Rather than go through the trouble of figuring out the cost of each ingredient in a meal, the prime ingredient markup method instead focuses on applying a multiplier to the main ingredient in the dish. With Steve's ribeye plate, the cost has already been established as $5 for just the steak. Now Steve needs to figure out his multiplier.
Each night Steve makes $24,000 in revenue and spends $4,000 on ingredients. If we divide his revenue by ingredients we get:
$24,000 / $4,000 = 6
For the prime ingredient markup method, the multiplier in Steve's case is 6. Multiplying that by the $5 per plate for the steak gives a sale price of $30. The nice thing about this method is that it is easy to calculate a new price if the cost of the steak changes. If the price goes up to $5.25 for the steak, all Steve has to do to find the new price and have the same profit margin is multiply that by six to get a new price of $31.50.
Markup with Accompaniment Method
What if Steve wants to offer a ribeye steak plate special that includes all the fixings such as salad, drinks, bread, butter, additional vegetables, and maybe even dessert? The markup with accompaniment method is used to add a plate cost, the cost of these extra items, to the prime ingredient cost and then apply a multiplier to determine the sale price. Let's say that the cost of these extras amounts to an additional $4.00.
If we add the $4 for sides, drinks, and dessert to the $5 cost of the steak, the total cost is $9. Using the same multiplier as calculated with the prime ingredient method, we multiply that by 6.
6 X $9 = $54
Using the markup with accompaniment method, the sale price for this dinner promotion is $54.
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