The other day I was sitting in on a consulting session with a group of new restaurant owners who were sampling ingredients that would potentially make up their restaurant's new panini sandwiches. The group was comprised of approximately five or six people, only one of whom had extensive experience in the restaurant industry.
All of them, however, had experience in business. And one thing they understood was the cost to make the sandwich included more than just bread, lettuce, and other food ingredients.
The employee cutting the bread, slicing the tomatoes, and preparing the sandwich must also be paid, as do the IRS and State governments on employer taxes.
Dividing your employee's hourly wage plus employer taxes by 60 (as in minutes), you'll be able to understand your labor cost per minute. Knowing that it takes five minutes to make your special Chicken Caesar panini, you can add your labor cost for that time to your ingredients to get a better understanding of the your cost of that tasty sandwich. You'll have a better grip on price setting this way too, as, due to your costs, maybe charging $7.99 is more appropriate than $6.99.
Unless, of course, you're in the airport, where $14.99 seems to be appropriate:)
