Bit of a debate going on re the cost of a slice of cake in various establishments and how it differs from one to another.

Some people think that some of the cafes are “just at it” and blatantly ripping people off.

So? Anyone on here in the catering world care to shed light on how to do the costings with regards to how cafes etc arrive at the price per slice, assuming they are “home/own” bakes?

The obvious are ingredients,rent, rates, wages, power, time and a bit of profit. I reckon footfall has something to do with it? Others think it should be the same regardless because it costs the same to make!!

I remember my daughter doing the business costings for her research/design and sell her knitwear when she was at uni and it was horrendous for a single item!!! She did however have buyers 😀

Price of an item directly relates to what you can sell it for, everything else is theory.

Not all cake is equal.

As above but if you want to carry on it will be cost + what the market will bear

Look online for the the cost of a lease for a premises with catering consent on your high st. Add at least half that again for business rates. That plus any capital on fitting the place out needs to be covered. Then consider that to sell one slice of cake you need to offer a selection of cakes and at the end of each day you won’t have sold them all.

Having your cake available when you actually want it is what you’re paying for – comparing the cost of cake in a cash and carry to its price in a high st chain cafe to its price in the trail centre carpark – the ingredients are irrelevant. You’re paying the rent on your chair while you eat your cake on the high st, you’re paying for a cafe thats open of a wet tuesday afternoon in november with no passing trade as well as summer weekends at trail centre.

many different ways to cost an item, but the two most common ways are cost plus and market based.

Cost plus is taking what it costs to make, plus an allocation of the fixed costs, deciding what profit you want to make and add it on.

Market based is setting your price to be ‘the same’ as others. There’s room for a bit of variation on this – if you go a bit lower how much extra custom do you get and does that offset the lower profit per item by more overall profit – equally some items are priced higher than the typical price for a ‘similar’ item to specifically create an impression of value. Bose for example?

Most pricing is a bit of each then – take your cake example; you might decide it costs 50p to make a slice and you’d be happy to sell it for £1. But everyone else is selling it for £2. If you price it at the £1 you’d accept, sure you’d probably get more custom because you’re the cheapest in town, but will you sell 3x as many as you would at £2? Cos that’s what you’d need to make the same profit in actual money. And is pricing it at £1 too cheap – do people think ‘It can’t be much good, it’s only £1’ It might be worth pricing at £1.75, which isn’t low enough to make people think it’ll be crap but it’s still cheaper than everyone else so would drum up more custom, and you only are ‘losing’ 25p profit on each slice, so you only need to sell 20% more and you’ve tripped the balance? So you try £1.75 and you don’t quite get the balance right so go slightly lower and eventually find £1.65 is the level.

Ultimately it’s not an exact science, business rarely is, it’s empirical experimentation of scintific theories.

[edit – if you do charge a quid, don’t be surprised if your premises mysteriously burns down one night, thanks to a visit from Mrs. Spongefinger from the bakery on hill street]

Baking goods to sell on to a cafe will not yield anything near as much of a return as a cafe baking and selling the goods on themselves. What the cafe charges depends upon many factors, but location (both nationally and locally), competition from other cafes etc will all have an influence. Or charge as much as you can get away with and hope people will come back for more!

150% … to start with or more.

Yes, some are trying on so don’t buy them.

🙄

edit – if you do charge a quid, don’t be surprised if your premises mysteriously burns down one night, thanks to a visit from Mrs. Spongefinger from the bakery on hill street

more of a consideration than many would think. My friend runs a cafe and one of the first business decisions she had to make was who to pay protection money too.

150% … to start with or more.

Yes, some are trying on so don’t buy them.

150% or what

I used to call at cafes regularly on my Sunday road ride.
Not any more.£5 for a cup of tea and a piece of cake.I can afford it but i’m not paying it because its not good value.
Our club stopped at a cafe on the A66 and a ham sandwich was £5.99.Add on a coffee and its nearly 9 quid.Take my own with me now,Aldi flapjacks at 50p a time are great.

maccruiskeen – Member

150% or what

Cost.

About 3x the cost should be the selling price more if customers are willing to pay silly money.

150% of the cost of baking a cake would be absolute buttons

depends on the cakes quality …..

starbucks cake tastes like dried wood

was happy to pay more at gadie burn cafe to get a moist sponge with actual cream and jam.

Don’t get me started on a jacket potato with beans and cheese. ingredients must be pennies, put it on a plate with a bit of garnish and charge £5

how many independent cafe owners do you see driving mercs or living in 4 bed detached homes.. not many so i’d say its damned hard work for little financial reward

totalshell – Member

how many independent cafe owners do you see driving mercs or living in 4 bed detached homes.. not many so i’d say its damned hard work for little financial reward

Reasons:

1. Nothing special.
2. Cannot differentiate from other cafe.
3. Poor quality or service.
4. Wrong location.
5. Expensive.

Don’t get me started on a jacket potato with beans and cheese. ingredients must be pennies, put it on a plate with a bit of garnish and charge £5

Don’t buy it, then.

I don’t.

Don’t get me started on a jacket potato with beans and cheese. ingredients must be pennies, put it on a plate with a bit of garnish and charge £5

If you were to try and earn your current income from selling ‘fast’ food, how much would you have to charge for this though.
I don’t know the answer, but it’s how I try to think of it when I instantly react in a “how much!?” way.

Reasons:

Blah blah blah, usual chewkw bullshit. You don’t have to **** up every thread you know.

cake costs a pound
coffee costs a pound

this is well researched true science fact.

if the canteen here thinks anyone wants to pay 1.75 for a muffin, they are in for a shock and a pile of stale muffins.

If you were to try and earn your current income from selling ‘fast’ food, how much would you have to charge for this though.
I don’t know the answer, but it’s how I try to think of it when I instantly react in a “how much!?” way.

But that’s not the point of the question, it’s an illustration of price setting strategies. If it was cost plus, then the cost even including overheads has to be less than £1. You can’t tell me the ingredients for a spud with C&B cost that much more than the ingredients for a cake slice. Yet a cakes slice sells for £2 whereas a spud with C&B for a fiver. Why – because we’ve become attuned to paying a fiver for it, ie: that’s the market price. You’d be dumb to charge £2 for it while there are folk happy to pay more.

Reasons:
1. Nothing special.
2. Cannot differentiate from other cafe.
3. Poor quality or service.
4. Wrong location.
5. Expensive.

How’s your business going? I here it’s rip roaring. Can I borrow your private jet?

“Others think it should be the same regardless because it costs the same to make!!”

Sound like these misguided fools “want thier cake and eat it”

Cake isn’t expensive and coffee isn’t either. (Although some cakes you’d be surprised…)

Buildings, staff, rent, rates, utilities and 20% VAT however…

Always amazed me when customers say that they could buy a can of the same lager for a quid in Tesco’s… as if it’s the beer/cake cost that is the expensive bit. Hey ho..

“You’d be dumb to charge £2 for it while there are folk happy to pay more.”

Strangely it does happen though.

Sunny Frinton-on-Sea, on the Essex coast, still sells a 99 ice-cream cone for £1

But Frinton is a funny place… or should that be wonderfull… You can park without charge, there are no pubs or tacky shops selling cr4p on the beach and to get your £1 ice-cream you have to walk away from the beach into town. Where the only three shops selling ice-cream are situated next to each other.

Sorry I digress … I’ll take my Ronnie Corbet hat off

deadlydarcy – Member

Reasons:

Blah blah blah, usual chewkw bullshit. You don’t have to **** up every thread you know.

What are your offering as alternative to the reasons then?

Or you could have offered alternative like these good points by thepublican but obviously maggot brain does not compute. I step on you!

thepublican – Member

Cake isn’t expensive and coffee isn’t either. (Although some cakes you’d be surprised…)

Buildings, staff, rent, rates, utilities and 20% VAT however…

maccruiskeen – Member

How’s your business going? I here it’s rip roaring. Can I borrow your private jet?

Yes, you can borrow my private jet if I have one. If I am rich to afford a private jet then I am rich to lend it out for free. You will be the first person I offer to fly out to paradise orgy holiday Dear Leader style.

So if people are willing to pay over the top price for whatever the price is on offer by the cafe so be it.

Put it this way your hard earned money is yours and if you are willing to pay over the top price everyone is happy.

So £5 per cup of coffee?

p/s: funny thing is that the business rate is rather high in the North East by comparison to other regions … hmmm … I don’t know why and yet people are complaining about high unemployment here. Ya, why not extort even higher rates and see if there are more business being set up here … the LibDem city council is sniffing their own backside.

Space Cake is nice !

Having spent 20 years running hotels and restaurants ( not any more though) I frequently looked at are books and wondered how we made any money at all, Salaries running at 38% of income, rates, water, equipment ( how do you fancy a new sewerage system @£138,000 and the customer never sees that ) painting,gardens , fire systems checks.
If you want to make money in catering get a Mac Donald’s franchise if not and your doing things because your passionate about doing things the right way then forget it.

The missus worked until recently in a Cafe that specialized in selling Organic products.

The cost of materials and time in cake production was a small fraction of the actual selling prices and she herself considered it to be a rip off.

The real rip off (I am told by the missus again) was with the Coffee. You can stick 10p worth of materials in and charge £2.95. There is a reason why there are so many Coffee shops.

Yup the materials are the cheap bit and coffee ( the good stuff ) if you have negotiated your bean price correctly works out at about 12p a cup the costly bit is the lights wages insurance etc etc I worked out in my last establishment that we smashed 1.5 cups a day, cost the business £7.23 in just replacing the cups per day. You need to charge correctly if your going to make a business pay nobody does it for zero return.

The real rip off (I am told by the missus again) was with the Coffee. You can stick 10p worth of materials in and charge £2.95. There is a reason why there are so many Coffee shops.

was she factoring in her own wage in that calculation. How much does a commerical coffee machine cost to buy / lease / service / repair?

The real rip off (I am told by the missus again) was with the Coffee. You can stick 10p worth of materials in and charge £2.95. There is a reason why there are so many Coffee shops.
was she factoring in her own wage in that calculation. How much does a commerical coffee machine cost to buy / lease / service / repair?

Just asked, yes. Especially the cakes as she made them all. The machine and barrista training was a big hit to the wallet but they turned the cost round fairly quickly.

To be fair, if it was a tight business model why are there so many Costas? They have been hugely successful and for a good reason, the model works.

Pensioners are the only people with any disposable income around here. They seem happy to pay £7 for a coffee and a sandwich in the Dales, which means the rest of us can lump it.

If your clever you can get it for free but you need to buy a hell of a lot of coffee for that, normally about £4000 for good one Had the cheap ones and all you get is bad coffee and loads of call outs to fix it you end up paying the same in the end depends if you want the hassle, its all about the pump. Serve good coffee and they will come.