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Overhead Cost Allocation

Every fixed cost in your business — distributed across every item you make

MenuCost's Overhead Settings captures your rent, utilities, equipment depreciation, and other costs — and automatically calculates how much overhead is carried by every menu item. Enter your monthly portions and get an overhead per item that feeds directly into every recipe cost.

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WHY THIS MATTERS

Your rent, electricity, and equipment don't disappear because they're fixed

Every month your business pays rent, electricity, water, gas, and equipment costs — regardless of how many items you sell. These fixed costs need to be recovered in the price of every item you produce. If they aren't included in the cost per serving, the margin you see is overstated by exactly the amount you're spending on overhead.

Most F&B operators know their monthly overhead total — but they never put that number into their recipe costs. MenuCost's Overhead Settings does exactly that: it takes your actual monthly costs across four categories (Rent, Utilities, Equipment, Other), builds a complete overhead total, divides it by your estimated monthly portions, and produces an overhead per item that flows automatically into every recipe.


HOW IT WORKS

Four overhead categories — configured separately, totalled automatically


Rent — with production allocation percentage

Enter your rent amount and payment period. The monthly equivalent is calculated automatically. Set a Production allocation % — the share of your total space used for food production. Only this portion of the rent is allocated to recipe costs. A restaurant using 35% of its 5,000 SAR/mo space for production allocates 1,750 SAR/mo to overhead. The effective from and review date fields let you track when lease terms started and when they're due for renewal.

Utilities — electricity, water, and gas monthly averages

Enter monthly average figures for electricity, water, and gas. MenuCost sums them into a single monthly utilities total (e.g. SAR 400 + SAR 200 + SAR 550 = SAR 1,150/mo). These are monthly averages rather than exact figures — the goal is a representative cost, not perfect accounting precision.

Equipment — purchase price and useful life give monthly depreciation

Add each piece of equipment with its purchase price and useful life in months. MenuCost calculates the monthly depreciation automatically — for example, a Coffee Machine at SAR 45,000 over 60 months depreciates at SAR 666.67/mo. The Equipment tab totals the monthly depreciation across all active items.

Other — fixed recurring and variable monthly costs

The Other tab has two sections. Fixed Recurring covers costs that are the same every period — entered once (e.g. SAR 3,000/mo marketing). Variable Monthly tracks costs that change month to month — enter this month, previous month, and month before, and MenuCost calculates a 3-month rolling average (e.g. Gas: SAR 350, SAR 300, SAR 400 → 3m avg SAR 350).

Complete Overhead Summary — total monthly overhead ÷ portions = overhead per item

The Complete Overhead Summary adds all four categories plus staff overhead into a single total. Enter your estimated monthly portions and MenuCost divides the total to give you the overhead per item — shown in the orange badge. This number is applied automatically to every menu item cost calculation in the system. Change your overhead figures and every recipe updates.

REAL EXAMPLE

Configuring rent with a production allocation percentage

Rent is entered with a production allocation percentage — only the share of the space used for food production is allocated to recipe overhead costs. The monthly equivalent and allocated amount calculate automatically.

WHAT YOU GET

What changes when overhead is included in every recipe cost

  • A complete four-layer cost per recipe. Overhead is the fourth cost layer — alongside ingredients, labour, and packaging. Without it, every recipe cost is understated by the overhead contribution. With it, the margin you see is the margin you actually earn.
  • Rent allocated only to the space that produces food. The production allocation percentage means only the share of your rent that applies to food production is charged to your recipes. If 35% of your space is the kitchen and 65% is dining room, only 35% of rent feeds into your overhead per item.
  • Equipment depreciation calculated automatically. Enter a purchase price and useful life - MenuCost divides them to produce a monthly depreciation figure. Add all your active equipment and the total monthly depreciation is summed automatically, no spreadsheet required.
  • Variable costs smoothed with a 3-month rolling average.  Costs like gas and variable subscriptions fluctuate. The Variable Monthly section takes three months of actuals and averages them — so your overhead per item reflects a smoothed cost rather than 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 automatically into every active recipe's cost per serving — the Profitability tab, reports, and catering quotes all update without any further action.

QUESTIONS

Most F&B businesses rent a space that includes both production areas (kitchen, prep areas) and non-production areas (dining room, office). Only the production portion of your rent should be included in your recipe overhead costs. The Production allocation % lets you specify what percentage of your total rent applies to food production. If your kitchen takes up 35% of your total space, set this to 35 and only SAR 1,750 of a SAR 5,000 monthly rent is allocated to overhead — not the full SAR 5,000.

MenuCost separates direct staff (those whose time is already costed per recipe through Labour Management) from indirect staff (managers, admin, accounting). Direct staff costs are already included in the Labour layer of each recipe — adding them again in overhead would double-count them. Only indirect staff who are not assigned to specific recipes are included in the overhead total. The summary shows "2 indirect staff | 1 direct staff excluded" so you can see exactly which staff are counted where.

Estimated monthly portions is the total number of individual items (servings, portions, products) your business produces in an average month. MenuCost divides your total monthly overhead by this number to get the overhead per item. A restaurant producing 20,000 portions a month with SAR 17,116.67 in overhead has an overhead per item of SAR 0.86. A business producing 5,000 portions with the same overhead would have an overhead per item of SAR 3.42. Set this to the most accurate estimate you can make — it directly affects how much overhead is allocated to each recipe.

Fixed Recurring covers costs that are the same every period — for example, a monthly marketing subscription of SAR 3,000. You enter it once and it repeats at the same amount. Variable Monthly covers costs that change from month to month — for example, gas bills or waste disposal fees. You enter the actual amount for each of the last three months and MenuCost calculates a 3-month rolling average. Using an average rather than a single month's figure smooths out seasonal fluctuations and gives a more representative cost for your recipes.

Yes. Save a change to any overhead figure — rent, utilities, a new piece of equipment, a variable monthly cost — and the Complete Overhead Summary recalculates the total monthly overhead and the overhead per item immediately. That new per-item figure is then applied to every recipe in the system. You don't need to touch any individual recipe; the update flows through automatically.

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