What are the most profitable food business ideas? NaijaXtreme recently interviewed over 100 food and beverage restaurant owners to see which types of food businesses are actually making money and which are not.
This gave us a lot of information about how people invest and the type of service that is offered.
From the interviews, we are able to identify the five most profitable food companies.
Margins for a typical food and beverage store range from 5% to 10%. Those are very, very thin margins.
The five most profitable food companies range between 20% and 35% margins. We’re talking 20% to 35% take-home margins, which is incredible.
Top 5 Profitable Food Business Ideas
1.) Tea Shop [Bubble Tea Shop]
The number one most profitable food and beverage business is a tea shop. It is the most profitable because the cost of goods sold is relatively low. It varies from 10% to 15%.
The items are also very easy to make, and it’s relatively easy to maintain consistent quality. All you have to do is follow the formula and the recipe.
Once you have all the powders and syrup, you are ready.
Lastly, training the staff is a breeze because bubble tea doesn’t require any special skills (unlike cooking) to make and requires only minimal serving talent.
Some of the advantages of operating a bubble tea shop is that it is in high demand. Nowadays, everyone is drinking bubble tea and if you don’t know what bubble tea is then you are definitely missing out.
The second thing is the high turnover rate. You don’t need a big space to make a lot of volume. People tend to drink their bubble tea and walk away. That is why it is such an attractive business model.
It does not require much investment. All the equipment is really very affordable.
The fourth thing is quality control. It doesn’t require a very high skill to be able to make the product good because it’s all in the formula. That is what makes this product and this business model so attractive.
Now the downside of running this business is that the average ticket price is relatively low. This means that you need a lot of volume to be profitable.
It is also very competitive. I’m not sure about you, but there are more bubble tea shops in America than 7-Eleven’s and Starbucks. Going down a block you will see at least five of them. It is because there is a very profitable business idea.
I have a few friends who own bubble tea shops, and many of them make over seven figures selling bubble tea.
We’re talking peak hours: over $200,000 per month. That crazy amount of volume and demand was the reason 720 Sweets started selling bubble tea as well. Your franchisees also love that you provide them with this alternative.
2.) Ice Cream Parlor
The second most profitable food and beverage business out there is an ice cream parlor.
The cost of goods sold, once again, is relatively low compared to a full service restaurant. We’re talking about 20% to 25% on the cost of goods sold.
Basically you just need to follow the recipe and create mix A, mix B, mix C and you get a product. This means that highly skilled labor and talent are not required to create the product.
And who doesn’t like ice cream? Everyone loves ice cream and the volume it potentially goes through is insane during the summer.
Now, some of the downsides to having an ice cream parlor is that the equipment is a little higher in cost, seasonality is an issue, and the average cost of tickets is low. So, just like bubble tea shops, you’ll need a lot of volume.
People don’t come just for dessert. They can also come for a light lunch or a light dinner.
3.) Ramen Shop
The third most profitable food business idea is to own a ramen joint.
Ramen is amazing when it comes to profitability. The cost of goods sold ranges from 15-20% and there is a huge demand – people love ramen.
The average ticket cost is much higher compared to a bubble tea or ice cream. It can be kicked up even higher if you have alcohol available and set menus like a ramen bowl and a gyoza bowl.
Although ramen is not as easy to prepare as bubble tea or ice cream, it requires only moderately skilled labor. A fully trained chef is not required as many of the processes are preset.
The best thing about a ramen business? The super fast rotation.
Ramen is not only pretty quick to make, but it’s also quick to eat. In Japan, ramen is meant to be a fast food, where you’re supposed to eat and slurp down the noodles right away.
On the other hand, the investment is much higher compared to a bubble tea shop or ice cream parlor. You will need to consider more expensive equipment, ingredients, and personnel.
For a bubble tea and ice cream shop, there are cases where you only need 1-2 employees on site. A ramen shop needs more regularly to make it work.
And because of how popular ramen is, the competition is pretty fierce. You will see many of Japan’s big names set up shop abroad. You will have to consider how you can compete with them.
4.) Pasta Shop
The fourth type of super profitable food and drink ideas is having a pasta place.
After interviewing over hundreds of food and drink owners, food and drink stores that specialize in pasta are always among the top in terms of profitability because of how basic this item is. Just like ramen, people love pasta and the cost of goods sold is incredibly low because they’re just mixing flour and water together.
We’re talking about 15-20% cost of goods sold, high demand, average ticket cost is definitely much higher than bubble tea and ice cream.
The amount of investment required to open a pasta joint is higher when it comes down to it. You’ll need a full kitchen and more skilled labor to open a pasta place.
5.) Pizza Parlor
The last most profitable food business idea in this new decade of 2021-2030 is to have a pizzeria.
This has always been very cost effective because you are basically mixing dough and water. You’re talking about 10% to 15% on the cost of goods sold.
Now, we’re not talking about those $1 pizza places. But your cost of goods sold will be higher depending on the type of pizza you serve. Some people can eat arugula and have different kinds of meat really fancy, so for those joints, the cost of goods sold is definitely higher.
When it comes to pizza, the skill required to make pizza is also less than in a full restaurant. If your store is more easy-going and cafeteria-style, you can also avoid having to hire additional staff.
On the downside, the investment to own a pizzeria is definitely much higher as well.
So here you have it. The 5 Most Profitable Food Businesses You Can Start.
But just because the concept is profitable, doesn’t mean it will be a walk in the park. There are a lot of mistakes and misconceptions that I see new restaurant owners make, which bankrupt them. Whether it’s bad hiring practices, unrealistic expectations about marketing, or just plain bad business fundamentals.
Make sure you know about them so you can get started on the right track and avoid unnecessary headaches when starting your restaurant.