As the threads title suggests, I'm looking for some very general help with menu costing. This is for an idea I had to turn my smoking hobby into a very small business. It's not for catering, but something different all together and would again start out very small.
Basically my idea stems from the fact that I have coworkers, friends, neighbors etc. that have all taken an interest in my BBQ and have expressed interest in having me smoke some meat for them. So I thought of putting together a menu where they could put in orders for what they want, then I would buy everything, prep it, smoke it, and package it for them with heating instructions. Kind of similar to something like this: https://www.corkysbbq.com/shop-online, although their prices seem insane to me.
I have heard menu prices should generally be 3x your food costs, but not really sure if that means 3x the cost of just the main item, or add the cost of everything required together and price at 3x that number, which would seem to get overly expensive quickly. I'm also struggling with how to account for certain costs like spices for the rubs and sauces. For example if you buy big 16 oz bottles, I would have no idea how to estimate the cost per food item as each bottle of spices will last for several separate cooks. I know obviously costs for items like that would need to be prorated, but I have no idea how many racks of ribs (or pork butts or whatever) a 16 oz. bottle of black pepper for example is going to get me through. Even though things like spices, foil and other items are really a part of your cost of goods sold, is it easier and common practice to classify them as part of your general operating expenses?
I'm a commercial loan underwriter by profession and I analyze financial statements all day every day so I have a very good understanding of revenues, costs, expenses and margins. I'm really just trying to find a happy balance between making sure it is a profitable venture, and also making sure the price is not so high as to be a turn off etc.
If I use a rack of spare ribs and a bottle of sauce as an example, I generally pay about $10 -$11 per rack, and a bottle of sauce probably costs me about $3-$4 to make. At 3x the food cost the price would be would be $30-$32 for the rack of ribs and $9-$12 for the bottle of sauce. I guess my issue is that at $32 for the rack of spares, it seems to be riding the line of priced to highly, and $12 for a jar of sauce seems really high when they can go to the store and buy a big bottle of their favorite sauce for much less. The sauce is just expensive to make due to the high cost of some ingredients.
These prices above also only account for 3x the cost of the actual main food item itself, the rack of ribs itself for example, or the ketchup base for the sauce, and don't take other costs into consideration such as fuel for the smoker, other ingredients such as the spices for the rubs and sauces, my time.
Anyways, sorry for the long post. I'm just looking for some general guidance to see if this idea even has legs...
Basically my idea stems from the fact that I have coworkers, friends, neighbors etc. that have all taken an interest in my BBQ and have expressed interest in having me smoke some meat for them. So I thought of putting together a menu where they could put in orders for what they want, then I would buy everything, prep it, smoke it, and package it for them with heating instructions. Kind of similar to something like this: https://www.corkysbbq.com/shop-online, although their prices seem insane to me.
I have heard menu prices should generally be 3x your food costs, but not really sure if that means 3x the cost of just the main item, or add the cost of everything required together and price at 3x that number, which would seem to get overly expensive quickly. I'm also struggling with how to account for certain costs like spices for the rubs and sauces. For example if you buy big 16 oz bottles, I would have no idea how to estimate the cost per food item as each bottle of spices will last for several separate cooks. I know obviously costs for items like that would need to be prorated, but I have no idea how many racks of ribs (or pork butts or whatever) a 16 oz. bottle of black pepper for example is going to get me through. Even though things like spices, foil and other items are really a part of your cost of goods sold, is it easier and common practice to classify them as part of your general operating expenses?
I'm a commercial loan underwriter by profession and I analyze financial statements all day every day so I have a very good understanding of revenues, costs, expenses and margins. I'm really just trying to find a happy balance between making sure it is a profitable venture, and also making sure the price is not so high as to be a turn off etc.
If I use a rack of spare ribs and a bottle of sauce as an example, I generally pay about $10 -$11 per rack, and a bottle of sauce probably costs me about $3-$4 to make. At 3x the food cost the price would be would be $30-$32 for the rack of ribs and $9-$12 for the bottle of sauce. I guess my issue is that at $32 for the rack of spares, it seems to be riding the line of priced to highly, and $12 for a jar of sauce seems really high when they can go to the store and buy a big bottle of their favorite sauce for much less. The sauce is just expensive to make due to the high cost of some ingredients.
These prices above also only account for 3x the cost of the actual main food item itself, the rack of ribs itself for example, or the ketchup base for the sauce, and don't take other costs into consideration such as fuel for the smoker, other ingredients such as the spices for the rubs and sauces, my time.
Anyways, sorry for the long post. I'm just looking for some general guidance to see if this idea even has legs...