How to Start / Open A Juice Parlour Business in Kenya

Juice Parlour Business Plan (Kenya)



Overview

Download Juice Parlor Business Plan - Kenya PDF➥

Fruit consumption is elastic. Thus people consume more fruits as their income improves and vice versa. (Comparatively an increase in income does not lead to more consumption of vegetables). However due to more information about benefits of fruits being made available many who normally won’t eat fruits everyday are substituting one meal for fruits. Say instead of taking ugali / chips for lunch they consume fruit salad.

By and large as the economy grows so will fruit consumption. On the other hand a rise in the inflation rate and prices of basic products will reduce consumption of fruits.

Bananas are the most consumed fruits in Nairobi followed by Oranges, Mangoes, Avocado and Pawpaw. Bananas show the least variation in prices throughout the year, this is followed by oranges. And with the increased importation of apples their prices are stabilizing. Bananas are mostly sold in wholes, used in almost all salads and sometimes in juices.

A consumer survey has indicated that over 90% of households purchased their fruits and Vegetables from two or fewer outlets, about 80 % used the same number for meat. For staple foods (sugar, maize flour, tea leaves etc) though only 30 % used a regular retailer.

In 2003 only about 6 % of city residents purchased fruits from supermarkets. Presently the number is estimated to be 20 %. The increase has less to do with the rise in the number of supermarkets and more to do with traceability; the faith that supermarkets will only source quality fruits and from the best of suppliers.

Overall, according to some other research, households in Nairobi spend 15% of their basic food budget on vegetables, 8% on fruit and 3% on Irish and sweet potato. In comparison, they spend 18% on dairy products, 14% on beef, 12% on wheat products, and 11% on maize products.

According to World Health Organization, the average recommended level of daily fruit and vegetable intake is 400g per person per day or roughly 150 kg per person per year

Types of Fruit Parlours

The fruit parlour (whole fruits, juices and salads) business can be loosely classified into the following categories.

a)Street/ Mkokoteni / Wheelbarrow Parlours – These have carts, wheelbarrows and other make shift structures largely positioned in downtown areas of various towns . They largely sell salads, and pieces of whole fruits. A few sell juices which they make at home.

b)Individual, Small Business Office to Office Vendors – These could be individuals or businesses that mainly make juices in homes and deliver to offices.

Some focus on specialty dietary juices, (say for diabetic people). Mostly these are the kind of juices that would be not commercially viable to produce for the mass market say carrot juice. Some use the internet to market themselves, either using Facebook, free online classifieds or own websites through which one can order.

There are also many individual vendors who produce the normal fruit juices and salads and deliver to offices, shops, employees and students. These vendors penetrate the market by offering a line of credit, liaising with someone inside the organization, or competing on price since they pay no licenses or rent. They mainly grow by word of mouth.

c)Small Informal Stalls Parlours – These sell whole fruits, salads and make the juices a bit informally. Some have blenders/juicers at their places of work while others make the

juices in their homes and come with them to their businesses. Many don’t have refrigerators. They serve juices in cups.

Not all are this causal though; others are more established with take away cups, refrigerators, and a couple of blenders which they use to make the juice and sell salads on the premises.

d)Formal Street Parlours - These are located in proper stalls or permanent premises. They make juices in real time, and have more and bigger blenders, juicers and juice dispensers. They portray a high level of cleanliness. The staff wears aprons or uniforms. They also sell

snacks mostly cakes.

e)Hotels/ Restaurants – Many hotels now offer juices and salads as part of their menu. A section of fast food fish and chips restaurants favor passion juice which they sell for between Ksh.15 and Ksh.20.

f)Other Informal Players – These include those who could be selling fruits in various parts be of a town or along highways. One moment they are there, the next they are not.

Licenses

Often if you are operating informally say from a market stall, wheelbarrow, and mkokoteni or

such other then you don’t need proper licenses. You are considered more of a hawker, and you

pay daily or monthly fees. However if you have a hint of formal then you could require licenses which among other things touch on hygiene. The exacts about licenses, just like with enforcement, will vary from county to county but the below should guide you.

 

License

 

Details

Cost

 

 

Single User Business Permit

 

This is issued to businesses

The cost will range from

 

 

 

 

formally operating within a

county to county, size of

 

 

 

 

county irrespective of their

premises and the location

 

 

 

 

activities.

within the county. Budget at

 

 

 

 

 

 

least Kshs. 5000 per year for

 

 

 

 

 

 

this license.

 

 

Food Handler’s Medical

 

This ensures food handlers

The cost varies but ranges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Certificate

are free from diseases which

between Ksh.600 to

 

they could spread to

Kshs.1500 depending on the

 

customers.

hospital and county. County

 

A medical examination is

hospitals will charge the least.

 

required before the issuance

 

 

of the certificate. This can be

 

 

acquired at county

 

 

government hospitals or other

 

 

recognized medical

 

 

institutions.

 

 

 

 

Public Health License (

If you are operating a more

The cost varies from county to

Premises)

formal parlour serving juices

county but budget at least

 

in a hotel kind setting then you

Kshs. 3000 for the license.

 

need these licenses which are

 

 

issued to ensure that your

 

 

premises are fit for the

 

 

business. For instance looking

 

 

at the drainage, availability of

 

 

sinks, toilets for staff, painting

 

 

and all that.

 

Equipment

The major equipment required for running a fruit parlour are as below. Though some of the items are a must have, some are not. Use this as a guide.

 

Equipment

Purpose

Cost

Supplier

 

 

Juicer

Basically a juicer is

The cost will vary with

Juicers can be bought

 

 

 

used to get the juice

the brand and

in supermarkets or

 

 

 

from fruits: Separate

features. Some

specialist household

 

 

 

juice from the pulp of

entrepreneurs swear

equipment shops.

 

 

 

‘juicable' fruits. For

by Black and Decker

 

 

 

 

instance oranges.

while others are for

 

 

 

 

 

 

Ramtons and Phillips.

 

 

 

 

 

 

There are so many

 

 

 

 

 

 

pro and con stories

 

 

 

 

 

 

that make it difficult to

 

 

 

 

 

 

say this is the fool

 

 

 

 

 

 

proof brand. Price

 

 

 

 

 

 

starts from

 

 

 

 

 

 

Kshs.6000.

 

 

 

Blender

A blender whips and

Just like with juicer

Available in

 

 

 

blends. Take for

the cost will vary with

supermarkets or

 

 

 

instance mango pulp,

the brand and

specialist household

 

 

 

you put into a blender,

features such as

equipment shops.

 

 

 

add some water,

capacity, power etc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

switch it on, its whips

Budget at least Kshs.

 

 

 

 

it and there you have

8000.

 

 

 

 

your juice. Other

 

 

 

 

 

fruits that are usually

 

 

 

 

 

blended are

 

 

 

 

 

avocados, bananas.

 

 

 

 

 

Or take a combination

 

 

 

 

 

of all these pour in a

 

 

 

 

 

blender and it

 

 

 

 

 

‘blends’, resulting in a

 

 

 

 

 

cocktail.

 

 

 

 

 

There are

 

 

 

 

 

multipurpose blenders

 

 

 

 

 

and juicers but parlour

 

 

 

 

 

owners prefer to have

 

 

 

 

 

each on its own so

 

 

 

 

 

that if the main parts

 

 

 

 

 

break they don’t affect

 

 

 

 

 

the performance of

 

 

 

 

 

the other.

 

 

 

 

Cups and Bowls

These are used to

The prices will

Available in

 

 

 

pour the juices and

depend on the size,

supermarkets.

 

 

 

serve the salads.

quality and supplier.

Specialist packaging

 

 

 

They rage in sizes.

The 500ml juice cup

material shops like

 

 

 

For juices the

will range between

Asami. Some general

 

 

 

common sizes are

Kshs.7 and Kshs12.

merchandise shops

 

 

 

300 ml and 500 ml

At Asami, one of the

(like some in

 

 

 

plastic cups. For

leading packaging

Kamukunji Nairobi)

 

 

 

salads the measure is

material shops

 

 

 

 

‘small ‘bowl and big

located in Nairobi

 

 

 

 

bowl. Often the

(Moi Avenue,

 

 

 

 

containers are plastic.

opposite Koja stage)

 

 

 

 

Those used for take

25 , 500ml plastic

 

 

 

 

away purposes have

cups cost Kshs,175,

 

 

 

 

a lid. Some parlours

meaning each is

 

 

 

 

use melamine bowls.

Kshs.7, while 300 ml

 

 

 

 

 

cost Kshs. 125,

 

 

 

 

 

meaning each is

 

 

 

 

 

Kshs.5.

 

 

 

Knives, Kitchen

Knives are for cutting

There are no standard

These items are

 

 

basis, Buckets, Jugs

re fruits, basins for

prices for these. A

available in

 

 

and other related

holding the cut fruit,

knife could cost at

supermarkets, plastic

 

 

items.

jugs for pouring the

least Kshs.120, a

items dealers and

 

 

 

ready juices. There

spoon Kshs.12, jugs

household items

 

 

 

are also other items

Kshs. 130 to 240...

shops.

 

 

 

like sieves, spoons,

Clear jugs are

 

 

 

 

forks and even a

preferred. A big sieve

 

 

 

 

dustbin.

Kshs. 30.. Budget at

 

 

 

 

 

least Kshs.4000 for

 

 

 

 

 

these items.

 

 

 

Juice Dispenser

A juice dispenser

Standard dispensers

Some supermarkets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Optional)

adds to the

range in price from

sell dispensers.

 

 

 

professional look. It

Kshs. 50,000 to

Nowadays there are

 

 

 

also makes it easy to

Ksh.150, 000

individuals importing

 

 

 

handle the juice, keep

depending on

from China and

 

 

 

it fresh and hygienic.

capacity

selling independently.

 

 

 

 

 

and make. Most

You can also get

 

 

 

 

 

parlours with

dispensers at

 

 

 

 

 

dispensers use

specialized household

 

 

 

 

 

Promex. Nowadays

goods items. In

 

 

 

 

 

there are also

Nairobi you can check

 

 

 

 

 

dispensers with a

shops such as Nairobi

 

 

 

 

 

cooling system.

Kitchen Care either

 

 

 

 

 

 

 

along Mombasa Road

 

 

 

 

 

 

 

(Allbid House.Opp

 

 

 

 

 

 

 

ASL)

 

 

 

 

 

 

 

Latema road. They

 

 

 

 

 

 

 

can be reached on

 

 

 

 

 

 

 

0727 246 209. Others

 

 

 

 

 

 

 

include Housewives

 

 

 

 

 

 

 

Paradise, opposite

 

 

 

 

 

 

 

Jamia Mosque,

 

 

 

 

 

 

 

Nairobi. Nakumatt

 

 

 

 

 

 

 

supermarkets have

 

 

 

 

 

 

 

also a variety of

 

 

 

 

 

 

 

dispensers.

 

 

Refrigerator

This is to keep the

Price will depend on

Available in

 

 

(Optional)

juice cold, especially

the make and size of

supermarkets,

 

 

 

on hot days. And so

the refrigerator.

electronics and

 

 

 

as to attract

Budget at least Kshs.

household good

 

 

 

customers who love

21,000.

shops.

 

 

 

could juice.

 

 

 

 

 

 

Refrigerators are also

 

 

 

 

 

 

used to store fruits

 

 

 

 

 

 

when bought in bulk

 

 

 

 

 

 

so that they don’t

 

 

 

 

 

 

spoil.

 

 

 

 

 

Chairs

Ideally customers

Plastic chairs start at

Plastic chairs are sold

 

 

 

should have a place

Kshs.700 each.

in supermarkets and

 

 

 

to sit as they sip their

Benches start at

plastic items shops.

 

 

 

juices. The kind of

Kshs. 500, metal

Benches can be

 

 

 

seats that you choose

chairs at Kshs. 900.

made by local

 

 

 

will depend on your

Though the prices

carpenters so are

 

 

 

setting. If the space is

generally fall within

metal chairs.

 

 

 

small then you could

that bracket the

 

 

 

 

use a wooden bench.

exacts will depend on

 

 

 

 

Or simple plastic

the particular supplier

 

 

 

 

stools. If you want to

and specifications of

 

 

 

 

offer more comfort

the chair.

 

 

 

 

then you could use

 

 

 

 

 

 

plastic chairs with

 

 

 

 

 

 

arms. In a hotel like

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

setting you could use

 

 

 

 

 

tall stools in addition

 

 

 

 

 

to plastic chairs or

 

 

 

 

 

metallic chairs.

 

 

 

 

 

Choose your chairs

 

 

 

 

 

based on your

 

 

 

 

 

budget, space you

 

 

 

 

 

have available and

 

 

 

 

 

setting.

 

 

 

 

Table

Again depending ion

Prices start at

Available at local

 

 

 

your setting you could

Kshs.1500

carpenters, plastic

 

 

 

need a working table,

 

items shops and even

 

 

 

and perhaps tables

 

supermarkets for

 

 

 

for customers to use

 

plastic chairs.

 

 

 

when sipping their

 

Generally for plastic

 

 

 

juices. There are

 

items in Nairobi you

 

 

 

parlous which run

 

can check the

 

 

 

without table for

 

Kamukunji area near

 

 

 

customers, and if in a

 

OTC where you are

 

 

 

market use the raised

 

likely to get fair prices.

 

 

 

stall as the work table.

 

 

 

 

 

You will make the call

 

 

 

 

 

depending on your

 

 

 

 

 

setting. Of course in a

 

 

 

 

 

more formal setting

 

 

 

 

 

you will need tables

 

 

 

 

 

for customers. Where

 

 

 

 

 

spaces are squeezed

 

 

 

 

 

some parlours use the

 

 

 

 

 

small plastic stools as

 

 

 

 

 

tables. Others use

 

 

 

 

 

plastic tables placed

 

 

 

 

 

outside the shop with

 

 

 

 

 

a canopy above.

 

 

 

 

Signage and

A sign may be

Signage will depend

One of the easiest

 

 

Branding ( Optional)

necessary to

on the size of the

ways to get a sign

 

 

 

advertise your shop.

board, and the

maker in your location

 

 

 

Or some outside

artwork. Same with

is to look at other

 

 

 

branding to do the

branding; it depends

shops whose

 

 

 

same. There are

on the area you want

signboards and

 

 

 

many parlours which

covered and the

outside branding you

 

 

 

operate without any

artwork, and even

like .Often At the

 

 

 

form of signage. But

artist. Budget at least

bottom there you will

 

 

 

this will depend on the

Kshs. 7,000.

find the name and

 

 

 

location. For instance

Remember for

telephone number of

 

 

 

in market places

signage you have to

the artist or signboard

 

 

 

where there is a flow

display signboards

maker.

 

 

 

of customers, open

pay a fee to the

 

 

 

 

air, there is little room

county government.

 

 

 

 

for signage or

The fee starts at

 

 

 

 

branding. Stalls

Kshs. 2,500 annually

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

enjoying location

and depends on the

 

 

economies also

size of the board.

 

 

advertise less. If you

 

 

 

are operating formally

 

 

 

from a shop or such

 

 

 

other building it’s a

 

 

 

good idea at least to

 

 

 

brand on the outside,

 

 

 

and where possible

 

 

 

have a sign.

 

 

Apron (Optional) s

An apron helps you

Starting Kshs. 600

Local tailors,

 

and your workers look

 

supermarkets.

 

professional while at

 

 

 

the same time

 

 

 

keeping clean. It’s an

 

 

 

optional item.

 

 

Capital

Item

Breakdown

Total

 

 

 

(Kshs.)

Licenses

 

 

 

 

 

 

 

Single User Business Permit

1

 

5,000

Public Health License

1

 

3,000

Signboard License

1

 

2, 000

Medical Certificate

1

 

500

Sub Total

 

 

10,500

 

 

 

 

Equipment

 

 

 

 

 

 

 

Juicer

1

@ Kshs.6,000

6,000

Blender

1

@ Kshs.8,000

8,000

Cups and Bowls

All

2,000

Knives, Kitchen basis, Buckets, Jugs & related

All

4,000

Juice Dispenser

1

 

50,000

Refrigerator

1

 

25,000

Chairs (Plastic)

4

@ Kshs.700

2,800

Tables

3

@ Kshs.4,500

13500

Signboard

 

 

7,000

Sub Total

 

118,000

 

 

 

Stock

All

11,000

 

 

 

Premises

 

 

 

 

 

Rent

2 months deposit + 1

18,000

 

month rent. Will

 

 

depend on location.

 

 

(@ Kshs.6,000 per

 

 

month)

 

Renovation and Remodeling

Repainting and any

6,000

 

branding

 

Sub Total

 

24,000

 

 

 

Working Capital

 

 

 

 

 

Salary

3 months @

24,000

 

Kshs.8000 per month

 

 

for one worker

 

Electricity

3 months @ Kshs.900

2,700

 

per month

 

Miscellaneous

3 months @ 4000 per

12000

 

month

 

Sub Total

 

38,700

 

 

 

 

 

 

Grand Total ( Adding all the above sub totals)

 

202,200

Notes on Capital

The capital breakdown above is just a guideline. Items can be added removed as need be. For instance if you are starting a small scale stall you can begin without the juice dispenser. Depending on your capital you can also start without a refrigerator. Same with the number of tables and chairs. The licenses you require will cost less if you are starting informally. Other items will depend on scale. It’s a fact that there are juice business which start with capital as low as Kshs. 15,000. Either by using a make shift stall, wheelbarrow or mkokoteni. A small light material wheelbarrow costs an average of Kshs.2000. The costs will be less if you are selling fruits only without juices and salads. Or only if you are selling fruits and salads only and you won’t require the juicer and dispenser. There are all these variables that could increase or reduce the amount of capital that you need.

There are parlours which have started on a smaller scale. One began with three melons, 10 pineapples, bananas worth Kshs.200, 30 mangoes and grown from there. Starting with a

wheelbarrow, then a stall, gradually moving from whole fruits then to salads and juices. The capital breakdown above should not discourage you, adjust accordingly.

That said whatever your scale have some working capital. You will not break even immediately. Products could spoil because they are moving slowly or you are yet to get enough customers. You need to keep restocking even at such times, so that your business survives for at least three months by which you should be at least breaking even.

Revenue, Margins, Stock, Trends and Scenarios

Stock and Sample Prices

Revenue in the juice parlour business is definitely affected by several factors some beyond your personal control. Let us look at the details.

There are several markets that you can buy fruits from. The markets are walk in walk out, open to anyone so don’t be afraid of gatekeepers. Once in the market move around and talk to different vendors until you get the best deal in terms of price, quality and service. Usually within a market there are standard prices for produce, but there is some room for negotiations. To get better deals tell the wholesalers you are in business, and would like the best prices possible so you keep your business going and become a regular customer.

In Nairobi some of the well known markets for fruits are Githurai, Kangemi and Marigiti. Githurai is well known for melons and bananas. Wakulima will have everything but it closes early; by 1pm it will be too late. The other markets operate till late afternoon.

For fruits used to make salads and juices you don’t need the best of the best. Average quality fruits will do. There is no need to pay the premium for the grade one fruits; they won’t add so much to your margins.

Prices of items will vary depending on the time of the year. If a product is in season the price will definitely be lower and vice versa. Banana prices are the most stable all year long.

To illustrate possible income scenarios of margins and revenue we use prices of January 2016. The prices are average from a sample of markets in Nairobi. Of course depending on the location, say different counties, prices will vary.

The price of a melon was averaging Kshs. 38 per kilogram at Githurai market. This is irrespective of the size of the melon as long as its grade one melon. Melons are graded by bruising, aesthetics, ripeness and other smaller factors. You need to be sure you are buying a mature ripe melon, because this is tasty and doesn’t have a ‘dull’ taste. A good vendor will teach you tricks to know if the melon is ripe, for instance by hitting

A medium size melon will weigh an average 5 kilograms while the larger of the melons will weigh about 5 kilograms. Larger melons weigh 7-9 kilograms with an average of 8. Of course there are melons which are bigger and could weigh up to 10 kilograms. A 5 kilograms melon can be cut to 20 -24 pieces.

At Kshs.38 per kilogram, 5 kilograms will be Kshs.190. Cutting it to 17 pieces and selling each at Kshs.20, then you will have gross margins of Kshs.150. The number of pieces you cut the melon to will depend on the size and your skill.

For grade two melons the price per kilogram could be as low as 30kg. The rule of the thumb for grade two melons is that you are supposed to get double the buying price, of course keeping everything constant and assuming there will be consumers who are going to buy.

Usually a good vendor will help you, a newbie, to slice the melon into pieces. Still you will want to learn how to slice the melons yourself since you can’t slice all the melons you purchase at the same time. Melons when sliced are perishable and can’t last for more than a day. If you are not able to sell all the same day they go to waste. So when starting just slice what you estimate will be enough for the day or better still slice hour by hour judging by the demand.

The small traders who sell using clear buckets on highways are selling grade two melons. Putting it in a crude way they buy a slice at Kshs.10, split it in to two and sell each resulting slice at Kshs.10, meaning they make double the profits. Such hawkers buy the melons from vendors, who slice the fruits for them. After what they buy sells out, they go back to the vendor to restock. This way they reduce chances of any losses.

A small to medium pineapple selling at Kshs. 50 can result into 8-10 pieces of Kshs.10 each. This means with such you can make Kshs.30 to Kshs.50 margin. For bigger pineapples you scale accordingly.

Bananas are commonly sold at three bananas for Kshs.10 for smaller bananas or five bananas for Kshs.20 when they are relatively larger. You sell each banana at Kshs.5, meaning in each bunch you make Ksh.5.

Mangoes have a margin of Kshs.5 to Kshs.10. Oranges you can buy four for Kshs.20 and sell each at Kshs.10. You can also buy three for Kshs.20, and still sell at the same price. You can also get three at Kshs.10 and sell at Kshs.5. Avocados will depend on the quality but in January you could get standard small avocadoes at three for Kshs.10.

But to get a good understanding of how much you are likely to get let us give some illustrations:

The most popular juices are mango juice and cocktail: which is juice made from different fruits. Examples of fruits commonly used in various ways are mango, avocado, orange, tree tomato, beetroot, pawpaw, passion and pineapple. The fruits can be mixed in different ways, sometimes a cocktail can have two or three fruits. And the fruits have different characteristics which affect how the cocktails are made. We look at that a little later. In the case study below we focus on a version of cocktail juice. The parlour is located at Zimmerman Estate, Nairobi.

Case Study One (Juice)

To keep his juices as fresh as possible, and as a sort of marketing: the parlour owner makes juices as need be. In January 2016 he was making a cocktail made of Mango, Pawpaw, Banana and Avocado.

Here were his buying prices:

1 Mango (Large, fleshy and ripe) – Kshs.20

1 Pawpaw (Small and sweet) – Kshs.20

2 Bananas – Kshs.10

Avocado (Medium size) – Kshs.20 (used only a quarter thus Kshs.5)

Other expenses included:

Sugar – Kshs.10 (He buys a kilogram of sugar at Kshs.120, and from his own experience the quantity of juice used about Kshs.10 of sugar

3 500ml Plastic Cups (@ Kshs.10 each) – Kshs.30

Water – Kshs.8 (He boils water home and goes with it to his stall. The price is based on commercial cost of water)

Total: Kshs.110

The above fruits made 1.5 liters of cocktail juice. He sells each half a liter cup at Kshs.80, meaning 1.5 liters will amount to Kshs. 240.

The gross revenue will be Kshs.240 – Kshs.110 = Kshs.130

There are other expense such as electricity, rent, transport which are calculated on a monthly basis. Please note cocktails take many versions depending on the whims of the vendor, what she thinks is more profitable and attract customers.

Simply from the above example we see the factors affecting revenue are:

Fruit Prices – Fruit prices keep fluctuate depending on the season, whereas juice prices remain more or less the same. This means that you will make money when the prices of key ingredients like mangoes are low and less when they are off season and the prices higher. Of course there are ways to mitigate the losses. One way is to adjust the ingredients accordingly for instance by adding more water, or using more of the cheaper fruit.

Revenue is thus influenced by the seasons and how parlours are able to play around with them. Due to imports and expansion of farming spaces in Kenya most fruits are available throughout the year. Margins are higher when a key fruit is in season and the prices are lower.

Most parlours try keeping the prices of juices and salads constant throughout the year. Thus to buffer themselves against the seasonal changes in prices they device some tricks as shown above.

Some parlous work with the reduced margins believing they will recoup when it’s on season. Pricing of juices and salads has to have a long term perspective. For whole fruits consumers are relatively more flexible in paying extra prices during the off seasons.

For salads and cocktail juices a common trick is to ration each of the ingredients so that the cheapest of the fruits forms the large part of the serving. This has to be done carefully so as not to antagonize customers.

How you source will also affect the price you buy fruits. Time you go to the market, understanding of the market, networks and time you go to the market will affect your buying prices. And so is buying to enjoy discounts and save on time and transport costs. You have to buy in bulk keeping in mind fruits are perishable; so just the right amount of bulk.

Your Pricing - The price of a half a liter of cocktail differs from location to location. In urban areas we have noted price ranging between Kshs.60 and Kshs.100. Though the cost of preparing the juices will vary depending on the ingredients used, the variations are not significant to justify the wide price differences. In some parlours running from the streets in Nairobi CBD a cocktail such as the one we have illustrated goes for Kshs. 90. Higher price means you make bigger margins per quantity. Of course your pricing will be determined by other factors such as location, competition and your target customers.

Location vis a vis Customers – Yes you have made 1.5 liters but are there enough customers to buy the juice, and within what time. If you are in a location with enough of the customers who would appreciate the juice then you will sell more and your revenue higher

Your Costs – Beyond the costs of fruits there are other associated costs such as rent, transport, accessories such as cups and manpower. The lower they are the higher your margins will be.

Marketing - This includes not just advertising and promoting your business, but also customer service. Great customer service is one of the factors that make customers spend more per sitting and keep coming. Advertising whether it takes the forms of a poster, signboard or sandwich boys will help attract people to your business and increase the chances of selling more.

Presentation, packaging and distribution are also part of marketing. Other than labeling a stall Fruits and Salads some added some simple extras “Cold delicious juices” or such. It’s easy to underestimate the power of such slogans but subconsciously they work. The commonly used phrases are “Fresh Juice’, ‘Delicious Juices’, and ‘Healthy Juices’

Presentation plays a role in appealing to customers. Arranging the fruits so that they look attractive to the eyes and seem more delicious than perhaps they are actually are.

Packaging has to do with the way customers consume fruits. The bowls, containers, forks, spoons and all that are used. Smart, fancy but functional packaging is a plus. Irrespective of the location and the target market this is always an added advantage.

Choice of Ingredients – The cocktail above could have been more expensive it included more expensive fruits. Thus it’s always a balance between what customers want and what will make more profit. It’s also a balance between differentiating from competitors and maximizing profits.

Based on the case study above, here are some pointers:

Mango is the key ingredient in most cocktail juices. Due to thickness of mangoes you can’t blend it alone hence you have to add water. There is nothing wrong with adding water; it’s how juices are made. You should listen to the sound of the motor as you are blending. If you get the hint the blender is struggling with the thickness then you add water as need be, otherwise you will end up with a faulty blender and not properly whipped juices.

Pawpaw serves a great role of ‘binding’. When mixed with mango it helps bind the mango which is thin and “allover”. This results in a smoother thicker juice.

Avocados also help make the juice thicker and sticky because it’s oily. A small piece is enough.

Because of adding water, and using some types of avocado or pawpaw which may not be tasty you add sugar to taste. Of course the sweeter the fruits the less sugar you add.

Pineapples and tree tomatoes are largely used to blend cocktail juices.

Still from the Zimmerman Parlour

Daily Juice Sales: 13 - 21 liters. The owners observes sales depend on the day, with higher sales during the weekends ( the opposite could be true for parlours targeting office workers) , the weather: there is more intake during the hot seasons as compared to the cold season, whether he is present himself or just his assistant. He makes more money when he is present all day rather than when his assistant is in charge.

Average Juice Consumption per Customer – 500 ml.

Case Study Two (Salad):

It is not ideal to calculate the margin per glass of juice or serving of salad. (The best way to calculate profit is by considering total costs and total revenue).

But to use a crude example to help you an idea of margins here are the proportions used by a parlour along Accra road, Nairobi.

1 Melon (Ksh.120) used for 18 bowls of salad.

1 Banana (Ksh.5) used for 3 bowls of salad

1 large paw paw (Ksh.60) used for 15 bowls of salad 1 pineapple (Ksh.70) used for 12 bowls

1 Avocado (Ksh.7) used for 4 bowls

1 Beetroot (Ksh.20) used 15 bowls

In the above case the direct cost of a making a small bowl of salad is Kshs.20. He sells the bowl at Kshs.30

Another parlour in Nakuru made salad from banana, melons, avocado and pawpaw. On average the cost of making the small bowl of salad ranged between Kshs.15 and Kshs.20. The small bowl goes for Kshs.30.

These case studies are representative and give an idea of the margins in the business. Specifics will vary from parlour to parlour depending on particular efficiencies.

Here are some general revenue pointers which should guide you:

The proportions of each fruit in a bowl of salad depends on the cost of different fruits, their source of supplies, other businesses expenses, or basically the whims of the owner: what he or she defined as the most profitable quantity or rations. Some parlours buy punctured pawpaw and melons cheaply, remove the spoilt part and used the rest for juices and salad.

Cocktails are the most popular. Indeed some parlours just sell cocktail juices. Mango juice is also loved. Cocktails will vary from parlour to parlour but will often contain a mango, paw paw, avocado; others are banana, tree tomato, beetroot, and oranges.

Revenue is higher among parlours which sell fruits in pieces. This works only for a select fruits like pineapples, pawpaw and melons. Pineapples and melons could have margins of 30% – 70% when sold in pieces than when sold as a whole.

Size and prices of the pieces depends on the location and target market. In locations populated by people of relatively higher income how the pieces were handled and packaged was important. The higher the income the more conscious people are of hygiene and quality of what they ate. Dirt and any hint of staleness are frowned upon.

Vegetable juices are priced at a premium and tend to have higher margins. To give a crude example in January 2016, for one home based vendor carrots worth Kshs.100 in Nairobi made at least three liters of juice, with each liter selling at Kshs.150. This means a gross profit of Kshs. 350. This particular vendor sold six liters of carrot juice every week to two particular customers, delivering to their work place. Vegetable juices are very perishable.

For mass market street parlours be very careful about the ‘health’ juices. You know the ones with vegetables, obscure fruits and many other right (or wrong) things mixed.

Say Kidney Flusher which contains Spinach, Carrot, and Lettuce, Skin Cleanser – Cucumber and Apple

These are the kind of juices touted as having the ability to kusafisha damu, kuongeza damu and such. If you are a street mass market parlour it doesn’t mean you won’t get customers interested in such juices, but comparatively they may not be enough to make the effort worthwhile.

Such juices cost more to prepare and are highly perishable. Though margins could be higher look at it vis a vis the quantities that will be consumed. Also there has been a slight dampening from the healthy mixes hype of say four years ago (2012). Again because such juices are supposed to be ‘healthy’ no sugar is added and some consumers complain they are too tasteless a pill to swallow.

For these it’s perhaps better to make them on order. There could be more customers in a formal parlour and opportunity in branding as a healthy juices parlour.

This branding works only if the customer is able to trust the staff as one with more than a passing knowledge of health benefits found in fruits. The owner and staff must instill confidence in the customers that they have the right knowledge and it’s not just a marketing gimmick. Some have worked by providing relevant literature from health books, the internet and other sources which customers use to select the juice or fruit they need to purchase. A sort of menu giving symptoms/conditions then suggesting the relevant juice. Another has posters on its walls giving the advantages of various fruits “Mango Juice is rich in iron and has anticancer properties”. These have a positive effect on revenues.

Just to pinpoint we are not saying the healthy remixes are not effective. That is for the customer to decide. We are reflecting market sentiments. But well simply observing the market and talking to some in the business you realize there are vendors without the very basic of knowledge to back their healthy cocktails, and it’s more of an effort at differentiating than genuinely kuosha damu, well whatever that exactly means.

That said an interesting observation, and which was also true three years ago is that some of the individual office to office vendors specialize only in vegetable ‘health’ juices, and make relatively good returns out of them. They have specific customers to whom they deliver as per a schedule.

A strategy used by many of the health juice vendors especially those who portray themselves as health specialists is to prescribe weekly regimes of juice intake. For example they say to a customer “to detoxicate your body you need to take half a liter of juice every day for 10 days.” This guarantees sales for the said days.

Sometimes such schedules are given by nutritionists based on some medical conditions. But often the vendors will do some research, add some confidence and prescribe without a blink.

We are not discouraging you from selling health juices, but do so with a very clear target market strategy. And brand accordingly.

Rather than invest in new products some parlours focus more on process, aiming to make a superior product through improving the quality of the juice they made. For these the aim is to

make anyone who tastes their juice or salad declare it the best ever, tell friends and come back for more.

Some parlours have experimented with distribution systems with mixed results. Rather than wait for customers to walk in, a number of parlous have diversified by going out to look for the customers especially in offices and colleges. At times this involves talking to an administrator but the guerilla way of doing it is just to offer to deliver the fruits to a customer rather than him coming to the parlour.

This allows other workers to become aware of the products, give the delivery person a chance to directly interact with potential customers and also acquire some sort of validation: if one person, maybe the health conscious individual in the office, vouched for the products the others would have an easy time trusting it. Others approach relatively small hotels to supply juice at wholesale price for onward sale to the restaurants customers.

When thinking of delivering relate to the extra manpower that you could need, distance you cover, time and any if you can offer credit if it comes to that. Office workers will most likely offer to pay weekly or monthly.

Market Quip

Generally in produce markets products are more expensive during the morning hours. This is because at such hours there are many high quality products. The demand is also relatively high in the morning.

As the day wears out the best products are gone, the vendors have made their margins and now want to sell what is remaining as soon as possible, and at a go.

You don’t have to go for the best quality. Sometimes products are defined as lower grade because they are bruised; they have punctures because of handling or other minor defects. Consumers are reluctant to purchase such products. Thus sellers will package them as “fruits for juice”, and sell at a relatively lower price rather than suffer outright losses. Often paws paws are sold this way.

With time try to build relationships with the market vendors. This will help you get good quality, credit facilities and better prices. A relationship does not mean that you can’t explore better alternatives, but have what you consider to be your core supplier.

Competition and Survival

Competition Trends

The numbers of fruit and juice parlours have been increasing. Unlike 5 years ago (2011) when you could count the number of fruit and juice parlours they now have become a common feature in estates and peri urban centers. Largely this is because of the low barriers to entry, health consciousness, the perceived success of the parlours which had established earlier and growth of urban population partially because of devolution.

In the last two years (2014) there have been a growth of formal grocery shops; specializing in fruits and vegetables. So in estates where you would normally find a ‘normal’ retail shop you find a shop full of crates selling tomatoes, onions, bananas, melons, mangoes, avocadoes and other fruits.

There are also more fruit vendors in the estates. The smaller ones specialize in one fruit: mango, apple, banana or pineapple. Whereas the bigger ones have a little of everything arranged neatly in a stall, wheelbarrow or mkokoteni.

The growth can also be attributed to the expansion of the so called middle class; an urbane population with above average incomes (Kshs. 30,000 and above) who not only value the importance of fruits in their diet but can also afford them.

The expansion of this class of consumers and a rising urban population will mean that the demand for fresh fruits and juices will continue growing. On the other hand the low barriers to entry in the business will continue attracting new investors to the business. Competition will continue to increase. Due to the favorable margins any fruit and juice parlour in an area with some sort of reasonable foot traffic will be able to break even.

Despite this it is instructive to note that there are fruit and juice parlours closing down. The business related reasons are largely tied to poor management, insufficient working capital, and poor locations.

Poor management often happens when someone other than the owner is running the parlour without a keen sense of service, process, sourcing and management. The result is a lot of spoilage, poor quality juices, less customers and eventually closing down of the business.

Presently competition is based on:

Presentation - This by using aesthetics to win customers. The common is arranging the fruits in a neat stack and sprinkling them with some water. There are several variations to this.

Same for juices. Packing them in cups, and having them on the face of possible customers such that they find them irresistible.

This works well especially when you have a large stock of fruits, and in a highly visible area. The problem with this is that presentation does not require any special skills and anyone with some creativity and determination can do it. Yet you will find two stalls next to each other, one with the fruits neatly arranged and the other the fruits lying haphazardly.

Variety – Variety is also used to differentiate. This by having as many different kinds of fruits as possible. Of course these are fruits which are usually in demand so rather than say just have mangoes, bananas, melons and oranges a vendor also has passion fruits tree tomato, avocados, apples, grapes , strawberry and such others.

Differentiating in this manner could be tricky for the novice who is yet to understand the market and observe local trends. Other than the popular fruits, uncommon fruits like strawberry and apricots need to be introduced gradually. Initially you may suffer losses but as consumers get used to the fruits, even if a small group, you start increasing and stocking as per demand. Even when competing on variety have a wider selection as possible of the easily identifiable fruits first then gradually introduce niche fruits.

Facilities – This is by having things like equipment that give you an edge. For instance by having a refrigerator that allows you to serve cold juices. Having a juice dispenser that keeps the juice fresh and gives an impression of professionalism. Others include simple things as stools for customers to sit and a little differentiation in packaging.

Location – Competition is also based on location, whereby a parlour tries to get an edge by locating in a strategic place relative to the competition. Sometimes this involves having more capital and paying more in rent. At other times it means l moving from highly competitive areas to locations which there seems to be a gap.

Formalization – For a long time the juice /fruit parlour has operated in an informal manner from stalls and other street formations. But now to stand out and cater for a customer base that tends to trust a more formal setting in terms of quality or hygiene fruit parlours are moving to the mainstream.

A formal setting takes the form of a proper hotel or shop. Such a premise has more space, more permanent and established facilities.

Moving to formality is also to get space and bigger space at that. It could be easier albeit expensive to get a room to rent than it is to get a stall in the estate or a town’s market. And when you want to have a variety of fruits and large stock the spaces in the market could be too small for that. Another reason towards moving to the formality, say by starting a parlour on the ground shop of a building, is to compete for customers by taking products direct to their faces and making it more convenient for them to shop for fruits without necessarily having to go all the way to the market.

The fact that there are more fruit parlous opening than closing, and the relatively high

number of businesses that have opened in the last one year shows that generally the market is expanding and there are opportunities in the business. The market is far from being saturated as urban populations increase and more centers open up due to devolution and new road infrastructure.

However opportunity specifics will depend on particular areas. But irrespective of the location competition will continue increasing as this is a business with very low barriers to entry. Survival will depend on the ability to win customers, great location and differentiate from the competition.

Other Competition Pointers

For the core product, a whole fruit, there is little differentiation; generally a fresh ngowe mango is still a ngowe mango wherever it is. This means location is important perhaps more than branding. An example is parlour trying to establish a chain in Nairobi; they want to have branded juice kiosks in the estates. This is about distributorship and building trust. By having several kiosks with the same set up, branding and offering, they hope to build trust among consumers even as they try to reach as many of them as possible.

For the secondary products, juices and salads, there is much more room for differentiation. As the market expands and there is a fruit parlour at every corner its branding and relevant differentiation that will drive growth.

There are more efforts to differentiate juices. For instance there are vendors including pieces of real fruits in the juices, another is adding yoghurt to juices, still another parlour is including grated garlic.

Barriers To Entry

The barriers to entry in the fruits business are relatively minimal. Some of the street vendors have started with a capital as low as Kshs. 3000, while the some stalls start with Ksh.100, 000 or less. The licenses and raw material suppliers are also easy to access. With Ksh.4000 one can get a juicer. The biggest barrier is a good location.

However the relatively low barriers means that competition will increase, and when location stops giving an edge then it’s the product/ brand that will matter. Eventually it will not just be about consuming juices but the how. For now though a strategic location remains the best way to compete and flourish.

Price and Competition

Price competition is not intense even for parlours located next to each other. This more so for juices. Not that lower prices wouldn’t pull in customers but unless it’s matched by consistency and higher quality products then it wouldn’t be sustainable.

It is better to compete on better quality products at the common price in the location. Customers are ready to pay what they considered a fair price at the location. For juices differences in

prices in a location are rarely more than Kshs.10. In one location a vendor quoted a higher price for the juice but allowed customers to negotiate.

That said within a larger area, say Nairobi CBD; you will find price differences of up to Kshs.30. These are informed more by location and the setting. Hotels known for exceptional juices tend to charge more, and so are parlours in what could be considered prime uptown locations.

Cost of Acquiring Customers

In urban highly populated areas the cost of acquiring customers is low. There is high demand and a variety of population that makes even the most basic of fruit and juice vendors, some whose hygiene practices could be questioned get enough customers to break even and earn profits. In this case location becomes more important than anything else.

Location Economies

Location economies are also used as a started to acquire customers. This means setting up a juice parlour businesses in places where several fruit parlours already exist The best example is the at least eleven juice parlours that operate next to each other at Bus Station in Nairobi CBD. Such a location guarantees customers since people already identify it with „fruits‟. The goal of the business then becomes to build loyalty, try differentiating in terms of variety, innovation, service or use price to compete.

The downside of this being higher competition. At the bus station several of the dealers have staff whose role is to entice passersby to the stalls. Despite the somewhat aggressive competition if such an area has high foot traffic, like at the Bus Station in Nairobi, there are enough customers to break even and make the business sustainable. Foot traffic is very important in this business.

The Experience

Like mentioned above as more consumers adapt the fruit lifestyle the experience is starting to matter to a section of consumers. Most of the fruit parlous are small stalls, with a wooden bench or just a couple of chairs so that when packed it’s a bit squeezed and sometimes stuffy.

Thus despite the location some customers are looking for some decent classy fruit taking experience. The coffee taking equivalent of fresh juice. The style is not just about the

setting but also the taste. Think of a barman who mixes different cocktails of the same drink. Or a barista playing around with coffee. Some of the individual vendors are trying to fill the gap in taste.

Still a parlour offering a better experience can only be a plus if the premium that a parlour charges for that is within what the consumers at the locality can comfortably pay. It’s better to start with a standard ; room, chairs, simple decent setting, great service, cleanliness variety and quality then if need be upgrade to a higher class set up.

Hotels and Restaurants also offer indirect competition. Purchase of fruits in hotels is

largely episodical; people don’t go to hotels intending to buy fruit related products; rather they do so as part of a larger meal. However noting the increased consumption of fruits a couple of hotels are making and marketing fruit products as standalone meals to the extent that a few hotels have gained reputation as havens of quality juices.

Hotels have the advantage of offering a better experience in terms of comfort and setting. A parlour positioned next to a hotel can compete by hyping its specialization, freshness and making takeaway of whole fruits, juices and salads extremely easy and friendly.

There are also a few but increasingly popular health restaurants which serve specialty ‘well being’ meals mostly made of vegetables and fruits. Their competitive edge is possession of professional nutritional knowledge about vegetables and fruits. They are able to use the information to create products suiting the customer. Often they are able to customize a product to a customer’s health needs. They charge a premium and have a more formal setting. Though competing for the same customers they have a niche they serve.

With the cost of blenders at the lowest there are more people who are making juices

in their houses for own consumption. People make juices in their homes more for reasons of hygiene and „freshness‟ than trying to save costs. A parlour offers convenience in terms of time and place in addition to eliminating the glitches of carrying food. Hence where competition is stiff a fruit business which offers „hygiene, freshness and an impression of skill‟ will lure and keep these kind of consumers.

Where losses are cited as the reason for closing down mismanagement is often the culprit. Mismanagement means lack of proper customer service, workers swindling the owner, preparing excess juice which led too much going to waste, not selling fresh juice and poor sourcing. Losses were also due to poor location.

Some Notes on Consumer Behaviour

Most aspects of customer behavior have been covered above but here are some extras.

Consumers surveyed quoted cleanliness, price, and quality of whole fruits, salads, juices and good service as the main considerations in choice of parlour.

Convenience though not explicitly mentioned seems a key consideration; many customers purchase their salads and fruits within a radius of about 100 meters from where they worked, parked or picked matatu.

In downtown parts of a town consumers are ready to compromise cleanliness for a fair price. A couples of mkoketeni parlous don’t maintain a high level of hygiene yet attracted many customers either because of their location or price.

Quality for juice was measured by how dilute / thick it was. And quality of fruit used to make it. For instance some customers said juice made from extremely over ripe mangoes tasted sour. For salads it was how each fruit was represented. Whether the salad contained too much of one fruit at the expense of another.

Customers also prefer fresh juice, and loved to see the juice made.

In hot weather customers are attracted to parlous selling cold juice

Some Notes on Manpower

Most parlours pay employees a monthly salary which averaged Kshs.7000 in urban areas. Others paid a daily wage often between Kshs. 250 and Kshs.350.

Most parlous are reluctant to employ labor with relevant skills in nutrition, food and

beverage and other professional qualifications because they equated that with increased cost in terms of higher salary and high turnover since the skilled labor would seek opportunities equal to

their skills. This means even people who have just finished high school or have dropped out are employed as attendants. And then most of the work is manual and can be learned easily.

Most of the employees have no previous skills in making juices and they learnt on the

job. The key requirements were good customer service, ability to work fast and mix the juices and the salads in the right rations to satisfy the customer and profit the business.

Many customers treated the staff just as waiters there to serve them and not as skilled professionals who could answer queries related to the fruits.

Owners not managing the parlours directly employed staff who if need be go to the market at the right time be to purchase supplies, who were honest, passionate and with good customer relations skills. Still about 78% of parlours are managed by owners.

Where the owners were not present most had a core employee who acted as a manager, coordinating the other workers, suppliers and trying to win customers. In many cases these were paid a basic salary plus a commission of the total daily sales.

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