The quotation for a meal will include various expenses, for instance, the total costs, the total selling price and the total profit.
Total Costs
Total costs are calculated by adding the cost of ingredients, the costs of labor and the cost of overheads.
For example, in making a boerewors roll to sell at a local shebeen…
The total cost of the ingredients are R1 for a roll, R14 for a piece of boerewors, and around R0.40 for butter and tomato sauce. When you add this up, a boerewors roll costs R15.40 (in terms of the ingredients used to make it).
Labour and overhead costs are hard to calculate per boerewors roll. A small shebeen might pay out R30,000 to a few staff members each month, while overheads necessary in running a shebeen could be around R10,000, totaling R40,000 per month. To calculate overheads and labour costs per meal, restaurants either…
- add a lump sum on to each menu item (e.g. adding on R5 per menu item)
- add a percentage of the costs as follows…
The ingredients cost ÷ percentage cost × 100 = total costs
For a boerewors roll sold at a profit of 20%, the percentage costs are 80%… with an ingredient cost of R15.40, one can calculate the total cost… R15.40 ÷ 80 x 100 = R19.25
Selling price
In order to determine the selling price of the meal…
Selling price = total cost + the profit
For a boerewors roll with a total cost of R19.25 and an anticipated profit of 20%, the selling price of the boerewors roll will be… R19.25 + (R19.25 x 0.2) = R23.10
Profit
In order to determine the total profit, the total costs will be deducted from the total selling price, as shown below;
Profit = selling price – total cost
R23.10 – R19.25 = R3.85