Curious George

A fountain of material and immaterial information - Things that I spend my days wondering about... and perhaps you have been too? Check out for more curious questions (and answers to them)

Thursday, June 07, 2007

How businesses stay profitable in NYC

New York Business Margins

Very interresting NY Magazine article made an in-debth analysis of various businesses in NYC - what makes them tick -
I have presented below some of what I thought was the most interesting

* H&M - retailMost profitable (margins): Jewelry (50-70%), Hats and Scarves (50-70%)Formal clothing (50%)

LEast profitable: Bathing suits (2-3$) and intimate apparel (10-30%) - lots of H&M marketing signature is bathing suits - with cheap prices on this, people will spend longer at the store, and spend more.(roughly 20% profit margin in store)

* Yellow CabsMost profitable: Low traffic city trips (make 2.5$ on the meter just for a person to get in - thereafter: 40c per 4 block or 1min standing) - also midday airport runs. 3pm - flights come in as well and no limits for traffic. Good round-trip fare

Least Profitable: Borough trips in traffic. Empty returns in traffic from the suburbs can be a killer.

Rental of cab: $120 per 12 hours - pocketing all rev after gas costs

* DinerDiners etc are most profitable.Specific items with high profitability are Eggs, Hamburgers, home-made cake and liquor

Least profitable items are such as Steak Dinner, Lox, Fish Dinner and Veal dinner

So low-market food/diners would seem to have the higher profitability

That said, for an upscale restaurant, one of the most important factor for whether you live or die is what type of lease you have locked in.

* Copy Shop

All the small copyshops in NYC can be put up with a minimum of seedmoney. The equipment is leased and rent needs to be paid. That's it.Walk-in customers are only a minuscule percent of the business - nearly all of it comes from local offices.Assumed overhead costs: 1c per B&W copy, 10c per Color copy

Most profitable are restaurant flyers - local restaurants will order 1000 new flyers every 3rd day!Price of printer cartridges makes this profitable still for the clients.

* Piza Place50% of revenue is food in restaurant, 30% is food delivered, and 20% is alcohol served.Majority of income comes from the fancy pizzas (huge markup on the sauces etc)Wine has a 200 to 250% margin

(roughly 10% overall profit margin)

*Yoga PlaceMost profitable yoga studios will need to fill four to five classes daily, and most hope to be profitable within 2 years.Best ways to make money are through private classes, but "packs of classes" also sell well where you count on people not showing up and part of the classes expiring. "People have big eyes"Few studios in Manhattan survive past 3 years, and fewer turn more than a 10% profit.Consider the non-financial aspects: People are willing to work for less to be a yoga guru (compare to a drug dealer who needs an additional pay to cover for the inconvenience for possible jail and death by shooting)


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