Goal 4.03: Calculate prices of menus for a culinary business.

anything it costs to do business Menu prices must cover operating costs.

time, care, skill needed to prepare a meal the more time, care, and skill needed the higher the price

review competitor’s menus/pricing use competition as a pricing guide portion size and ingredient quality may differ

Types of customers a foodservice operation will attract influences menu pricing. families- charge less than business people

Style of the foodservice operation influences menu prices. expected- fine dining=higher prices

cities=higher prices/people usually have more disposal income (leftover money after bills are paid) small towns=lower menu prices

*helps businesses make the highest profit

uses a pricing scale based on a percentage of the food costs needed to operate the restaurant using the factor method: 1. determine what food cost percentage should be (divide the total cost of food by total food sales) 2. Take the food cost percent and divide it into 100%. This is your factor.

3. Multiply the factor by the cost of the menu item. This is the selling price. EX: food cost 5000 total sales20000 food cost %.25 X 100=25%.25 divided by 1.00= 4 (factor) cost to make a burger and fries 1.50x4(factor)=$6 (menu price)

take the food cost and divide it by the desired food cost percentage=selling price EX: you want food cost to be 25% grill cheese and soup costs $1.25 to make 1.25 divided by.25= $5 selling price

charges what the competition charges for similar items charge a little less to be competitive charge a little more to appear upscale risky method since overhead charges are different (rent, labor, food costs, profit)

used after other methods based on how a customer reacts to menu prices instead of $6, charge $5.95 a price increase from $12.95 to $13.25 seems more than an increase from $13.25-$13.75 better to start at a low number $13.25 so you can increase without hitting a new dollar amount fine dining does not use this method- image of luxury and elegance