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