View
223
Download
2
Category
Tags:
Preview:
Citation preview
Factors that Affect Menu Prices
Chapter 5
Factors that Affect Menu Prices
• Setting prices – Volume for prices– Competition– Prestige
• Demographics & type of services– Quick-service – volume intensive– Basic table – midlevel– Luxurious – elegant – fine-dining
Break – Even Analysis• Fixed costs – same despite change in sales– Rent interest– Depreciation or amortization– Insurance real-estate or property tax
• Variable cost - + or – with sales– Labor food– Beverage supplies– Employee meals & benefits– Utilities maintenance
• Total cost – FC + VC
Break – Even Analysis• Contribution Margin– Sales –expenses=CM
• Break-even – cost =sales• Hidden cost
Pre-costing Menu’s• Standardizing recipe– Consistency– Controlled labor – Scheduling– Predetermined product cost
• Discounts• Specialty items• Loss leader
Nonfood & Non-beverage Items• Rooms• Membership dues
Ideal Cost• Ideal vs actual• Tolerance to actual
Approaches to Pricing• BCG Matrix– Cows/plow horse – low growth & high market– Stars – high growth & high market– ?/puzzle – high growth & low market– Dogs - low growth & low market
• Contribution Margin• Informal approaches – Competitor– Market bear
Approaches to Pricing• Formal approaches – Derived FC %• Cost /% markup
– Pricing factor / markup / multiplier• 100/FC% = factor factor x FC = price
– Combined FC & LC (PC)• (FC+LC)/(FC%+LC%)
– Actual cost pricing• Combined cost (CC) = FC+LC+OC• CC /(1-10%)=price
• Rounding & font size– Nearest .25 increment
Approaches to Pricing• Formal approaches – Derived FC %• Cost /% markup
– Pricing factor / markup / multiplier• 100/FC% = factor factor x FC = price
– Combined FC & LC (PC)• (FC+LC)/(FC%+LC%)
– Actual cost pricing• Combined cost (CC) = FC+LC+OC• CC /(1-10%)=price
Approaches to Pricing• Rounding & print size– .25 increments under $5– .50 or .95 over $5
–Large font scares people– Always round up
Costs, Pricing & Profits• Lowest acceptable price – to both parties• Correct costing– Best price & quality sources
• Accurate pricing– Do it & be accurate
• Appropriate controls– Don’t under-estimate need for profit or time– Appropriate labor cost – setup – cleanup-
maintenance – cost facility
Computerization• Spreadsheets• Databases• Proprietary software
Recommended