- Joined 9/2008
- Location: Porterville, CA
- Posts: 3847
I'm fascinated by the fact that very few seem to evaluate their costs at all!
For me the rule for pricing is very simple:
PRICE = COSTS + PROFIT DESIRED
COSTS = Labor (including your own, if applicable) + Food + Utilities + Rent + Licenses + Tax reserve + Insurance + any other costs of doing business, including interest, depreciation, and all the hidden costs.
PROFIT DESIRED is up to you, what return on your investment do you want?
IMHO, if you do not know your costs, you are only guessing at prices, no matter what mathematical exercises you may go through and, if you are real lucky, you will still be in business a year from now.
When dividing by a food cost percentage, I sincerely hope you have at least ten (10) years of records for the actual food cost percentage for your operation with your menus, otherwise you have a better chance simply guessing.
Oh, once you've figured your price, it is simple to calculate $/person or $/piece or whatever, just remember, the fewer persons, the higher the $/person, only food cost and part of labor can be attributed to the number of people, the rest is overhead and somebody pays for it.
This is from another thread. It sums it up very well.