is only one part of the picture.
You need to understand the cost of producing, packaging, selling and delivering every product.
Explore What Does It Really Cost You to Make and Sell Food? for further guidance on food-business costing and pricing decisions.
Read the eBook overview first →Review the current price, contents and download format on the product page.
Why Portion Control and Food Waste Change Your Profit
A recipe may appear profitable on paper.
But what happens when every portion contains more meat, rice or sauce than the calculation allows?
What happens when you prepare 30 meals but sell only 24?
Ingredients used in unsold or discarded meals still cost money.
Reduce Avoidable Losses
- Use standard recipes and portion sizes.
- Record actual ingredient quantities.
- Track cooking yield.
- Monitor unsold and discarded food.
- Plan production around realistic orders.
- Recalculate costs when suppliers change prices.
- Follow appropriate food-safety practices. Do not sell unsafe food to reduce waste.
In our example, the R3 waste allowance is a planning assumption.
A real producer should replace it with an allowance based on actual yield and loss records.
Should You Simply Increase the Price from R90 to R100?
A higher selling price can increase contribution per meal if variable costs remain unchanged.
But customers may respond differently to a higher price.
You should therefore investigate both unit economics and demand.
| Selling price | Variable cost | Contribution |
|---|---|---|
| R85 | R72 | R13 |
| R90 | R72 | R18 |
| R95 | R72 | R23 |
| R100 | R72 | R28 |
These comparisons assume that variable costs remain R72, which may not hold if the product, portion or sales channel changes.
A price increase that substantially reduces sales may not improve the overall result.
Your decision: investigate customer demand, competitors, product value, costs and realistic sales volumes before changing prices.
Further reading: How to Price Your Products and Services for Profit in South Africa.
Your Food-Costing Worksheet: Seven Numbers to Record
You do not need sophisticated accounting software to begin understanding your costs.
Start with one product and record these figures.
Selling Price
What do you actually receive per sale, excluding amounts that are not your business’s revenue?
Ingredient Cost
What is the cost of the ingredients in one saleable portion?
Other Variable Costs
Include relevant packaging, direct labour, transaction costs, energy, delivery and expected waste.
Contribution
Selling price minus total variable cost per unit.
Monthly Fixed Costs
Record the overheads you must cover over the relevant sales range.
Break-Even Quantity
Divide fixed costs by contribution per unit, provided contribution is positive.
Actual Operating Result
Compare total contribution with fixed costs using actual sales figures.
Copy These Formulas into Your Spreadsheet
Variable cost per unit = sum of all relevant variable costs.
Contribution per unit = selling price − variable cost.
Break-even units = fixed costs ÷ contribution per unit.
Operating result = total contribution − fixed costs.
If contribution is zero or negative, the normal positive break-even calculation does not apply. Review the underlying product economics.
Five Food-Costing Mistakes That Can Hide Your Losses
1. Counting Ingredients Only
Packaging, energy, labour, delivery and other costs are ignored.
2. Treating Contribution as Profit
The business still needs to cover monthly overheads.
3. Ignoring Your Time
Unpaid owner labour may make a product look financially attractive when the economic return is inadequate.
4. Forgetting Unsold Food
Production losses and discarded stock can raise the cost per saleable meal.
5. Using One Calculation for Every Order
Collection, delivery, discounted orders and platforms can have different economics.
Your 30-Day Plan to Understand Your Food-Business Profit
Week 1: Record Actual Costs
Choose one product, weigh ingredients and record all relevant production and selling expenses.
Week 2: Calculate Contribution
Determine the variable cost and contribution per saleable unit.
Week 3: Calculate Break-Even
Record monthly overheads and calculate realistic break-even sales for the product or product mix.
Week 4: Test and Improve
Compare actual sales and costs with your forecast. Investigate waste, portions, pricing and sales-channel performance.
Decision rule: do not expand production simply because orders are increasing.
First establish whether the additional sales improve the overall financial result.
Related Food Business Guides for South African Entrepreneurs
Food Costing eBook
Explore the full eBook overview for further guidance.
Explore the food costing guide →Home Food Business
Investigate the wider process of starting and managing a home food venture.
Explore home food business →Meal Preparation Business
Explore a business model built around prepared meals and organised customer orders.
Explore meal preparation →Home Baking Business
Investigate costing and operating decisions in a home baking enterprise.
Explore home baking →Pricing for Profit
Explore the relationship between costs, pricing, customer value and business margins.
Explore the pricing guide →Food and Hospitality Hub
Browse the wider collection of food-business resources.
Explore all food guides →Food Costing and Profit FAQs
If a meal sells for R90 and ingredients cost R38, is profit R52?
No. The R52 remainder ignores packaging, labour, utilities, payment charges, delivery and other relevant costs. You must also cover fixed business expenses.
What is contribution per meal?
Contribution is selling price minus variable cost per meal. It helps cover fixed costs and contributes to operating profit once those costs are covered.
How do I calculate break-even meals?
For a single product, divide relevant fixed costs by positive contribution per unit, provided the assumptions remain valid over that sales range. Round the result up to a whole unit.
Should I pay myself for cooking?
Your labour has economic value. Include it appropriately in your costing and remuneration plan. Avoid counting the same labour expense twice.
Is revenue the same as profit?
No. Revenue represents sales earned. Profit is determined after accounting for the relevant expenses.
Do delivery-app orders have the same margin as direct orders?
Not necessarily. Platform commissions, promotional arrangements, selling prices and other expenses may differ. Calculate each sales channel separately.
What if I sell several different meals?
Calculate contribution for each product. A business-level break-even calculation then needs to account for the expected sales mix and relevant shared costs.
Should I include VAT in my calculations?
VAT treatment depends on the business’s registration status and the applicable treatment of its products and purchases. Use a consistent, appropriate approach and obtain professional tax guidance where needed.
Douw Steyn
Douw Steyn develops practical business guides to help South African entrepreneurs evaluate opportunities, understand costs and build more effective business systems.
Start Small. Build What Works.
Learn more about Douw Steyn →Know What Every Meal Really Contributes to Your Business.
Count the ingredients. Include packaging. Value your labour. Calculate delivery. Cover your overheads.
Then decide whether the selling price and sales volume create the financial result you need.
Explore What Does It Really Cost You to Make and Sell Food? for further food-costing and business-planning guidance.
Read the eBook overview first →Important information: This article provides general educational and business-planning information. It does not constitute accounting, tax, financial, legal or food-safety advice. All prices, sales volumes and expenses in the example are hypothetical. They are not current supplier quotations, typical industry margins or guaranteed outcomes. The simplified operating results exclude certain potential expenses, financing, income tax and exceptional losses. Actual profit and cash flow will depend on your business’s complete circumstances. Use your own records and obtain appropriate professional guidance where necessary.