Reader Question - Banquet Food Cost Calculation

Dear Joe,

Very good day to you. 

I hope my email finds you well. I just need to know how to calculate the accurate 
food and beverage cost for weddings, banquets, coffee breaks, and breakfasts on hotels. 

I am counting on your support especially since this calculation varies depending on 
consumption volume.

Thanking you in anticipation

Elie

Thanks for the question, Elie.

Most hotels experience a significant portion of their food and beverage revenue from special events, banquets and buffets.  For this category, it is common to comprise over 50% of the total volume.

The food cost percentage method often applied to a la carte sales is a poor tool for controlling banquet cost of sales.  It is common to see a flat fee per guest which includes many items beyond food and beverage.  Examples include flowers, entertainment, decorations, ice carvings, special bar arrangements and related services.  Guests may be offered a discount for rooms which is stated in a full package price.

To properly control the costs for special events, I recommend a spreadsheet which would have details of all menu items, beverage options, and all add on items and services.  Enter a budget amount for each line item in total dollars (or local currency).  Find the total cost for the event.

For the revenue component, take the expected final count and multiply the figure by the price per guest.  Deduct the usual room charges from the total revenue.

Finally, you should net your revenue and cost numbers to arrive at a expected profit for the event.

Do your best to keep all the actual expenses for the event separate.  Enter the actual expenses in the column to the right of the budgeted costs.  Calculate the difference for each line item.  Ask for explanations if any line shows a large variance.