I May Have Nailed Down My Buns

I went to a bakery that is about 3 miles from me a while ago.  A small but very clean/nice operation owned and operated by a Hispanic family.  I was talking about the S. Rosen Poppy Seed Buns and he said he could do that, no problem.  I said that I would be needing somewhere around 200/day, sometimes less sometimes more.  He said "200 dozen, or 200 peices..?".  I told him peices....he said he could do that and never miss a beat.  He said he could deliver as well.  He is making samples tonite and I pick them up tomorrow to see how they are.  Fresh buns baked daily, on my menu board..??  Now this, what's a fair price for this ?  I don't wanna charge more than $2.50 for a Chicago/New York dog....I'd like to be able to get $2.00 and still turn a profit.  I was thinking somewhere between 0.10 - 0.20 cents per piece..???  What do you guys do..???
 
Thanks as always,
 
curtis

I don't know what kind of markup
you guys need to make a profit,
but  I try to maintain at least 300%.

It costs me on average about $1.15
to make a hamburger in actual hard
cost so I charge $3.50.

So, after my overhead which is low,
I still end up with fair profit.

If you don't want to charge more than
$2.50, then you need to know how
much it's going to cost for everything
else, multiply that times 3 and see how
much you have left to pay for the bun
if that makes sense to you.

I figured my costs the hard way.

I took a head of lettuce and counted
how many hamburgers I could dress
out of it.

Same thing with the tomato.

I took what I considered to be an
average size tomato I would be getting
and counted the slices.

Ditto for onions.

Pickles were a little harder. I had to guess,
but allowed $.02 for pickles since I pay
less than 5 bucks for a gallon jar.

The buns and patties were the easiest
to price since they come in packages with
a set price. All I had to do there is divide
the number of items into the package price
to get the price for the individual patty
or bun.

After figuring out as best I could how much
it would cost per item to make a
hamburger, it was a simple matter of
multiplying by three to get my selling price.

So, if you go by that, you need to know
how much everything else is going to cost
so you know how much you have left
to pay for the bun at your markup level.

Michael

That's a very good question. Many restaurants go out of business because they don't ask questions like that. They don't keep menu prices in line with food costs. So, basically, this is a food cost percentage question as you need to figure that out first. Here's what I would try to figure:

Let's try to find what it will cost you to prepare a hot dog to sell:

1) What is the total cost of the buns you are buying. In this case, what is the total cost of 200 buns. Divide the cost by the number of buns and you have your cost for each bun. Example: If 200 buns cost $50, then divide $50 by 200 and you will see each bun would cost 25 cents. (That figure is for illustration purposes only as I hope your buns cost much less)

2) Do the same with the hot dogs. For example, if 80 hot dogs come to a case, and the case costs $18.00; divide $18.00 by 80 to get the cost of each individual hot dog. In this case 18/80 = .225 cents or rounded up to 23 cents per dog.

3) Add the cost of a dog and a bun and you've got your food cost for a plain hot dog. Add the rest and you've got what it cost you to construct a single hot dog.

So far, based on the examples, a plain hot dog and bun would cost .58 cents. But what about the other ingredients that makeup a Chicago or New York Style hot dog?

4) Do the same with the other ingredients. How much does a jar of pickle spears for that Chicago dog cost? Divide that cost by the number of pickle spears in the jar. How about the relish, tomatoes, mustard, kraut? All that needs to be broken down cost-wise as well, but by weight.

Here's where I might suggest investing in a digital food scale from Bed Bath and Beyond. (Salter makes a good brand). For example, will you use pre-packaged chopped tomatoes or will you by whole and slice your own wedges? In either case, this scale will save you a lot of money and here's how. You need to figure out how much a pound of product costs, which in this case could be tomatoes. Very important to keep in mind that a pound = 16 oz. For illustration purposes, fresh tomatoes at the store cost $1.99 a pound. So divide $1.99 by 16 oz and an ounce of tomatoes cost .124 cents which is rounded to .13 cents. Well, how much does a tomatoes wedge weigh? Or maybe you'll use chopped and if so how much will the chopped tomatoe weigh in a single serving? See where I'm going here? It gets kind of nit-picky but this is what will save you financially in the long run. That and always using quality ingredients.

5) Ok. For simplicity, let's say your just going to serve a plain hot dog. You need to figure out what your food cost percentage will be in relation to the price you will sell the hot dog to your customer.

The food cost percentage = food cost divided by the menu price.

So we know the total cost to you for a plain hot dog is is .58 cents. So if you want to charge $2.00 then your food cost percentage is 29%. Which means that for every $1 you spend to create that plain hot dog, you are keeping .71 cents. (And since you are chaging $2 the profit would be $1.42) What if you charged $2.50 instead. Then your food cost percentage would be .58 divided by 2.50 = .24. This means for every $1 you spend to make that plain hot dog you would keep 76 cents.  (The profit would be $1.52)

If this makes it any clearer, if you charged $2.50, your profit based on the examples would be $1.90 per hot dog. because $2.50 x 24% food cost = .60 cents which is the total cost of the hot dog. $2.50 - .60 cents = $1.90 profit.

So in short, figure out the total cost of what is is you are making. Then divide that by different selling prices and you'll have a better idea what to charge. If it helps, the cost of Mrs. Bairds buns form Sam's go for .12 cents each if that helps for a comparison price-wise.

That would be nice if he did it for .10 but that's probably not going to happen. I would carry bakery buns here but it's  way too expensive. The closest bakery that will do it has too many hoops to jump through and would cost .50 a bun. They told me no pick up orders and they will only drop off at restaurants. They weren't too street vendor friendly and that's their choice.  I would rather drive to San Francisco (45 min) rather then dealing with this company and I might be doing that soon if the price is right.
 
Good luck. Hopefully he will give you a good price. I always feel the fresh bakery buns make the hot dog that much better.

I have played with this and could not get our costs below $0.30. and S.Rossen is not the only par baked bun out there. probally the most known around Chicago area

 
Sorry for this, but when I read the title all I could think was --OUCH!!That hurts!! 

I will know today.  I don't spose I'm sposed to advertise "soft buns and plump weiners" am I ?

I have been pricing bulk condiments and need to do the analysis on cost today.  Yes, I need to make a minimum of 300%.

Stay tuned.

Thanks all.     curtis