Entrepreneurship, Costing and Catering Business Management
This section covers entrepreneurship, costing and catering business management: how a catering idea becomes a viable business, how prices are set and how costs and records are controlled. The exam tests business-plan elements, cost calculations, food-cost percentage, break-even and stock control.
Business basics
An entrepreneur identifies an opportunity, takes risk, organises resources and aims for profit. A business plan states the concept, market research, target customers, location, menu, equipment, staffing, legal registration, finance and projected sales. Good management controls purchasing, portion size, stock, labour, waste and records.
Costing and pricing
Food cost per portion is the total cost of ingredients divided by portions produced. Food-cost percentage = food cost ÷ selling price × 100. Selling price must cover food cost, labour, overheads and profit. Mark-up is added to cost; margin is profit as a percentage of selling price.
Worked example
A portion uses ingredients costing ₦250. The caterer targets a 40% food-cost percentage. What selling price is needed? Selling price = food cost ÷ target food-cost percentage = 250 ÷ 0.40 = ₦625. If the dish is sold for ₦600, the food-cost percentage is 250 ÷ 600 × 100 = 41.7%, above target, so the caterer must raise the price or reduce the ingredient cost. The reasoning shows that food cost alone is not profit.
Traps that cost marks
Do not confuse mark-up with margin. Do not price by copying a competitor without knowing your costs. Do not omit labour, fuel, rent and waste from overall viability. Do not keep stock records only in your head; use requisitions, invoices and stock counts.