Bakery Owners: What % Of Your Cake Cost Is Labor?

Business By Cakepro Updated 5 May 2010 , 12:40pm by HaydenSC

Cakepro Posted 4 May 2010 , 5:12pm
post #1 of 8

We do custom cakes...none are kept in the case. About half of the cakes are multi-tiered fondant cakes with GP elements (bows, flowers, baby shoes, etc) and the other half are relatively simple cakes done in buttercream.

My question is ~ what % of our cake cost should be labor? Right now we are running at about 50% but I know that should be lower. I was told that the standard is 20% in general business, but was wondering if that number is different for cakes.

Thanks! icon_smile.gif

7 replies
sari66 Posted 4 May 2010 , 7:05pm
post #2 of 8

I'd have to double check but when I figured this out once before it was about 30%

LindaF144a Posted 4 May 2010 , 9:18pm
post #3 of 8

I don't know about making cakes strictly. I was watching a YouTube video where someone was talking to three bakery owners from the midwest. One of the owners said that his percentage of labor costs was 40%. He owned three bakeries.

Kitagrl Posted 4 May 2010 , 9:33pm
post #4 of 8

I really think the percentage of labor would totally depend on the type of business and the cost of the business.

For instance...if I made all my fondant from scratch, cake from scratch, icing from scratch, and decorations from scratch, my labor is going to be alot more than if I pre-buy fondant, pre-buy icing, and pre-buy gumpaste flowers, etc.

In the first example, supplies will cost less but labor is more. In the second example, supplies will cost more but labor will be less.

So I don't think there can be a for sure percentage on labor.. also because the speed of working varies so widely. If I do a cake in 5 hours and someone else makes the same cake in 8 hours, I'm getting a larger percentage of labor profit than the other person.

TexasSugar Posted 4 May 2010 , 9:51pm
post #5 of 8

Maybe I'm wrong but wouldn't it be based off how long it takes and how much the employee (or yourself) get paid more than it would a percentage?

Cakepro Posted 4 May 2010 , 9:54pm
post #6 of 8

Thanks Sari and LindaFl - I will go search for that on Youtube. That's the information I'm seeking.

indydebi Posted 5 May 2010 , 2:42am
post #7 of 8
Originally Posted by TexasSugar

Maybe I'm wrong but wouldn't it be based off how long it takes and how much the employee (or yourself) get paid more than it would a percentage?

with standardized production, there is a rule of thumb on how much each expense "should" be.

For example, in my catering quotes, I always allocated 10% of the total for labor costs. This told me that on a $4000 quote, I could "allow" $400 for labor/payroll. At $10/hour, this means I could have 40 hours worth of labor. I could use 5 people for 8 hours or 8 people for 5 hours and be within budget (and I usually came in under budget because we had it all set up assembly-line process ...... no wasted minutes on my watch! icon_biggrin.gif

If you know that labor is "usually" 20% of your cake price, then a cake for $500 means you can allow $100 for labor. At $10/hour, this means you can use 10 hours of manpower to make this cake.

It's a budgeting tool so you don't have to sit and figure it out every single solitary time you have a new project and it helps you with staff scheduling. Total weekly orders of $2000 with a 20% labor budget at $10/hour means you can schedule employees to work a grand total of 40 hours. ($2000 x .20 = $400 divided by $10/hour = 40 hours)

HaydenSC Posted 5 May 2010 , 12:40pm
post #8 of 8

Thanks for posting this! We have recently hired a few new people, but I am not totally convinced they are making it "worth my while". This will help me evaluate the situation! icon_biggrin.gif

Quote by @%username% on %date%