Overhead Cost Allocation
Your rent and utilities are a cost too — every recipe should carry its share
Enter your monthly fixed costs once. MenuCost divides them fairly across every recipe, so your true cost per item includes rent, electricity, and equipment — not just ingredients.
WHY THIS MATTERS
Most recipe costs only count ingredients — and that's why the numbers never quite add up
When you calculate what a croissant costs to make, you probably include flour, butter, and eggs. Maybe packaging too. But there are costs that exist whether you make one croissant or a hundred — your rent, your electricity, your oven, your equipment loan. These are called overhead or fixed costs, and they are a real cost of every item you sell.
When fixed costs are left out of your recipe, your cost looks lower than it is. Your margin looks healthier than it is. And when you check your profit at the end of the month, you're short — and you don't know why.
Example: Your café pays SAR 6,000 a month in rent, SAR 800 in electricity, and SAR 400 in equipment lease — SAR 7,200 total. You make and sell 3,600 items a month across all your recipes. That means every item needs to carry SAR 2.00 in overhead. If your croissant costs SAR 1.60 in ingredients and SAR 0.60 in packaging, the real cost is SAR 4.20 — not SAR 2.20. Price it at SAR 5 thinking you're making 55% margin, and you're actually making 16%.
Overhead Cost Allocation puts that SAR 2.00 into every recipe automatically — so your cost number is complete, and your pricing decisions are based on what the business actually needs to cover.
HOW IT WORKS
Five things Overhead Cost Allocation does for you
You enter your fixed costs once
Add your monthly overhead items — rent, electricity, water, gas, equipment lease, insurance. You only set this up once. MenuCost handles the rest from there.
MenuCost splits it across all your recipes automatically
Your total monthly overhead is divided across every recipe based on production volume — how many units of each item you make per month. Each recipe carries only its fair share, not more.
Every recipe cost includes overhead from day one
The moment you add a new recipe, overhead is factored in automatically. You don't have to remember to add it — it's already there in the total cost per unit.
Update your overhead anytime — all recipes adjust
Rent goes up. You add a new piece of equipment. Update your overhead total once and every recipe recalculates its share. Nothing is ever manually out of sync.
See the overhead breakdown inside each recipe
Open any recipe and see exactly how much of the cost is overhead — broken out as a separate line item. You can see the full picture: ingredients, packaging, labour, and overhead, all in one place.
REAL EXAMPLE
How overhead gets split across a café's menu
A café with SAR 7,200 in monthly fixed costs and 3,600 units produced — SAR 2.00 overhead per unit, distributed automatically.
So a croissant that costs SAR 1.13 in ingredients + SAR 0.60 packaging + SAR 1.25 labour now also carries SAR 2.00 in overhead. Real total: SAR 4.98 per unit. Price it at SAR 7 and your actual margin is 29% — not the 73% you'd calculate from ingredients alone.
WHAT YOU GET
What changes when your recipe cost includes everything
- A complete cost number, not a partial one. When overhead is included, the cost you see for each recipe is the real cost — what it actually takes for the business to produce that item.
- Prices that actually cover your fixed costs. Every item you sell contributes to paying rent and utilities. You stop discovering at month end that sales were good but money is short.
- No manual calculation per recipe. You enter overhead once. MenuCost handles the distribution. Add a new recipe next month and overhead is already in it.
- Stays accurate as your business changes. Rent goes up, you buy new equipment, your production volume increases — update your overhead once and every recipe adjusts automatically.
QUESTIONS
Overhead is any cost your business pays every month that doesn't change based on how much you produce. Common examples: shop rent, electricity, water, gas, internet, equipment lease payments, insurance, and any subscriptions your kitchen depends on. Labour is handled separately in MenuCost under Labour Cost Management.
MenuCost divides your total monthly overhead by your total monthly production volume — the number of units you make across all recipes. That gives a cost per unit. Every recipe then carries that amount per item produced. If you produce more of one item, it carries a proportionally larger share of the total overhead.
You can update your overhead total at any time. When you do, MenuCost recalculates the allocation across all your recipes automatically. Most businesses update this quarterly or when a fixed cost changes — such as a rent increase or a new equipment purchase.
No. You can cost recipes without setting up overhead. But your cost numbers will only include ingredients, packaging, and labour — not fixed costs. We recommend setting up overhead early so your recipe costs are complete from the start.
Yes. Inside any recipe, overhead is shown as a separate line item in the cost breakdown — alongside ingredients, packaging, and labour. You can see exactly how much fixed cost each recipe is carrying per unit.
Start costing recipes with all costs included
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