Juniper Lunchworks

The account contributes cash before fixed overhead

Monthly revenue of $160,000 less $88,000 of direct, avoidable food, packaging, temporary labor, and outsourced delivery costs leaves $72,000 of contribution, a 45% contribution margin. Fixed operating costs are $60,000: $44,000 of core payroll and $16,000 of rent, insurance, administration, and other overhead. Operating profit is therefore $12,000, or 7.5%, before interest and tax. The large account generates $40,000 of revenue from 5,000 lunches and incurs $28,000 of avoidable costs, contributing $12,000. Allocating $15,000 of overhead to it produces an apparent $3,000 loss, but exiting it without replacement work or an actual fixed-cost reduction would leave $120,000 of revenue, $60,000 of avoidable costs, and the same $60,000 of fixed costs: zero operating profit. Core payroll is not assumed to disappear when the account leaves.

Packing and delivery constrain peak days, not cooking

Average volume is 1,000 lunches per service day, but four days reach 1,250. For the current menu mix and service windows, assumed regular-shift capacities are 1,400 lunches for preparation, 1,500 for cooking, 1,100 for dietary labeling and packing, 1,200 for delivery, and 1,300 lunch-equivalents for washing and reset before the next shift. Peak days therefore exceed packing capacity by 150 lunches and delivery capacity by 50; temporary coverage and extra outsourced trips bridge those gaps and are already included in the $88,000 of avoidable costs. Extra cooking capacity alone would not increase dependable output, and washing would become the next constraint if packing and delivery were expanded beyond 1,300.

Payment terms amplify the account's operating burden

The large account is invoiced $40,000 at month-end and pays 60 days later, while its $28,000 of attributable monthly costs are paid during the service month. Its first month's costs therefore need financing for roughly 60–90 days, with another service month's spending occurring before the first collection. The other $120,000 of monthly revenue is collected weekly during service, but those receipts also support the remaining direct costs and all fixed overhead. With an assumed unrestricted opening cash balance of $38,000, the owner needs a dated cash forecast rather than treating the $12,000 monthly operating profit as immediately available cash. Exiting the account would eventually release receivables and stop its direct spending, but would also eliminate its recurring contribution.

Test a contract redesign before canceling

Offer a pilot with earlier dietary cutoffs, standardized packaging, fewer delivery windows, and revised payment terms. Separately test a 10% price increase: if all 5,000 monthly lunches remain and costs do not change, revenue would rise by $4,000 and account contribution would increase from $12,000 to $16,000. These are negotiation hypotheses, not guaranteed gains; measure acceptance, retained volume, service quality, and genuinely avoidable spending. Compare any exit decision with replacement demand and a specific plan for fixed costs.

Validate the entire workflow before considering equipment

Run a four-week time study across ordering, preparation, cooking, labeling, packing, loading, delivery, and washing. Pilot a dedicated labeling-and-packing role and staggered delivery windows on peak days, targeting reliable completion of 1,250 lunches without emergency coverage. Count transferred labor and any new recurring expense rather than assuming faster packing equals cash savings. Consider equipment only if the trial identifies a persistent equipment-bound step; establish practical throughput for the actual menu and obtain comparable supplier quotes separating machine-only scope from the installed project, including utilities, installation, and ancillary equipment.

Manage cash and account economics together

Build a rolling 13-week cash forecast using actual invoice dates, contractual due dates, supplier payments, payroll, and temporary-labor commitments. Test weekly billing on net-15 terms with the large account, while retaining the current payment pattern as the downside case until a signed change takes effect. Review account contribution, packing minutes per lunch, on-time delivery, emergency labor spending, and overdue receivables weekly. Evaluate any transition using both cash timing and recurring profit; collecting old invoices after an exit is a temporary cash release, not replacement earnings.