Self-Check Activity
Catering companies and banquet halls must set pricing to cover fixed and variable costs. What are the costs of a banquet? Usually, the management quotes a set price and then a per-person price to ensure profitability, such as $100 plus $15 per plate, or $2,000 for the first 100 guests plus $10 for each additional person.
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The rental fee for the room is a constant cost regardless of whether the room is filled or empty.
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The insurance must be paid even if there is no banquet.
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The manager must be paid, since this person is on salary.
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The chef is usually on salary, since he or she is not going to take a job that is classified as "on call."
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The food is made dependent upon the number of people eating.
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The tableware is used dependent upon the number of guests.
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The tables are used based upon the number of guests.
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The linens used are based upon the number of tables needed.
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The wait staff needed is based upon the number of guests.
So, there is a base price to rent the space, and then there is a production price based upon the number of guests. How can a banquet hall, restaurant, or caterer know what to charge in order to make a profit?
