How to cost breakfast and find out why it is one of B & B’s best kept secrets.
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Why is costing breakfast one of the best kept secrets of the Bed & Breakfast industry? There is no magic in working out the cost of a continental breakfast, bacon and eggs or an alfresco mixture of muesli, fruits and toast.
The magic is the fact that breakfast is a cheap meal to make even when you use the best ingredients. This provides the business owner with a low Raw Food Cost or Kitchen % which in turn generates a large Gross Profit %.
You will usually find that the kitchen % is in the 20’s for breakfast whereas restaurants and hotels will be operating in the 30’s for lunch and dinner because of more expensive raw materials.
Costing Breakfast
Look at the following example which I am presenting with the headings that your accountant would use except simpler:
| Breakfast |
$ |
% |
| Selling Price |
20 |
100 |
| Raw Food Cost (Kitchen) |
5 |
25 |
| Gross Profit |
15 |
75 |
| Labour |
5 |
25 |
| Overheads |
5 |
25 |
| Net Profit |
5 |
25 |
The raw food cost is the cost from the supermarket or your supplier and is the cost of the raw materials before any preparation or cooking takes place. $5 is used for ease of calculation and in fact maybe too much depending on the breakfast being served.
Of course you should cost in your own labour as labour cost for preparing and cooking the breakfast; remember that you could be out working somewhere else and getting paid for it and you are foregoing that opportunity. You are not working for free but it is a separate cost to the raw food cost.
Overhead costs can be found from your profit and loss statement from which you will need to estimate an amount for electricity, rates etc. and you intend to make a net profit; in this case 25%. All costs and profit are expressed as a % of sales or selling price. If you add kitchen and gross profit %’s together you should always get 100%.
You can play around with different raw food costs and associated %’s using the formula:
Selling Price = Raw Food Cost x 100
Kitchen %