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Boy

How would one grow a sandwich business like this?

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Hello people

I've been following this guy's story, he started a business selling sandwiches on the street in Joburg's CBD. How would one grow a business like this to the next level and what would that next level look like?

Quote

 

This dad started a sandwich business to look after his child using his last R800, and now makes R20,000 a month.

Itumeleng Lekomamyane grew his sandwich business in Johannesburg to a R20,000 a month business in six months.

He used the R800 he owed for his daughter’s maintenance to start his business, and grew to four locations in January. 

He sleeps every day between 13:00 - 20:00 to start making sandwiches in time to sell them by 04:00 in the morning.

 

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2 hours ago, Boy said:

Hello people

I've been following this guy's story, he started a business selling sandwiches on the street in Joburg's CBD. How would one grow a business like this to the next level and what would that next level look like?

Very good example of starting with what you have and not some fantasy that will never be a reality.

Based on publicly available figures (if correct), it appears he still has some way to go before he is ready to grow to the next stage, but that is fine, he has started and now has a real picture of what his business is and what it needs and its challenges, something you don't have when it's just an idea in your head putting him miles ahead of people who are still dreaming. 

Based on media reports his business looks a bit like this:

Sales of R20 000 per month with a 100% markup over 4 locations (sales channels).   

As he is working from home for now, let's work on the 100% markup on ingredients only (minus rent/labour):

Sales: R20 000 (based on public figures)
Cost of Sales: R10 000 (based on 100% publicly disclosed markup)
Profit: R10 000

Assuming he is working 20 days (Mon-Fri) that works out to R1000 a day in turnover and R500 a day in profit, divide that by 4 locations and it averages R250 per day in turnover and R125 in profit per location/sales channel. The article you linked to mentions they sell from 4AM until 10AM (6 hours). Each location making on average R20.83 an hour profit.

In this video he mentions the selling price as R20. That would mean his cost price per sandwich is R10 and that he is selling 50 sandwiches a day (R1000/R20).

If the labour is not included in the "100% markup" he was publicly quoted then he still has to pay the person from the R125 in profit per location. As you can see there is still a way to go if the public figures are correct. Now these are only sandwich numbers I have seen some photos of him with cakes and sweets so he will be making extra there.

I personally would only pay on commission. 50/50 profit split. For every sandwich the location sell they get R5. Assuming he is doing this then he is making R62.50 per location in profit or R250 a day. If he is working one location, then he is taking R312.50. This means that each seller is only making R62.50 from the sandwiches from that six hours work. But he can sweeten the pot for them and just stick to sandwiches and let them sell the sweets and keep all the profits for them. He does the food they can sell the dessert.

There are a few things that can be done immediately:

  1. Optimise sales channels: Find a way to sell more at the four locations. Get sellers more motivated so that can sell more. After all they will be rewarded. 
  2. Increase sales channels: Add more locations/sellers. Offer to supply existing traders with your stock on consignment and give them R5 per sale. He is currently making enough profit per day to add an extra 25-30 sandwiches which can be doubled.

Notes

  • It is worrying that he does not know for sure what his most popular sandwich is. He is doing small enough volumes to manually keep track and should know to minimise wastage.
  • I also disagree with his retail shop growth strategy, retail space is expensive and if he gets space it should be in the form of a commercial kitchen, that can be used as a depot and base for all his sellers.
  • As for his food trucks that are going to travel around the country going to stadiums. I don't know how workable that plan is, it sounds a bit unrealistic to me unless he has a national network of trucks that work other places during the week and does stadiums on weekends the way some people do with Sunday markets.

A proven concept he should aspire to is something like Sandwich Baron but on a cheaper scale, where you operate in an area and people can order via phone, WhatsApp, Website or Email and have their food delivered to them. But instead of a shop you work from a food truck, the truck does not even have to be the sales channel, just use it as a kitchen, he can park in a central location in a business district and have someone hand deliver to the buildings, this will also negate the problems that he has facing with metro police as a street vendor.

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Thank you @Brakish so go from serving the worker in the street to their workplace?

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On 8/5/2020 at 1:40 PM, Boy said:

Thank you @Brakish so go from serving the worker in the street to their workplace?

Something like that. It can be outside or delivered to their workplace. Now remember at the moment his main clientele might be blue collar workers so there might be a shift in target market to white collar workers, unless he is parking outside of factories. 
But his current way of doing things is unsustainable, getting a R1600 fine every time, which effectively wipes out days if not weeks of profit is not a sustainable way to run a business.
 

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