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"The standard package includes a 6 month rental of 2 chickens and a chicken coop for $485. After delivery and other expenses, the gross profit margin is 39%. And that's just for the standard package. For the Deluxe package, the gross margin is over 52%." Phil Tompkins left a 20 year career in IT to look for a home-based business idea he could start with his wife, Jenn. The idea he ended up with was renting chickens to rich urban hipsters. Here's what the standard offering included: 1 copy of the book "Fresh Eggs Daily: Raising Happy, Healthy Chickens Naturally" sent to the customer in advance of chicken delivery 2 hens, a chicken coop with water and food bowls, and 100 pounds of chicken food -- all delivered anywhere within 50 miles of Phil and Jenn's home 6 months of time with the chickens Pickup of the hens and coop at the end of the 6 month rental period The cost of that "standard package" is $485, and the couple called their new business "Rent-The-Chicken". How did Rent-The-Chicken get customers? Initially, Phil and Jenn struggled to find anyone who would rent chickens from them. However, after persuading one friend to rent a chicken for free as a test, a local newspaper one county over heard about the business and contacted the husband and wife entrepreneurs for an interview. At the time, the company did not even have a logo, but the newspaper ran the story over a holiday weekend, and it went viral. It was picked up by the Associated Press, and the couple was then invited to do video interviews, radio interviews, podcast interviews, blog interviews, and more newspaper interviews. That was the late summer and fall of 2013, and the wave of media publicity brought in a wave of customer orders. However, the chicken entrepreneurs soon discovered that their initial idea about who would be their ideal customers (rich urban hipsters) was completely wrong. The people who actually wanted to rent chickens were empty nesters (parents whose children have grown up and left home) and young families with parents who wanted to provide their kids with a fun, educational experience about where their food comes from. The business now uses organic social (Facebook and Instagram) as its primary marketing strategy. Due to the novel & charming nature of the business, it also continues to get free news coverage periodically in mainstream TV, newspaper, and other media channels. Recent egg price inflation has also spurred a lot mainstream news stories about how you can rent a chicken to get your own eggs at home. Side note: those news stories are pure clickbait since the cost of renting chickens is several times higher than the cost of just buying 6-months worth of eggs at the grocery store, even after inflation. What are the unit economics of renting out chickens? Let's break down the revenue, expenses, and profit margin for a single "standard package" chicken rental. Below is a table summarizing the business expenses directly attributable to a single rental (excluding the cost of the hens and coops which are re-used). Expense ItemEstimated Total CostCost Estimate Justification1 copy of the "Fresh Eggs Daily: Raising Happy, Health Chickens Naturally" book with shipping$15I found a copy of the book for $13.56 + $2.64 shipping ($16.21 total) on AbeBooks. Since Phil and Jenn are sending a copy of the book with every order they make, they should be able to get books in bulk for a bit cheaper than that.100 lbs chicken feed$37Tyrone Milling sells a 100 lb bag of chicken feed for $37100 Mile (round-trip) delivery - vehicle costs$63The IRS posted a standard mileage rate (intended to reflect all costs associated with owning a vehicle, including gas, repairs, oil, insurance, registration, and depreciation) of $0.625/mile for the second half of 2022.100 Mile (round-trip) delivery - labor costs$45The total loading, driving, and unloading time should be less than 3 hours to deliver to a destination within 50 miles of a farm (less than 100 miles round-trip).Assuming an hourly worker is hired to drive, the cost per hour should be less than $15 in most markets. That makes 3 hours of time cost $45.100 Mile (round-trip) pickup - vehicle costs$63100 Mile (round-trip) pickup - labor costs$45Unit Expenses (excluding hens & coop)$268n/a In reality, Phil delivers the chickens himself so there are no labor costs per se. However, if you wanted to start your own chicken rental business, you could easily hire someone to take on that duty which is why I included labor costs for delivery in the list of expenses above. The capital expenditures (capex) for a single rental set-up are summarized in the next table: Capex ItemEstimated Total CostCost Estimate JustificationChicken coop$100I found a reference chicken coop on Amazon selling for $150, and the coops shown in the pictures on the RentTheChicken.com look simpler and cheaper. Even the upgraded "Deluxe coop" offered by Phil and Jenn appears to be something that could easily be made for under $100.2 hens$40Hens can be purchased in bulk for $20 eachUnit Startup Capex$140n/a Commercial egg-laying hens are typically kept for 2-3 years because after that, egg and shell quality decline. That means a hen can probably be rented out for about five 6-month stints before being retired. It's also reasonable to assume that a chicken coup will last for at least as long. That means our total unit expense should include a depreciation expense worth 1/5 the unit startup capex amount. This is summarized in the next table. Financial MetricAmountRevenue$485- Operating Expenses (excluding hens & coop)$268- Depreciation of hens & coop (assuming each is rented 5 times)$28Total Cost of Goods Sold (COGS)$296Gross Profit$189Gross Profit Margin39.0% A gross profit margin of 39% is already good, but there are several reasons why the actual gross margin could be even higher: Not every customer will actually be 50 miles away. Some will be closer. That would reduce delivery and pickup costs which account for $216 of the $296 COGS (73%). If we consider a circle with a 50 mile radius, the average distance to a point in that circle will be 33 miles. That means if customers are uniformly distributed over the service area, the true unit transportation cost might be closer to $144 rather than $216. That would imply a gross profit margin of 53.8%. Multiple customer deliveries and/or pickups could be scheduled for the same day, cutting down on transportation costs. A more fuel-efficient, lower-maintenance vehicle could be used for deliveries and pickups, cutting down on transportation costs. Remember, we just used the IRS's average vehicle number, so there is substantial room for achieving lower transportation costs by choosing the right vehicle. Manufacturing of coops could be optimized, reducing the cost per coop. Coops might last longer than the 5 uses anticipated by our model. If they don't currently last longer, they could be manufactured more durably so that they do. Additionally, all of this is just for the "standard package". Rent-The-Chicken also offers a "standard upgrade" package and a "Deluxe" package, both of which have higher margins. The Deluxe package sells for $685. It comes with 4 hens and 200 pounds of chicken feed, with everything else the same as the standard package. Total COGS (cost of goods sold) is $341 which means gross profit is $344, and the gross profit margin is 50.2%. Or, if we use our assumption that the average customer is located 33 miles away rather than 50 miles away, then the COGS for the Deluxe package is $269, the gross profit is $416, and the gross profit margin is 60.7% (about the same as Amazon AWS). Franchising Rent-The-Chicken has expanded across the U.S. and into Canada through a franchising business model. Franchisees (called "affiliates" on RentTheChicken.com) are small farmers and homesteaders who rent out chickens and coops under the "Rent-The-Chicken" brand in exchange for a 10% royalty on sales. The map below shows the location of all current franchisees. Intellectual property royalties are essentially 100% gross profit, which makes franchising an amazing business model. In exchange for those royalties, Rent-The-Chicken also handles marketing and customer service. However, given the limited amount of marketing conducted by Rent-The-Chicken (basically just organic social), I estimate the net profit margin of their franchising business (after all expenses except taxes) would still be over 90% even if you replaced Jenn's marketing and customer support roles with paid employees. By the way, if you enjoy learning about interesting business models like chicken rentals and chicken rental franchises, subscribe to my free newsletter to get more content like this on a weekly basis. Appendix A: Growing profits with location-based pricing Once Rent-The-Chicken was franchised into different markets, the number of package options and the pricing of those options was modified to reflect the different buying power in different markets. For anyone running a business across multiple geographic locations, this type of price optimization is one of the easiest ways to increase your profitability. The table below shows how Rent-The-Chicken set prices for each U.S. franchisee's location. LocationStandard PackageStandard Upgrade PackageDeluxe PackageEglu Go Up PackageOut of Area PackagePhoenix, AZ$825$925$1025----Tucson, AZ$485$585$685----Los Angeles, CA (zone 1)--$585$685----Los Angeles, CA (zone 2)--$615$715----Los Angeles, CA (zone 3)--$645$745----Connecticut$485$585$685$885--Philadelphia, PA$635$735$835----Athens, GA$485$585$685----Atlanta, GA$585$685$785----Chicago, IL$995$1095$1195$1395--South Bend, IN$495$595$695$895--Omaha, NE$485$585$685$885--Sioux City, IA$595$695$845----Baltimore, MD$485$585$685$885--Boston, MA--$595$735----southern New Hampshire--$595$735----New Jersey--$585$685$885--Albany, NY$665$765$815$1065--Syracuse, NY$485$585$685$885--Finger Lakes Region, NY$585$685$785$945--Long Island, NY----$1185*----Rochester, NY$585$685$785$985--Raleigh, NC$485$585$685$885--Columbus, OH$485$585$685----Cleveland, OH$535$635$785----Harrisburg, PA$485$585$685----Gettysburg, PA$485$585$685----Laurel Highlands, PA$485$585$685$885--Pittsburgh, PA$485$585$685$885--South Carolina--------$1350Florida--------$1350Middle Tennessee$485$585$685$885--Austin, TX$735$835$985----College Station, TX$535$635$785----Dallas, TX$665$765$915----Houston, TX$665$765$915----Burlington, VT--$685$785----St Johnsbury, VT--$585$685----Winchester, VA$485$585$685$885--*The Long Island package includes less food than the typical Deluxe package (only 100 lbs for 4 chickens) Appendix B: Farmer Brad Chicken Rentals Rent-The-Chicken is not the only chicken rental business that exists. Another is "Farmer Brad Chicken Rentals". Farmer Brad's chicken rental prices are provided in the table below. Basic Chicken Package (2 hens)Deluxe Chicken Package (4 hens)Bantam Rental3 month rental$300$450n/a6 month rental$450$600$200Buyout$350 (3 month buyout)$300 (6 month buyout)$325 (3 month buyout)$300 (6 month buyout)$200 Appendix C: Hatch-The-Chicken Rent-The-Chicken has started growing their business through additional types of animal experiences beyond renting egg-laying chickens. They now also offer a "Hatch-The-Chicken" experience where they rent you a mini incubator for 5 weeks, provide you with 7 fertile eggs to hatch, and then come pick up the hatchlings at the end of the 5-week period. They offer this service for $210 (which is another reason I suspect the unit transportation costs on their main chicken rental business are lower than the $216 estimate I used earlier in this article). Like the original "Rent-The-Chicken" product, "Hatch-The-Chicken" has many young families as customers. However, Hatch-The-Chicken has also generated significant institutional demand. It is being sold with much success to daycare providers, preschools, private elementary schools, summer camps, and senior living facilities. Rent-The-Chicken cofounders Phil and Jenn have also mentioned on a podcast that they were planning to launch a "Hatch-The-Duck" product, but do not appear to have actually done so yet. That could be an opportunity for you to launch your own business in that niche. Appendix D: References RentTheChicken.com RentTheChicken Franchise Program Farmer Brad Chicken Rentals

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