CATERING Chapter 3 Pricing For Profit
Learning Objectives By the end of this chapter you should be able to: • Effectively calculate prices for specific catering menu items • Use a pricing formula to set menu prices • Understand the two main components of business overhead • Calculate food and beverage costs and their percentage as it
relates to sales • Understand the relationship between supply and demand of
food and beverage products and how they affect costs
Maximizing Profitability • Profits on services offered/types of services • Liquor license and profit
Calculating Price Pricing Formula: OVERHEAD + MATERIALS+ LABOR+ PROFIT = PRICE
Calculating Price • Overhead • Materials • Labor • Profit
Calculating Food Cost Definition of food cost and importance • Consistency of food cost • Factors affecting food cost (theft, arbitrary pricing) • Food cost percentage
Calculating Food Cost • Recipe costing form • Inventorying assessment • Markups on food and liquor • Portion control
Pricing for Profit Greenfield’s Catering Apple Pie Ingredient
Unit Cost
Flour, 8 ounces
$0.10
Butter, 8 ounces
$2.15
Apples, 8 Granny Smith
$2.20
Sugar, 4 ounces
$0.50
Ground cinnamon, 1 tsp.
$0.05
Unit cost for pie
$5.00
When you have a food cost for an entire recipe, then you can arrive at the cost per serving. If the apple pie serves 8, your cost per serving is: Cost per serving = Recipe cost is $5.00 Number o f servings is 8 Greenfield’s Catering Apple Pie costs $0.625 per serving.
Computation of Monthly Food Cost Opening Inventory + Purchases – Closing Inventory = Cost of Food Sold
Opening Inventory
$
+
Purchases
$
–
Closing Inventory
$
=
Cost of Food Sold
$
Cost of Food Sold ÷ Total Sales = Food Cost Percentage
Cost of Food Sold
$
÷
Total Sales
$
=
Food Cost Percentage
%
Availability of Product • Cost and availability • Seasonality of ingredients and factors affecting availability • Types of purveyors • Specialty items
Key Terms • Pricing formula • Overhead costs • Fixed expenses • Variable expenses • Materials • Labor costs • Profit • Food cost • Food cost percentage
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