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Recipe detail - Cost Analysis tab
The information in this section of the recipe details is about helping you to understand the cost of preparing the recipe and to assist in setting a price for the recipe (if you are a commercial operator) to achieve a specific profit margin.
The first thing to remember is that the costing function will only be accurate if the details about the ingredients that you use in the recipe include pack size and cost information. If you use ingredients from one of the Set suppliers, these usually do not contain cost information. You normally have to use ingredients from your own cookbook where you have been able to enter the cost information yourself.
If you are unsure whether you have costs against all of your ingredients in the recipe, check on the ingredients tab. There, alongside each ingredient quantity will be the calculated cost. If there is cost information missing then it will appear as zero.
Back to the cost analysis section; at the top of this section is a calculation showing the COST of the ingredients needed to make ONE PORTION of this recipe. In essence this is the cost to you of the raw ingredients.
Underneath this are three boxes to enable you to start working out a price for the recipe.
Firstly you need to tick the box "Includes VAT" if your business is VAT registered. If not, leave it unticked.
Next you have two options, which you can play with to your heart's content.
In the first case the system will work out for you what is the gross profit and the margin percentage.
In the second case, the system will calculate the price needed to give you the desired margin.
So, typically you would begin by entering your desired margin, 75% say, and then calculating the required price. The system would tell you, in the example above, that you need to price the recipe at £5.28.
You might then want to round that amount to a sensible number so you would overwrite the 5.28 with 5.99 and then recalculate. The system would then inform you that that price would achieve a margin of almost 78%.
The price you set here will be carried forward into any menus that you set up to include this recipe.
Checking your prices whenever ingredient prices change to ensure you are maintaining your margins is an important part of running a catering business. This can be tedious if you have to do each recipe individually. Fortunately the system has a really helpful tool to speed this up. This is covered in the next topic.
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