Transcript pricing for profit

PRICING EVENTS
KEYS TO MAXIMIZING PROFIT
BASIC PRICING FORMULA
PRICE=
OVERHEAD
+MATERIALS
+LABOR
+PROFIT
PRICE= O+M+L+P
OVERHEAD
 COSTS THAT REPRESENT THE
VARIABLE AND FIXED
EXPENSES OF ANY CATERING
BUSINESS.
 COSTS ARE FIGURED FOR THE
YEARAND DIVIDED BY THE
NUMBER OF ANNUAL JOBS
BOOKED.
 WHAT ARE EXAMPLES OF
FIXED COSTS?
 WHAT ARE EXAMPLES OF
VARIABLE COSTS?
EXAMPLE
 WARRIOR CATERING HAS A YEARLY
OVERHEAD OF $200,000
 THEY BOOKED 150 EVENTS LAST YEAR.
 EQUATION: $200k/150 = $1,333
 THIS AMOUNT MAY HAVE TO BE LOWERED
FOR SMALLER EVENTS, LARGER FOR
SIZEABLE EVENTS.
 KEEP IN MIND, COMPETITION IS ALWAYS
AN ISSUE
MATERIALS
 INCLUDES COST OF FOOD
AND BEVERAGE, HANDLING,
AND DELIVERY.
 EX: DRINK, APPETIZERS,
ENTRÉE AND DESSERT
$6. 52/PERSON
FOR 100 GUESTS= $652.
OR FOR 50 GUESTS @ 2
SERVINGS
LABOR
 SERVINGS COSTS, FOOD
PREPARATION,
COMPENSATION, SICK PAY,
BENEFITS, INSURANCES
 EXAMPLE: 4 SERVERS ARE
NEEDED FOR A 4 HR. EVENT.
THEY ARE PAID $20/HR.
4SERVERS x $20 x 4HRS.=
$320
PROFIT
 AMOUNT EARNED AFTER
EXPENSES ARE PAID.
 PROFIT PROJECTIONS
ARE USED.
 EXAMPLE: WARRIOR
CATERING NEEDS TO
MAKE $120,000 / YEAR
THEY ESTIMATE THEY
WILL BOOK 150 EVENTS
$120,000/150 = $800
PRICING THE EVENT
 OVERHEAD = 1,333
 MATERIALS = $652
 LABOR = $320
 PROFIT = $800
TOTAL PRICE= $3105
CAN BE ROUNDED UP TO $3200
THEN DIVIDED BY THE NUMBER OF GUESTS
TO GET A COST PER GUEST OF $64.
FOOD COST CALCULATIONS
 TOTAL COST OF FOOD ITEMS TO BE
SERVED
 ITEMS ARE MARKED UP BY THE INDUSTRY
NORM (TYPICALLY 3-5 TIMES THEIR COST
 FORMULA
COST PER UNIT=
PURCHASED COST/NUMBER OF UNITS
EXAMPLE: FLOUR $1.00/5 LBS.= 20 CENTS/LB
PRODUCT AVAILABILITY
 UP TO DATE KNOWLEDGE IS A NECESSITY OF
COST AND AVAILABILITY
 MAY HAVE ISSUES WITH SPECIALTY ITEMS THAT
ARE RARE OR IMPORTS
 PRODUCTS VARY GREATLY IN PRICE BASED ON
SUPPLY AND DEMAND
WHAT MAY CAUSE A CHANGE IN SUPPLY OR
DEMAND OF A PARTICULAR FOOD ITEM?
HOW WOULD YOU ADAPT TO THESE CONDITIONS?
PORTION CONTROL
 MUST BE
CONSISTENT AND
MONITORED
 USE ACCURATE
MEASURING TOOLS
 KEEP STAFF AWARE
OF RECIPE
INGREDIENTS/RATIOS
PRICING CONSIDERATIONS
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