The Number You're Avoiding (And Why That's Normal)

You know the number I'm talking about. It's somewhere in that spreadsheet you haven't opened since October. The one with the tab labeled "Q3 Costs" that still has Q1 formulas. The one where labor hours are "estimated" and the ingredient prices reference a supplier invoice from six months ago. You've been meaning to update it. You will. Just not today. Today you have orders to fill.

This is not a you problem

In early 2024, we sat down with food brand founders and asked a simple question, "Do you know your profit for last year?"

We talked to four businesses. A pickle company in Philadelphia. A cookie brand in Baltimore. A packaged meals brand. A popcorn startup. Combined revenue across those businesses was somewhere north of $1.3 million.

None of them could answer the question.

Michelle, who runs a cookie brand, put it bluntly, "There is no system. We gotta get better. We don't know our numbers."

Mike, who co-founded a pickle company doing over $600K in revenue, said, "Inventory for what I buy is in my head. I know that's not the good answer." He laughed when he said it. They all laughed. It's the kind of thing that's funny until you think about it for more than a few seconds.

Breanna, who co-founded a packaged meals brand, was the most direct, "We needed someone to come and look at our numbers to tell us if we were on track."

These are real brands selling real products through retail, farmers markets, online, wholesale. They're making money. They think. Probably. They just couldn't tell us how much.

Why you don't look

It's not laziness or ignorance. It's avoidance. And honestly, the avoidance makes sense. Think about what happens if you actually sit down and calculate your true cost per unit. Ingredients at current prices. Actual labor time, not the estimate you've been using since launch. Packaging. Materials. Shipping. Waste. All of it, for every product. You might discover your best seller has the thinnest margin. You might find out the co-packer deal you negotiated is eating your profit. You might realize you've been underpricing your flagship product for over a year. That's a heavy afternoon. So instead, you fulfill the next order, restock ingredients, update the Instagram, and tell yourself you'll do a proper cost analysis next quarter. Same thing you told yourself last quarter. One founder we spoke with, Jeff, runs a jerky brand through a co-packer. He described the cycle perfectly, "It feels like there's never excess profit, just enough to buy the next batch." Just enough to keep going. Never enough to know if you're actually getting ahead.

The spreadsheet problem

Most food brand founders we've talked to started the same way. A spreadsheet.

It made sense at first. Three ingredients, one recipe, a few customers. You could calculate your cost per batch in your head. The spreadsheet was just for keeping track.

Then you added a second recipe. Then a variant. Then a different package size. Then a co-packer for one product line. Then a new supplier with different pricing tiers. Then labor, but how do you even track labor when some batches take 2 hours and some take 3.5 and your production assistant called in sick on Tuesday so you did it yourself?

The spreadsheet didn't break all at once. It broke slowly. A formula referencing the wrong cell. A price that hasn't been updated. A tab nobody maintains. Jeff told us his spreadsheets were "messy, multiple sheets, outdated tabs, things I should delete but don't."

We dug deeper into why spreadsheets fail food brands in The Spreadsheet Delusion.

You know it's broken. You just don't know how broken. And finding out would mean sitting down with the thing for a full day, which you don't have, because you're producing and fulfilling and delivering and answering emails and doing everything else that keeps the business running.

So the number sits there. Unexamined.

What avoidance actually costs

Say you're doing around $190K in annual revenue across 7 or 8 SKUs. You think your average margin is somewhere around 38%. Not bad for a small food brand.

But you've never actually calculated it. That 38% is based on ingredient costs from when you first priced the product, estimated labor, and shipping that's "probably close enough."

What if your actual margin is 31%? That 7-point gap on $190K is about $13,300 a year. That's real money. That's ingredient orders you're funding out of revenue you thought you had but don't.

Or picture this: one of your products is actually at 14% margin while the others average 43%. You're spending the same effort producing it. Same kitchen time. Same packaging run. But it's dragging everything down, and you don't know which product it is because you haven't looked.

The avoidance isn't free. It's just invisible.

Why now matters more than later

Ingredient prices change constantly. Your flour costs more this month than last month. Your supplier raised the price of vanilla. Packaging went up.

Every price change ripples through every recipe, every product, every margin. But if your cost data is three months stale, you don't see the ripple. You just see the revenue number and assume things are fine.

One of the founders in our research said something that stuck with me. They said, "Food prices change all the time so I need something where I can go and show that it was x dollars last week and x dollars this week." She knew the problem. She just didn't have a way to see it without rebuilding the spreadsheet from scratch every time something changed.

The longer you wait, the wider the gap between what you think your margins are and what they actually are. Every pricing decision, every new wholesale account, every product launch in that gap is based on numbers you're not confident in. You feel it even if you don't articulate it.

What "looking "actually looks like

Looking doesn't have to be a full-day spreadsheet audit.

Pick one product. Your best seller, your simplest SKU, whatever feels least intimidating. Calculate the real cost: ingredients at today's prices, actual labor time (timed, not guessed), packaging, materials. Divide by the number of units per batch. Compare that to your selling price.

That's your real margin on one product.

It might be exactly what you expected. It might be better. It might be worse. I've seen founders go through this exercise and feel relieved. I've also seen the other thing. Either way, they all say the same thing afterward: they wish they'd done it sooner. Not because the answer was good, but because the not-knowing was worse.

The anxiety of not knowing is there whether you acknowledge it or not. It's in the back of your mind when you price a new product, when a supplier raises their rates, when someone at a market asks "so how's the business going?" and you say "great!" and mean it about the product but not entirely about the numbers.

You're not behind

If you've read this far and recognized yourself in any of it, you're not behind. You're normal. Every food brand founder we've spoken to has some version of this. The ones doing $50K a year and the ones doing $700K.

The difference between founders who break through the hamster wheel and those who stay on it isn't talent or product quality. It's whether they eventually sit down and look.

You don't have to look at all the numbers today. One product. One real cost calculation. That's enough to start.

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Prophitable is a cost tracking and profitability platform built for small packaged food and beverage brands. If you want to see your true cost per unit and true profit per sale, start your free trial. 14 days, full access, no credit card required.