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