Discover Helpful Tips About Starting Your Own Catering Business And Cost Of Food

What is food cost and how does it effect your business? Food cost percent is the percentage amount of total food purchases in contrast to the amount of revenue generated.

An example:
You are selling Chicken Picatta for a menu price of ten dollars, and the ingredients cost you two dollars and fifty cents. To figure out your food cost percent you would simply take purchases divided by menu price equals food cost percent. In this example, you would take $2.50 divide by $10.00= .25 or 25 percent.

Now what does this mean when your starting a catering business. In general in the world of catering most menus are sold as sets. A dinner menu would contain a salad, starch,vegetable, and dessert to compliment the main course. So you would have to add up all your costs and divide by the given menu price.

Having a good handle on food cost will help you determine your menu pricing and make sure your business is profitable, particularly in respect to helping you determine menu costs. Ideally, food cost percent would be 20 to 25 percent. Of course this also depends on what you are serving and what you can mark it up for. An example would be a Tenderloin, it might cost you $15.00. You can sell it for $45.00. Your food cost would be 33 percent,but your making $30.00 a cover. Going back to the
original Chicken Picatta example, you were making $7.50 per cover. That is wonderful, but I’ll take the $30.00 per cover and higher food cost anytime.

You do want to sell your product for the highest profit possible. When determining menu cost, you must also consider what the competition is charging. You don’t necessarily need to be the cheapest, but you must be able to justify the price tag . I would also recommend implementing a service charge, they are typically 17-20%. This will help offset vehicle maintenance costs, rental, etc, and you will have some left over to put in your pocket.

Knowing your food cost will help you manage your business. It effects your bottom line tremendously. As an example, you are averaging one thousand covers per week. If your food cost is 25% of your spending, it would be two thousand five hundred dollars. If your food cost is 30% of your spending, it would be three thousand dollars. The variation is five hundred dollars per week. That’s a twenty six thousand dollars per year profit. If you are just starting off, you’re probably not going to do those numbers to begin with. Just remember, starting off with good habits will stay with you for the lifetime of your business.

Remember, you do want to have fun with home catering business but your key motivation must be to make money. If you are money motivated, then starting a catering business is for you.Work clever, work hard, and profit well.

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