Client Story: The "Grow Last" Strategy That Created $107K Monthly Profits
(Listen on Apple or Spotify. Full transcript below.)
What if the secret to massive food business profits isn't growing revenue first?
Sarah reveals a counterintuitive "grow last" strategy that transformed a seasonal business from $19K to $107K monthly profits in just two years.
This client's 14% gross profit margins were a ticking time bomb – every new sale was actually creating bigger losses. But instead of the typical "sell more" advice, Sarah implemented a radical two-year approach that flipped conventional growth wisdom upside down.
Year 1 Strategy: Fix everything inside the business first. Sarah walks through the unsexy but profit-generating work that most founders skip. Revenue stayed flat while profits more than doubled – proving the model worked before scaling.
Year 2 Strategy: Revenue growth. But rather than finding new customers or opening a new locations, the goal was to maximize customer value.
Tune in as Sarah breaks down her profit assessment process and all the details of the financial and operations strategy that resulted in 5X profit growth.
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Episode Timeline
00:00 Introduction to the Good Food CFO Podcast
01:05 Client Success Story: Doubling Profits
07:18 The Importance of Financial Audits
15:53 Yearly Growth Strategies and Adjustments
22:35 Long-Term Vision and Future Plans
29:13 Conclusion and Key Takeaways
Full Episode Transcript
you're listening to the Good Food CFO Podcast. I'm your host Sara Delevan and with us as always is our producer Chelsea Stier. Hey Chelsea.
Hey, Sarah. One of your clients recently had, think their biggest month ever. This is something that like if you're listening to the podcast, they've heard you share before about this particular client. It was actually this time last year that you were sharing about their July profits month over month from 2023 to 2024. And now this year, as I've already said, they had an even bigger month.
And I just want to recap for everyone what specific numbers we're talking about. In 2023, this client's July profits were around $19,000. In 2024, so just one year ago, their July profits were around $51,000. So more than double in one year. Amazing. And then this year, this is so exciting, in July, their profits were over $107,000.
thousand dollars.
Yes, for the month of July alone. And we're going to into the specifics of this business, particularly how these results were possible and how you can take what we've done for this business and implement the same guidelines, if you will, the same framework into your business as well.
Yeah. But Sarah, before we get into all of that, I've got a review to share with you. Yeah. And this one comes from our brand new Bobby Yacht member, Michelle Bryan. She shared, Sarah is a true gem in the CPG space. Her writing and podcast are fire, real, practical, and always advocating for founders in an industry that pushes fast national growth.
I love a review.
She shows the value of deliberate strategic growth in your own backyard and how founders can truly win on their own terms.
That is so sweet. Thank you, Michelle. It has been such a joy to get to meet Michelle. We've seen each other a couple of times in our monthly member events, and I'm just so excited to have you as a member and to be working with you. This is just really delightful, and I'm honored to have gotten this review from her. So thank you, Michelle, and thank you, Chelsea, for bringing it here.
course, yeah, it was a very sweet note. As I mentioned, Michelle is a new member. Hopefully, we're going to be able to do her member highlight in new season, in season 16, and many other new member highlights in season 16 because in the month of August alone, we had eight new members join our membership over on Substack, and we are now up to 26 BABOYOT members over there.
I think it's worth reminding anyone listening who's not yet a member or if you are a member and we haven't seen you in a little while, maybe it's been a busy season for you, that with the software launching very soon, members get a free month of the software to help us beta test, give your feedback. It comes with some free hands-on workshops that are happening in the month of September as well as some fun, I think fun, beta testing events.
that we kind of get to do as a group. So I'm just beyond excited that the membership is growing and that more people are going to be at our events and helping us to really launch this software that is designed for you. And so I'm really excited. If you have been thinking about becoming a member or you're like, okay, now's the time I want in on that free monthly subscription or one month subscription, I should say, head on over to the website, Chelsea, can you give them the address where they can join?
So if they go to thegoodfoodcfo.com slash BABOYOT, that's B-A-B-O-Y-O-T, or they can just go to thegoodfoodcfo.com and click on membership to get more information. Now, another exciting member update that we have that I wanna talk about is we're actually gonna be also launching a new type of podcast episode next season.
Yes. I'm really excited about this. There's many things, think, Josie, that we talk about here on the podcast where we say, this has been a long time in the making, right? Yeah. And we have wanted to do this for a while, and that is what we're currently calling financial audit episodes. So we have a service and an online tool, which is now becoming part of the software.
that we've called for years the profit assessment. We're going to talk about how that profit assessment affected or impacted this business that just had record-breaking profits for the month of July. But this episode, this new episode type is going to be us doing a profit assessment or financial audit for a member and then sitting down with them as we do to read through the results and give them insights. And then we're turning that into an episode because we want
listeners to understand the impact of these audits, the impact of knowing your numbers and how you can utilize that information to move your business forward and really create a profitable, sustainable growth plan. really excited. I think the first episode of this kind is probably going to air in November. We've got some folks on the calendar all set up for their audit review sessions with me.
And I'm so excited for it. really, really am. So another member perk, as you said.
Absolutely. And I love what you said about how, you know, that's one of the things that we're going to be talking about today, right? Is that audit process and how it impacted this business. So I can't wait to dive in because I know that you have a lot to bring to this conversation.
Yeah, let's get to it. Hey there, it's Sarah. If you're enjoying the podcast, I want to invite you to become a BABOYOT member. It stands for building a business on your own terms and your membership directly supports the continued production of this podcast and helps us reach our goal of supporting 1 million food founders. As a member, you'll get access to our live coaching events, have your brand featured right here on the podcast, be the first to test our new tools,
and receive a 10 % discount on all of our tools and services when you choose an annual plan. Join fellow successful founders at the goodfoodsf.com slash BABOYOT. That's spelled B-A-B-O-Y-O-T. Together, we're changing the way that food business is done. Now, back to the show.
So Sarah, like I mentioned in the intro, your client was able to take their profits from $19,000 in July to $51,000 the following July. And then this July, they hit over $107,000 in profit. And when we talked about this last summer or the end of last summer, you really stressed the importance of that.
financial audit as we've talked about, right? And the difference that that made in those profits year over year. And I'm wondering if that's the same work that you continued to do this year that got you to $107,000.
That's a great question. And the answer is no. The work that we did year one, which was between 2023 and 2024, and then from the end of 2024 to 2025 was actually quite different. And that's going to be the case for every business, right? As you're growing, what you're focusing on, the strategies you're implementing are going to change. And I will talk about
the profit assessment, which we also now sometimes call a financial audit, until I am blue in the face because that is the foundation. That is like the groundwork for figuring out where do I need to put my focus and attention to improve my outcomes. I think something else that we don't really talk a ton about here on the podcast, we focus a lot on margin and the importance of your product margins, the importance of your gross profit margins.
In my mind, it kind of goes without saying, but today I'm going to be explicit about it. Growing your revenue without understanding what's happening, as I say, inside the business with your cogs, with your labor costs, with your other operating expenses, there's no guarantee that that growing revenue is actually going to produce profitability. And what we know to be true from years of doing these assessments
is that if you have a business that is not financially structured in the right way, growing your revenue will actually create larger losses. And that's a big reason why this audit, this assessment exists so that I was able to – this is back in the day, this is one of our oldest tools – sit down and say, this is why I could point to the numbers on the screen and say, this is why
You are working your tail off to grow your revenue and things are getting worse instead of better. Here's the place in your business where if we can create change, then when you go to grow, you will turn those revenue dollars into profit. So before I work with someone one-on-one, like as their fractional CFO or, you know, we do an audit, before I sign you on as a client, you have to do this audit because I need to know
and the client needs to know what are our goals, where are we today, and what is the real work to be done to create change. And then once we know that, the founder sitting across from me or across the computer screen from me can say, okay, I do want your help with that, or you know what, this insight is really helpful. I'm going to go out and do that on my own, and then I will check back in with you in office hours or as a member.
or however it might be. So there's so much clarity around the business that comes out of these assessments, but also for the founder to go, okay, I know what my next steps are and I can make an informed decision about how I want to go about it and if I need support and what level of support I want for it as well. So year one, as I'm going to refer to it, was really about building the foundation. And so when we did
the audit. You can go back and listen to the full episode. I believe it's episode 118 if your podcast player has episode numbers. We give all the details there, but highlights are the gross profit margins for this business. When we initially started working together, we're 14%. You know that that is too low if you've been listening to this podcast for a while. At 14%, if this founder went out and just sold, sold, sold, sold,
Mm.
she'd be losing more and more and more money. Her profits probably would have dropped from 19K even lower, right? It was so quite a ways from our 51 % target, but what we actually found again through this audit is that we wanted her to hit 70 % gross profit margins, not 51, not 52, not 55, but for her business, it is a hyper seasonal summer business. They're essentially operational from May
to September and in May and September they're like half time operational. So like June, July and August are the months of the year where they need to make money in order to survive and stay alive because by the way, they still have to pay rent and a host of other expenses in the off season when they're not operating. So it's not about, if people are thinking like, you jacked up the prices to get a 70 %
margin and you're gouging people like, promise you and hopefully you know by now that is never the strategy. Yeah. But what we did do was knowing that the gross margins were 14 % and doing the profit assessment, we could see two things. One is that some of the product costs must have been too high compared to the price point. So like ingredients and packaging, there was something in that part of the business that we needed to improve.
We also saw that labor costs were quite high and that was an area that we really needed to tackle. And again, I can kind of hear the founder in my voice from when we first started to meet, it's like, I can't get rid of any people. We are jam-packed, slammed. So how do we reduce labor and how do we really figure this out? So the very first thing we did, and I want to share these details because this is work.
that is so unsexy, that is so boring, but that will get you $107,000 of profit, right, for every single very sexy. Yes, if you're willing to do this work. We, after looking at the assessment, knew that there was an issue with pricing, costs, labor, right? And so we dove into every single product. What is the ingredient and packaging cost? What is the labor cost for this product? What is the price for this product? And we made adjustments.
She had to remove some things from her menu that just simply didn't make sense. She had to change the sizing for some things, not to be able to charge more and get a bigger margin, but to just make it make sense for the consumer. And then she also had to change a few things. One of the biggest things we did was recognize that a lot of the labor was for making product that didn't sell. So they were still trying to figure out at that point
much product was moving, they have like a coffee, like a cafe and bakery component to the business, how much of the product was actually being sold versus how much was going to waste on a daily basis? So one of the things we tackled was minimum, like preventing waste in year one. So on some days, did we, quote unquote, lose out on revenue? Yes. But we also, most days didn't lose out due to waste.
In addition to analyzing every product and looking at how efficiently people were making things, we also analyzed how much product should we be making at any given point so that we weren't spending more on ingredients, packaging, and labor for product that would never sell. And then we made for the first time in their business a labor plan. How many people are you going to have in the cafe? How many people are you going to have in the rest of the business? How many people do you need in the kitchen?
know, baking and making the other in-house products that you sell. Map that out and we mapped that out for the whole year. And we knew that, for example, in May and September, those labor costs were going to be elevated as a percentage of revenue, but we also had targets for what they should be in the peak months. And we were really diligent about looking at what is the revenue? Are we on target?
What are our cogs? What are our labor costs? Are we on target week over week for what we're bringing in and what we're spending? And if ever we got off, then we had the information we needed to tweak. Okay, we need to reduce labor here because we're just not bringing in the numbers. Maybe we are going to increase product production for next week because the signs of product ramping up are coming in. You know what mean? We really stayed in tune with the business and that is what...
2024 looked like. That was our job, our work, day in and day out. And of course, she was running her business as well, which is ton of work. And I was kind of at the financial command center on my end.
that recap of what you did to get to that 2024 profit number. But you said that then to get to that 2025 profit number, it didn't look the same. So I'm really curious what changed or what was different about this year.
So what we were able to do in year one was prove that what we put into place worked. Because here's another important piece of this puzzle. Her revenue did not increase very much from 2023 to 2024. So she did not focus on growing revenue at all. We focused on maintaining revenue. Because here's the deal. We were
changing pricing a bit. We were taking away some products, adding some other new products, right? We were changing the way the team worked and produced in-house products. So that was all changing sort of inside the business, if you will. And we needed to make sure that with those changes that would impact profitability, we weren't cannibalizing or reducing revenue in any way. So I guess the other goal to keep an eye on for 2024 was
is our revenue staying at least consistent with the year before. And it did. And we were profitable by 2X the amount that she was in 2023. So we knew that the model worked. So once you have your assessment, you implement the changes you need to make to move your finances in the direction you want, move your business in the direction you want. And you've proven that it works without growing revenue, which I think is actually
a great way to do it, the next year you push for revenue growth. Because now you have created the model where you can confidently say, if I sell more and maintain these targets, maintain these philosophies, maintain these systems, this business will become more profitable. So that's what we did in 2025. But here's the thing, because it's not just about running a bunch of ads to
to sell more product. This is a physical location that has limited space. They can only ring so many people up in an hour in this space. If you can't increase the number of people that you are selling to, how do you generate more revenue? The answer is you sell them more stuff. You call it the average order value. The deep dive
in 2025 was what additional ways can we serve our customer? What else do they want from us? So this is an era of listening to the customer. What are they asking for? It's a summer business. It's a food business, of course. People wanted certain types of food products that the team couldn't deliver in 2024. But the founder thought through, if I get
refrigerator like retail refrigerators. And if I get a retail freezer, we can make these items that people want. So they're coming in in the morning for like their coffee, their pastry, they're shopping around for things. And now they're asking for food to take away to the beach or to the house or wherever they're going to take it. But we weren't able to give that to them last year. How can we give it to them this year while not blowing our labor budget, right? While not
creating a bunch of waste. so what she came up with was we will make these awesome foods that people love and put it out in the store and make it available for like a grab and go, like a reheat at home kind of a situation. And with that came the big question of where in the world are we going to produce that? Like the kitchen in the space that they were in was not big enough to do that work. So
investments were made into a second space on the same street. Again, strategically, we didn't want to get a kitchen that was far away from this primary space. We didn't want to create extra work, more labor, time. Being a food founder myself and Chelsea, you worked with me in that business, the physical toll
of even traveling a small distance with your products is a lot. So really thought through, what is a good location? What is a good opportunity? And so we rented out a second kitchen, got some equipment that would make production efficient and put it to work creating these new products and putting them out in store. And so, you know, that was that focus of, you know, not only being able to serve folks there with these sort of grab and go and takeaway items,
But also, if you remember, I mentioned that in 2024, we limited production of baked goods because we didn't want to have a lot of waste. But we did identify that there were some days where we could have sold more stuff, right? So we also implemented pre-making and freezing pastry items. So now the team could very easily, if your chocolate chip cookies are running low, you could identify that, go back into the freezer, take a tray of chocolate chip cookies,
put them into the oven and have more, but you're not – like that labor was already done and you're only taking the cookies that you need to bake. So you're still managing waste but also maximizing revenue. I mean, my answers are often long-winded, but like this year was about, okay, we've proven the model, we understand what our margins need to be. How do we maximize revenue?
but while maintaining that reduced waste, while maintaining those consistent labor costs and really serving people the products that they want. I think 2026 is going to look like a second location because now we truly have maxed out, we believe, much maxed out the earning capabilities of this single location, the secondary kitchen.
that we rented this year is paid for, you know, by the profits and revenues generated this year. And now our next step next year will be to open the retail space that is attached to that second kitchen and to be able to generate additional revenue and serve people in new ways there. And so I think, you know, something that I didn't write about in the newsletter, but that's dawning on me now is that
This founder is simultaneously focused on like the here and now and the long-term vision of what this business can be and how this business can evolve and serve people. Right? So if you think about it right now, as I described, there's like coffee and baked goods. There's like frozen kind of take and bake. There's also some like lunchtime grab and go.
know, sandwiches and salads and soups things like that. And then like a retail space.
The evolution of that, there's so much possibility from there of taking those frozen items and maybe they stay and maybe they evolve into something new in the new space. I think being vigilant and making the best version of your business both to the customer but also financially that you can here and now while also thinking about how this business can evolve in the future is serving this founder really well.
Also, as I said in the last episode last summer, this founder is focused and determined. I do meet founders from time to time where we'll do an audit or we'll talk about what the next steps are and they aren't committed to doing it. They don't sit down and make the spreadsheet or get rid of the item that is just not profitable. And she was like,
I will do whatever it takes. want this business to be profitable. I want it to exist. I believe in it and I know that our customers want it to continue on. That is important for me to say because it's important. It's like a necessary part of being an entrepreneur and building a business.
No, absolutely. Having not just the vision, but the resolve, right? And it sounds like between that vision and the resolve that she is building a business that has fans, so to speak, right? Like that has super fans that as she grows, will grow with her. Yeah. And that is awesome. Sarah, I am interested because you talked about how this year was really focusing on growing that revenue.
Yeah.
right? And that she did have this, purchased this second space with this kitchen. And I heard you say before that there is a retail space that is attached to that kitchen currently. I'm curious why you guys decided to just use the kitchen and not fully space to grow the revenue.
Yeah, that's a great question. Two reasons. One, and the primary reason is because we had proven that the business could be profitable in this single location. And the next step in the process was to prove that we could grow revenue and maintain hitting our targets and maintain increasing the profitability. if year one,
was making internal changes to the business, keeping revenue consistent and seeing those profits increase, year two was maintaining those internal changes and growing revenue and proving that we were right. Again, it's like hypothesizing, implementing, observing. Year two, it was not the time to
change the model so dramatically and say, now let's add a new retail location because we hadn't yet proven that we could grow revenue and that it would for sure result in increased profitability. But even beyond that, we hadn't proven that people wanted more stuff. We hadn't proven what were the things we
could provide people that they're going to say yes to and actually spend more money each time they came to purchase. you know, there's that like, I'm not a fan of bigger is better, right? I don't believe that. And we could easily have gotten very excited and said, well, if we grow our revenue like 2X across these two different locations, like it's going to be amazing. But here are all the question marks that I had. Chelsea's like, how many people are we going to have to have working there? What is the model?
What is the investment that has to go into the retail side of that space, like the kitchen side of that space and getting the equipment and things in there? That was already an investment. So taking risks, but not just like, you know, yeah, and not just going like, we're going to go all the way in. Like, your time. Take your time. Prove that this thing works. And by the way, like,
Willy nilly.
You're right that this business has fans. They have super fans, you know what mean? Like across the country. They get excited when they see product from this place somewhere else, right? Because it's a single location. And, you know, people are interested in seeing this business succeed and grow. So, I'm mad, and I talk about this all the time, right? It's kind of like when you prove that you can sell in your own backyard and then you want to get into retail and you want to expand.
you are in control. You have the power in that relationship because you can say to a retailer, look how good my product sells. We are going to make you money. I'm going to negotiate, right? What promos and things we are and we aren't going to do. As a founder, she now can say, I have proven that this business model works. I have proven that I am a good founder, that I can make investments
and that I understand my customer, right? All of these things that she has proven to herself and to anyone who she may or may not want to go and ask for money to continue to grow this business. Because she now can point to a piece of paper that really shows not only what a single year looks like, but year over year over year, how a single location has evolved and just really
really performed financially and I can't say this enough, while also serving the customer really, really well. Yeah. And also paying her people well. This is not a super minimum wage kind of job. Her team gets paid well, she wants to take care of them. And so it also was never about paying people as little as we possibly could. It's not part of our philosophy and mission at the Good Food CFO, right? So just want to be really clear about that for people as well.
That's why we didn't immediately open a second space.
Yeah, that makes sense. I could see again, and I love the idea that you keep talking about, let's hypothesize, prove, and then observe, right? Because that goes back to so many conversations that you've had recently on the podcast of growing in shallow water, right? Failing when it doesn't cost you as much. All of those things I feel like are the same basic…
concept, right? Yeah. Iterated in different ways, but how can you take a risk, but as you called it, right, a strategic risk and prove it out before taking the next risk?
Yeah. And Chelsea, we're launching the software soon. As I mentioned earlier, the financial audit is a piece of that, right? It's like understanding your products and your margins, just like we did with this founder. That is step number one, get that information in the system. Step number two looks like doing a financial audit and understanding what is working and what is not and answering the question, if I grow my business,
will it result in increased profitability or not? And the third piece is what you were just describing is where you can say, okay, if I or what if I, right? What we did in spreadsheet form that now we're giving people the ability to do inside the software is to say, what if I invested X number of dollars in additional rent per month to be able to produce more products?
how much more revenue would I need to generate to be profitable, right, to cover those expenses? What would my labor cost be to sell that many units of product? What would my cogs be? Like we did that math and looked at these projected numbers, this growth scenario and said, yeah, this feels good. This feels doable and this feels.
like we should move forward and so we did. But I'll also share that whenever we do a forecast or a growth scenario, the client or the founder is the one who needs to come with the sales numbers, not me. will project your sales numbers as like, all right, if we had 20 % growth, if we had 10 % growth, if we had 50 % growth as like some guardrails of like, okay, here's an extreme and then where do we want to kind of dial it in from there?
So the founder always does the sales projections. And in this particular instance, we now have like a new kind of like product line, two new product lines that she needed to project revenue for. And when we put it into the scenario builder, it was like, that's a lot of money. That's a really high projection. And so I asked the question, how many, you know, how many turkey meatballs would you need to make to
So like to hit that, and I remember her going, yeah, that seems like that's a lot. Okay, we need to dial that back. And that is part of the process. Right? And why it's so important to go through it, because if you just go, I'm going to add this new revenue line and this is how much money we're going to make, you might be way off base. You have to go, okay, this is how much money I think we could make. What does that equal in the number of products that we need to sell? And you're going to probably
throw out a number that looks wonky at first, but you can change it. And that's just part of the process. It's like first draft, like writing an email or a blog post or a newsletter, throw the first version down and edit it from there. That's how it goes. But the software that we're launching helps you to do that and helps you to see what the possible futures are. And you then get to say, I feel good about this. This is the growth path that I want to tackle.
and focus on. And that's exactly what we did in this scenario as well.
Yeah, I think that's amazing. And I love that you're talking about those steps and the way that you laid it out with this client, because I think that really is why you chose those three tools to be the core of, you know, the first version of the Good Food CFO software. And so if you're listening at home and you want to, you know, have access to this kind of work for your business and also
Sarah's insights into that work, you definitely are going to want to get on our wait list. You can go to thegoodfoodcfo.com slash waitlist and sign up today. Sarah, I want to thank you again for sharing this story with us and all of this information. I think it's really important for founders to hear not just what other founders are doing out there, but what is possible.
for their business.
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