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.

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