How Much $ To Pay My Dad For Using His Restaurant Kitchen???

Business By SomethingSweetbyJ Updated 17 Aug 2010 , 7:26pm by jason_kraft

SomethingSweetbyJ Posted 17 Aug 2010 , 2:37pm
post #1 of 5

I am starting my 2nd year of using my father's restaurant kitchen to make wedding cakes. For my first year, my father let me use his kitchen for free. I also do most of my work during 3rd shift so I can have the place to myself and not get in anyones way. However, Saturdays can get a little hectic when I am trying to do last minute touchups on a cake and we are in the middle of a lunch rush! There is also some small issues with refrigerator space, but I always accommodate whatever the restaurant needs. I am projecting my 2011 year will have at a minimum of 40 weddings. I am lucky to not have any overhead while I was getting started. I am still at the stage where almost all of my profit has to be invested back by purchasing equipment...I still have so many more things I need to buy! This year I would like to give my father a kick back. I am not sure how much is a fair price. Obviously he wants to help me out, but he should be getting some sort of benefit from sharing his space. The first thing that pops into my head is 5% back of my total sales..but is this being to cheap? Is 10% still too low? What would you do?

4 replies
shalini1 Posted 17 Aug 2010 , 2:45pm
post #2 of 5

Having a free legal workspace is so awesome! I am officially jealous! I am not sure where you're located, but based on my experience on searching for a commercial kitchen, here are the current costs available in my area. The average cost per hour is $20. This doesn't include storage space. Some places offer it cheaper - like $10/hour, but they are located about a 40 minute drive from me

I hope that provides you some perspective!

jason_kraft Posted 17 Aug 2010 , 3:52pm
post #3 of 5

I would at least offer your dad fair market value for your time at the kitchen which is probably in the $10/hour range.

By the way, did you get a health department/DOA certificate for yourself at your dad's kitchen?

SomethingSweetbyJ Posted 17 Aug 2010 , 6:01pm
post #4 of 5

Yes, I am health certified separately from the restaurant. This may be a really silly question, but if you are renting a space for 10-20 an hour, how much to you have to charge for you cakes in order to make any sort of profit?

jason_kraft Posted 17 Aug 2010 , 7:26pm
post #5 of 5
Quote:
Originally Posted by SomethingSweetbyJ

Yes, I am health certified separately from the restaurant. This may be a really silly question, but if you are renting a space for 10-20 an hour, how much to you have to charge for you cakes in order to make any sort of profit?



There are two components you need to look at: variable cost and fixed cost.

Variable costs increase as your sales increase. This includes the cost of ingredients that go into the cake, the rental cost for the number of hours at the commercial kitchen needed to bake and decorate the cake, and the cost of your time. It should be relatively straightforward to calculate total variable cost for a cake.

Fixed costs stay the same no matter how many cakes you make. This includes things like insurance, health dept fees, and depreciation of large capital purchases. A simplified way to calculate the fixed cost for a cake is to add up all your fixed costs for the year and divide by the number of cakes you make per year.

The sum of these two costs plus a reasonable markup should equal your price.

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