Costing and Viability Tip
Most successful hospitality businesses aim to operate at around 10% net profit.
Knowing how much things cost per serve and how much to charge is crucial.
To make a net profit of $1000 per week, you need to be turning over at least $10,000 per week.
Based on this $10,000 turnover your wage cost would have to be less than $3000 per week and your food cost less than $3000 per week.
Standard Hospitality Costing Model – guide only
- Food Cost – 30%
- Labour Cost – 30%
- Rent Expense – 10%
- Non Food Costs – 10%
- GST – 10%
- NET PROFIT – 10%
Combined food and labour costs are usually around 60% of turnover.
Some hospitality businesses may have a higher food cost (such as steak or seafood restaurants, or businesses that buy in pre-made food and sauces) but this is usually reflected in a lower labour cost as less time is required to prepare the food.
An Italian restaurant may have a lower food cost because they are making all their pastas, breads, sauces and desserts in-house but their labour cost will be higher as a result.