PRICING EVENTS KEYS TO MAXIMIZING PROFIT

BASIC PRICING FORMULA PRICE= OVERHEAD 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. FOR 100 GUESTS= $652. OR FOR 50 2 SERVINGS OR FOR 50 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 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 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  SEASONALITY  HOLIDAYS  INFLATION  MENU  FOOD TYPE  COURSES  SET-UP