Menu Pricing (cost Multipler)

7
10
Joined Jun 11, 2017
Hello chefs I had a question about menu pricing.
We studied about cost multiplier method where the following is done:
For example your total cost of Food preparation is $9.50
your desired profit from this dish is 15%
So,
To find out the selling price for this dish the formula will be:
Total cost $9.5
------------------------- = ------------- = $11.18
(100-desired profit)% (100-15)%

So the Selling price will be $11.18

Here, what I dont understand is that why is that desired profit is subtracted from 100?

Thank you
 
658
276
Joined Sep 26, 2017
You subtract it from 100 to get the percentage of the total cost of the selling price.

In your example, since you want the profit to be 15%, the total cost would have to be 85% of the selling price.

Likewise, if you want the profit to be 50%, the total cost before would have to be 100-50 = 50(%)
 
166
42
Joined Aug 26, 2016
You don't have a light bill, garbage bill, waste oil bill, impact fees, health department fees, state taxes & fees, a gas bill, water bill, rents, advertisements, general upkeep, or employees?

If you charge 15% on top of total food cost, then your profit will be 0%...or $0.00...whichever is easier to understand.

Maybe I'm not understanding the logic in the OP...
 
658
276
Joined Sep 26, 2017
You don't have a light bill, garbage bill, waste oil bill, impact fees, health department fees, state taxes & fees, a gas bill, water bill, rents, advertisements, general upkeep, or employees?

If you charge 15% on top of total food cost, then your profit will be 0%...or $0.00...whichever is easier to understand.

Maybe I'm not understanding the logic in the OP...

Total cost means food cost plus every other costs you mentioned.
 
18
10
Joined Dec 2, 2017
Total cost means food cost plus every other costs you mentioned.
I will respectfully disagree on your term definition. Food Cost should be its own separate thing. Overhead expenses tend to be more stable. Labor and Food Cost fluctuate depending on your managing. If a 15 % profit is a general target, that is fine, but your High profit/ High demand items would be discounted to your detriment by your calculations.
 
658
276
Joined Sep 26, 2017
I will respectfully disagree on your term definition. Food Cost should be its own separate thing. Overhead expenses tend to be more stable. Labor and Food Cost fluctuate depending on your managing. If a 15 % profit is a general target, that is fine, but your High profit/ High demand items would be discounted to your detriment by your calculations.

You totally lost me there. Did you read the OP's original question? He's asking about a math question he's studying at school...
 
Top Bottom