Gross profit % and mark-up are about the same thing: the profit margin a food business owner stands to make on a product on the shop shelf or on the customer’s plate.
Mark-up is a % of the cost price added to create the selling price.
Gross profit is the selling price minus the cost price, expressed as a % of the selling price.
Most food shops will aim for a gross profit % of 35-45% across the board, i.e.. across all the different product categories that they sell; where a shop sits in that range will depend on their location and core customer base. Urban locations tend to have higher overheads (rent + rates) and labour costs, rural set-ups might be able to accept lower margins because their cost base is lower. They may make less profit than that on bread because of wastage but more on food-to-go.
Food service operators (cafes, restaurants, mobiles) will aim for a gross profit % of around 65% depending on the style of operation and location.
Gross profit example:
So for example, if you’re selling a product for £2 a deli owner who is aiming for 45% gross profit will want to sell it for £3.64.
£2 (cost) = 55% so 45% (profit) = £1.64
£2 (cost) + £1.64 (profit) = £3.64 (selling price) = 100%
Mark-up example:
If the deli owner works on 45% mark-up then you simply add 45% to the cost price.
So £2 + £0.90 (45% of £2) = £2.90.
I hope this would help how to cost out your food that may be selling.
Ian