Business Planning & Strategy, Financial Models
Kebab Shop Business: Costs, Revenue Potential & Profitability
Kebab shops operate in the quick-service restaurant (QSR) segment, offering low-ticket, high-frequency meals with strong takeout and delivery appeal. Gross margins are attractive due to low-cost core ingredients (meat, bread, sauces), but profitability depends on volume throughput, menu standardization, and tight cost control. Operators must manage labor-light production, optimized space usage, and strict inventory discipline to maintain consistent profitability.
Asset Configuration
CapEx is moderate, focused on kitchen setup, food prep zones, service counter, and branding. A typical kebab shop occupies 400–1,000 sq. ft., with equipment tailored for high-volume, fast-paced food prep and efficient service flow.
| Asset Category | Cost Range (USD) | Notes |
|---|---|---|
| Kitchen Equipment & Grills | $30,000 – $50,000 | Rotisserie grills, fryers, hotplates, prep stations |
| Ventilation & Safety Systems | $10,000 – $20,000 | Exhaust hood, fire suppression, grease filters |
| Refrigeration & Cold Storage | $8,000 – $15,000 | Upright fridges, under-counter units, prep tables |
| POS, Kiosk & Delivery Integration | $5,000 – $10,000 | Ordering, inventory, and aggregator systems |
| Branding, Seating & Finishes | $15,000 – $30,000 | Signage, counters, minimal dine-in furnishings |
Total CapEx: $68,000 – $125,000, depending on location format (takeaway-only vs. dine-in) and equipment grade. Delivery-first ghost kitchens operate at the lower end of the range.
Revenue Model
Revenue is transaction-based, with average tickets ranging from $9–$15. Core offerings include kebabs (wraps, plates), fries, drinks, and combo meals. High-margin upsells include extras (cheese, sauces), sides, and beverages. Additional revenue comes from delivery platforms, late-night traffic, and catering.
Annual Revenue Potential for a 7-Day Operation, Urban High-Footfall Location
| Revenue Stream | Volume Assumption | Annual Revenue (USD) |
|---|---|---|
| In-Store & Takeaway Orders | 50,000 orders/year @ $11 avg. | $550,000 |
| Delivery Sales | 18,000 orders/year @ $13 avg. | $234,000 |
| Upsells (sauces, fries, drinks) | $1,500/week avg. | $78,000 |
| Catering & Bulk Orders | 100 events @ $400 avg. | $40,000 |
| Total | $902,000 |
High-traffic shops with optimized kitchen flow and strong delivery ops can exceed $1M/year. Low-traffic or poorly located shops often stall at $250K–$400K/year.
Operating Costs
COGS are typically 28–34%, with protein as the main driver. Labor costs are relatively low due to fast prep times and narrow menus. Other expenses include rent, aggregator fees, utilities, and maintenance.
| Cost Category | Annual Cost (USD) |
|---|---|
| Food & Packaging (COGS) | $270,000 – $305,000 |
| Labor (staff, prep, cashier) | $180,000 – $215,000 |
| Rent & Utilities | $90,000 – $110,000 |
| Delivery Platform Commissions | $70,000 – $90,000 |
| Cleaning, Maintenance, Uniforms | $25,000 – $45,000 |
| Marketing & Local Promotions | $18,000 – $35,000 |
| POS, Licenses, Admin | $15,000 – $25,000 |
| Total | $668,000 – $825,000 |
Efficient shops with low waste, quick turnover, and high upsell conversion can achieve 25–30% EBITDA margins. Operators with uncontrolled food cost, long prep times, or excessive delivery dependence fall below 15%.
Profitability Strategies
The profitability of a kebab shop hinges on three pillars: speed, standardization, and yield per transaction.
First, production must be engineered for speed. A narrow, high-velocity menu allows for batch preparation, minimal customization, and faster order completion. Implementing a “build-your-own” system with fixed options increases perceived customization while maintaining back-of-house efficiency. Each second saved in prep increases hourly throughput and reduces queue abandonment.
Second, portion control and inventory tracking are non-negotiable. Use pre-weighed protein trays, FIFO systems for perishables, and integrated POS analytics to monitor real-time COGS. Optimizing skewer size and minimizing food waste can recover up to 5 margin points annually.
Third, every order should drive margin. Upselling fries, combo meals, sauces, and drinks must be embedded into the customer journey – whether in-person or digital. Menu engineering should push high-margin items to the center of the ordering experience. Bundle meals to increase ticket size without increasing prep complexity.
Finally, capacity must be monetized across all hours. Peak lunch and dinner slots drive 60–70% of revenue. Use late-night hours, delivery-only promos, and group catering to capitalize on underutilized time blocks. Leverage CRM systems to retarget previous customers with discount codes or loyalty programs to improve retention and frequency.
So what?
A kebab shop is not just fast food – it’s a margin-driven, throughput-maximized QSR system. Profitability depends on kitchen speed, upsell consistency, and yield per square foot – not culinary innovation. Operators who control food cost, engineer ticket size, and stretch operating hours can achieve 25–30% EBITDA margins with <$125K CapEx.
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