Overhead Cost Allocation
Every fixed cost in your business, spread across every item you make
MenuCost's overhead settings capture your rent, utilities, equipment depreciation, and other costs, then work out how much overhead each menu item carries. Enter your monthly figures and get an overhead-per-item number that feeds straight into every recipe.
WHY THIS MATTERS
Your rent, electricity, and equipment don't stop costing money because they're fixed
Every month your business pays rent, electricity, water, gas, and equipment costs, no matter how many items you sell. Those fixed costs need to be recovered in the price of every item you make. If they're left out of the cost per serving, your margin looks bigger than it actually is, by exactly the amount you're spending on overhead.
Most F&B owners know their monthly overhead total. They just never put that number into their recipe costs. That's what MenuCost's overhead settings do: take your actual monthly costs across four categories (rent, utilities, equipment, other), add them into one total, divide by your estimated monthly portions, and give you an overhead-per-item figure that flows into every recipe automatically.
Example: A restaurant enters SAR 1,750 a month in rent (its production area is 35% of a SAR 5,000 space), SAR 1,150 in utilities, SAR 2,216.67 in equipment depreciation, SAR 3,000 in fixed recurring costs like marketing, and SAR 350 in variable overhead (a three-month average). Staff overhead adds SAR 8,650. Total monthly overhead comes to SAR 17,116.67. With 20,000 estimated monthly portions, that works out to SAR 0.86 in overhead per item, applied automatically to every recipe.
HOW IT WORKS
Four overhead categories, set up separately, added up automatically
Rent, with production allocation percentage
Enter your rent amount and how often you pay it. The monthly figure is worked out for you. Set a production allocation percentage, the share of your space actually used for food production. Only that portion of your rent counts toward recipe costs. A restaurant using 35% of a SAR 5,000-a-month space for production allocates SAR 1,750 to overhead. There are also fields to track when the lease started and when it's due for renewal.
Utilities: electricity, water, and gas averages
Enter monthly averages for electricity, water, and gas. MenuCost adds them into one monthly utilities total (say, SAR 400 plus SAR 200 plus SAR 550 equals SAR 1,150 a month). These are meant to be averages, not exact figures, the goal is a fair cost, not perfect accounting.
Equipment: purchase price and useful life give you monthly depreciation
Add each piece of equipment with its purchase price and how long it should last, in months. MenuCost works out the monthly depreciation for you, for example a coffee machine at SAR 45,000 over 60 months depreciates at SAR 666.67 a month. The equipment tab adds up monthly depreciation across everything you list.
Other: fixed recurring and variable monthly costs
This tab has two parts. Fixed recurring covers costs that stay the same every month, like a SAR 3,000 marketing subscription, entered once. Variable monthly covers costs that shift month to month. Enter this month, last month, and the month before, and MenuCost works out a three-month rolling average (gas at SAR 350, SAR 300, and SAR 400 averages to SAR 350).
Complete overhead summary: total overhead divided by portions equals overhead per item
This adds all four categories plus staff overhead into one total. Enter your estimated monthly portions, and MenuCost divides the total to give you overhead per item, shown in the orange badge. That number is applied automatically to every menu item's cost. Change any overhead figure, and every recipe updates with it.
REAL EXAMPLE
Setting up rent with a production allocation percentage
Rent is entered with a production allocation percentage, so only the share of your space used for food production counts toward recipe overhead. The monthly figure and allocated amount are worked out for you.
WHAT YOU GET
What changes when overhead is included in every recipe cost
- A complete four-layer cost per recipe. Overhead is the fourth layer, alongside ingredients, labour, and packaging. Leave it out, and every recipe cost understates by exactly what you're paying in overhead. Include it, and the margin you see is the margin you actually earn.
- Rent charged only to the space that makes food. The production allocation percentage means only the share of your rent tied to food production gets charged to your recipes. If your kitchen is 35% of your space and the dining room is the rest, only that 35% feeds into your overhead per item.
- Equipment depreciation worked out for you. Enter a purchase price and useful life, and MenuCost divides them into a monthly figure. Add all your equipment and the total monthly depreciation adds up on its own, no spreadsheet needed.
- Variable costs smoothed with a three-month average. Costs like gas bills move around. The variable monthly section takes three months of real numbers and averages them, so your overhead per item reflects a steady cost instead of a spike from one expensive month.
- One number that flows into every recipe. Change any overhead figure and the overhead per item recalculates. That new number flows into every active recipe's cost, updating the Profitability tab, reports, and catering quotes automatically.
QUESTIONS
Most F&B spaces include both production areas (kitchen, prep) and non-production areas (dining room, office). Only the production share of your rent should count toward recipe overhead. This field lets you set what percentage of your rent applies to food production. If your kitchen is 35% of your space, set it to 35, and only SAR 1,750 of a SAR 5,000 monthly rent counts toward overhead, not the full amount.
MenuCost separates direct staff, whose time is already costed per recipe through labour management, from indirect staff like managers, admin, and accounting. Direct staff costs already sit in the labour layer of each recipe, so adding them to overhead too would count them twice. Only indirect staff who aren't tied to specific recipes go into the overhead total. The summary shows something like "2 indirect staff, 1 direct staff excluded" so you can see exactly who's counted where.
It's the total number of individual items, servings, or products your business makes in an average month. MenuCost divides your total monthly overhead by this number to get overhead per item. A restaurant making 20,000 portions a month with SAR 17,116.67 in overhead gets SAR 0.86 in overhead per item. The same overhead spread across 5,000 portions would be SAR 3.42 per item instead. Use your most accurate estimate here, it directly affects how much overhead lands on each recipe.
Fixed recurring covers costs that stay the same every period, like a SAR 3,000 monthly marketing subscription. Enter it once and it repeats at that amount. Variable monthly covers costs that change from month to month, like gas bills or waste disposal. Enter the actual figure for each of the last three months, and MenuCost works out a three-month rolling average. Using an average instead of one month's number smooths out seasonal swings and gives your recipes a more realistic cost.
Yes. Save a change to any overhead figure, rent, utilities, a new piece of equipment, a variable cost, and the complete overhead summary recalculates the total and the overhead per item right away. That new figure applies to every recipe in the system automatically. You don't need to touch any recipe individually.
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