# managerial account variable cost per person - restaurant



## bluepenink (Aug 30, 2012)

hey all

i am not an accountant but at the same time looking to develop a catering or party menu.

i own a in-house catering shop and was approached by someone to quote for 100 people.

that said, i am trying to figure out the variable cost per person.

i know the items the user wants and i know my cost per item...how can i include wages of employees, rent for facility etc...and figure out what my cost per person is...so i can see how much money i am making or not?

as it stands...the client wants: garlic bread, wings (appetizers); ribs, leg & thigh piece chicken, salad, potatoes and fries + drinks for dinner.

on top of the basic food cost, how do i account for the labor and rent charges etc when developing the "per head cost"?

can someone pls help?

thxs​


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## Firefly2012 (Aug 30, 2012)

Unless you will need to employ an additional person (or pay for additional hours from an existing employee over and above what you would normally pay) then the wages and rent are completely irrelevant when it comes to pricing up this contract (as you will still be paying these whether you take the contract or not).  Only the food costs, additional electricity and other variable costs that will increase as a direct result of the contract need to be taken into account


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## shg (Aug 30, 2012)

Even so, the fixed costs need to be allocated prorata over the the annual number of soirees served to calculate an appropriate price.


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## Firefly2012 (Aug 30, 2012)

Shg, I agree with you if the OP is looking at how to price their services _in general_, however, if this is a one off (which is what it sounds like to me from the OP's wording) then an appropriate price does not need to include them.


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## bluepenink (Aug 30, 2012)

hello

thxs guys for the input

basically...this is a one off situation however i have had frequent inquiries on catering for 100 people....that is why i am asking about the "actual per head cost" and how to calculate it.

i will be having employees help me on this and work extra so that is why i am asking about the calculation.

if i have the cost her food...how can i calculate for example, labor cost, electricity and rent cost and implement that into my "per head cost"?

if you can pls help me understand, that would be great. thanks.


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## shg (Aug 30, 2012)

Just because it's a one-off, would you price it for less (or even differently) than if you did them all the time? If you bid more, you'll be non-competitive, and if you bid less, you're cheating yourself. 

Total price = Food cost + disposables + direct labor hours * fully loaded labor cost + (probably) employee tip + profit

Loaded labor cost is direct labor cost + cost of benefits + employee tax contributions + allocated fixed costs (facility, utilities, marketing, ...) per direct labor dollar

The template I use would not be of any value; the allocation of fixed costs amortized over a year's total labor are computed annually as percentage of direct labor dollars (and it's not for catering).


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## bluepenink (Aug 31, 2012)

shg said:


> Just because it's a one-off, would you price it for less (or even differently) than if you did them all the time? If you bid more, you'll be non-competitive, and if you bid less, you're cheating yourself.
> 
> Total price = Food cost + disposables + direct labor hours * fully loaded labor cost + (probably) employee tip + profit
> 
> ...



hello shg

thx u so much for your prompt response....couple of quick questions:

1) what is defined as disposoables (e.g. cutlery, paper plates etc)?
2) in terms of calculating the labor cost and fixed cost...how can i go about doing that...in terms of calculating that....ie. if my rent if 12k a month; i have 4 employees (pay them 10.25$/hour - i will require them for 5 hours in total from ea.); and utilties cost $2.5k/month

3)my cost for food only so far is sitting at $7.50/head...but i have not included any of the above mentioned

if you can pls show or advise on how to make the calculation for point 1 and 2, i would be very grateful.

thx u

PS. as it stands, the other party cannot afford more than $16/head.


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## xenou (Aug 31, 2012)

I think it's easier to ignore fixed costs for a one off.  If the other party is willing to pay $16 (and no more) then you should charge $16, assuming variables costs do not exceed that amount.    For instance, if the employees make $10.25 and would not work otherwise then that is a variable cost.  If they are paid that much but would work regardless of this event (they work 40 hrs per week) then it's a fixed cost.  Stick to the main items.  Yes, you will consume $15 worth of plastic forks and knives but that's not going to affect your decision - if you like, include an estimated amount in the variable costing to cover all these small items (electricity, plasticware, cleanup, etc.)  Beware that if you charge a low price other customers may find out about it and come to expecting the same deal - special pricing is dangerous for that reason.


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## Ver101 (Aug 31, 2012)

can you just summarize all cost that you may incur in accepting the offer? all this cost will be considered as variable cost since this willl be incurred only once you accept the order (100 person quote) rentals, utilities that you already incurred and do not have direct effect(on the orders) will be considered as fixed cost, we will just allocate the fixed cost for the purpose of identiying the desired price or desired markup


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## Ver101 (Aug 31, 2012)

Do you also have any regulars customers aside from the 100 person offer?  if does, allocation of fixed cost will be distributed between the regular and new quote.


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