Kebab Shop Profit Margins
2 min read

Kebab Shop Profit Margins

This post will reveal the average profit margins in the kebab shop business.

I spent 10+ hours studying the ins-and-outs of kebab shops and collecting data so I could get the information to you accurately.

So if you want to compare your performance to the industry standard and find ways to improve your profits, this post is for you.

Oh, and I'm not going to waste your time. I’ll get straight into what you need to know.

Let's dive in.

Average Kebab Shop Profit Margins

The average profit margins in the kebab shop business are:

  • 60% gross profit margin
  • 10% net profit margin

These margins are tight. That’s why it is vital that kebab shop owners spend time working on their business to create a sustainable business model and efficient operations.

If you need an explanation of these financial metrics then you can check out my guides on gross profit margin and net profit margin.

Otherwise, let’s look at the average cost breakdown for kebab shops.

Average Cost Breakdowns for Kebab Shops

In terms of the cost breakdown, the average kebab shop spends:

  • 40% of revenue on cost of goods sold (e.g. ingredients)
  • 30% of revenue on indirect expenses like labor and marketing
  • 20% of revenue on overheads like rent and utilities

That means for every $1 in revenue the average kebab shop business pays 40 cents on cost of goods sold, 30 cents on indirect expenses, 20 cents on overhead.

So the average kebab shop earns 10 cents in net profit for every dollar of revenue.

But why settle for average profit margins if great margins are possible? Let’s see whether it's possible to do better in the kebab shop business.

Kebab Shop Profit Margin Benchmarks

Here’s the net profit margin benchmarks for the kebab shop business:

  • Great: 20% net profit margins
  • Good: 15% net profit margins
  • Average: 10% net profit margins
  • Bad: <5% net profit margins

Remember, these figures are not one-size-fits-all.

A kebab shop focused on a profitable niche can have net profit margins as high as 40%, but revenue might be fairly limited. However a large kebab shop business focused on a mass market offering can make good money on margins as low as 10%. It all depends.

If you are happy with your profit margins compared to these benchmarks, congratulations. You are either in a good market, running an efficient operation, or both.

If not, you’re also in luck.

You might have the opportunity to increase your profits by making some improvements to your business and operations.

Let’s quickly look at how.

How to Improve Kebab Shop Profit Margins

There are five ways to improve kebab shop profit margins:

  1. Increase prices
  2. Focus on profitable business
  3. Reduce direct costs
  4. Reduce indirect expenses
  5. Lower overheads

I would suggest focusing on them in that order too.

You’ll find more opportunities to move the needle by focusing on your prices, profitable business and direct costs than by fretting over indirect costs and overheads.

If you want to go deeper on any one of these profit improvement ideas, check out my article on How Smart Business Owners Improve Profit Margins.

Whether or not you check it out, I know one thing for sure. The fact that you are interested in exploring this exercise is a great sign.

It means you are thinking about the right issues and that you are considering the options available to improve your business and profitability.

Comparing your profit margins to industry averages is a valuable exercise. By baselining your performance you can see if there is room for improvement in your business.

It’s a great place to start, and I hope this post helped.