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