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PRICING EVENTS

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.

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PRICING EVENTS

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  1. PRICING EVENTS KEYS TO MAXIMIZING PROFIT

  2. BASIC PRICING FORMULA PRICE= OVERHEAD +MATERIALS +LABOR +PROFIT PRICE= O+M+L+P

  3. 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?

  4. 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

  5. MATERIALS • INCLUDES COST OF FOOD AND BEVERAGE, HANDLING, AND DELIVERY. • EX: DRINK, APPETIZERS, ENTRÉE AND DESSERT $6. 52/PERSON FOR 100 GUESTS= $652. OR FOR 50 GUESTS @ 2 SERVINGS

  6. 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

  7. 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

  8. 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.

  9. 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

  10. 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?

  11. PORTION CONTROL • MUST BE CONSISTENT AND MONITORED • USE ACCURATE MEASURING TOOLS • KEEP STAFF AWARE OF RECIPE INGREDIENTS/RATIOS

  12. PRICING CONSIDERATIONS • SEASONALITY • HOLIDAYS • INFLATION • MENU • FOOD TYPE • COURSES • SET-UP

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