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Restaurants make 70% profit on food!?

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a couple friends of mine run a popular local bar and grill, the place isnt that expensive, but its very busy, and booze is one of the biggest moneymakers there. beer and liquor drinks have a pretty decent mark up. not sure about the food, but my friend does the beer and liquor orders and the markup on drinks is pretty high

which is awesome, because i get specialty beer at their cost if i want something by the case
 
Mexican food places can allow for a much smaller percentage of revenue going to food costs. 50lb bags of beans or rice cost next to nothing. Rent and utilities are typically the largest expenditure for a restaurant.

In the restaurant business you have three targets: food, location and atmosphere. If you are amazing at one of those you will do fine, and if you are good at two of those you should do fine.
 
JEDI said:
reading comprehension much?

i said profit off of food.
not overall restaurant profit.
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Unless the food magically appears you don't make any profit on it without people to make it, serve it, clean up after it, and a place to do it.

Menu price - Cost of ingredients =/= profit on food
 
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Yea my coffee maker plugs into a power strip and then I plug the power strip into itself and thus pay $0 for electricity to make coffee.
 
Jesus, this is news?

Am I the only person here who actually stops to question how the world works? How can people be so ignorant? You literally have access to a world of information at your fingertips.

STOP WATCHING PORN ALL DAY LONG!
 
HendrixFan said:
Mexican food places can allow for a much smaller percentage of revenue going to food costs. 50lb bags of beans or rice cost next to nothing. Rent and utilities are typically the largest expenditure for a restaurant.

In the restaurant business you have three targets: food, location and atmosphere. If you are amazing at one of those you will do fine, and if you are good at two of those you should do fine.
Click to expand...


Most restaraunt dishes are 80% potatoes, corn, HFCs flavored fizzy water. Nothing too expensive
 
OP, huh???? OP has no clue how much equipment costs. How much for all the ovens... the gas to run the ovens (or electric), all the lighting, etc. Let's not forget routine maintenance - paying to have the parking lot plowed in the winter, sealing the asphalt in the spring, etc. All the cleaning supplies, all the stuff like napkins that customers take huge handfuls of and waste. Is there any point in me going on and on?

On top of that, it's not like all the profit to run a business is spread out over 12 hours - most of the business is at lunch time, or dinner time, with it usually much slower during the other hours.
 
I would think that food services would have to be high profit. You're paying for the waiters, atmosphere' and preparation more than anything else. Any kind of service industry is going to have a high profit on the materials, but it'll average out when you add in the manpower cost.
 
OverVolt said:
Yea my coffee maker plugs into a power strip and then I plug the power strip into itself and thus pay $0 for electricity to make coffee.
Click to expand...

43968c23-952d-4215-9794-6bfa7864f778.jpg
 
What makes no sense to me is when I go to a restaurant and order the grilled Halibut, and someone else gets grilled chicken, my dish cost over twice as much and looks half as small. Ridiculous.
 
DrPizza said:
OP, huh???? OP has no clue how much equipment costs. How much for all the ovens... the gas to run the ovens (or electric), all the lighting, etc. Let's not forget routine maintenance - paying to have the parking lot plowed in the winter, sealing the asphalt in the spring, etc. All the cleaning supplies, all the stuff like napkins that customers take huge handfuls of and waste. Is there any point in me going on and on?

On top of that, it's not like all the profit to run a business is spread out over 12 hours - most of the business is at lunch time, or dinner time, with it usually much slower during the other hours.
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geez man.. i didnt kno

thought restaurants w/liquor survived on liquor sales, and didnt make that much on food.

boy was i surprised on the high food markup %.
that means liquor markup must ber insane! (200%+? ) 😱
 
Bignate603 said:
It's called overhead. You've got to pay the wait staff, the kitchen staff, the bartender, the hostess, the busboy, etc. Then you've got rent, utilities, insurance, and other monthly bills.

Even with those huge markups many restaurants struggle and a ton of them fail because of all those other costs.
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This.

Very little of that 75% ends up being profit.
 
JEDI said:
geez man.. i didnt kno

thought restaurants w/liquor survived on liquor sales, and didnt make that much on food.

boy was i surprised on the high food markup %.
that means liquor markup must ber insane! (200%+? ) 😱
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Yeah, a shot is not 9 dollars.
Go buy a bottle. Do the math. Its ridiculous.
 
Markup on liquor is way more than 200%. Did the books for the Yardhouse when they were just 3 restaurants (LBC, Irvine, Costa Mesa). Still kicking myself for leaving the company after they literally blew up two years after I left (would have had a fantastic position at corporate).
 
DrPizza said:
OP, huh???? OP has no clue how much equipment costs. How much for all the ovens... the gas to run the ovens (or electric), all the lighting, etc. Let's not forget routine maintenance - paying to have the parking lot plowed in the winter, sealing the asphalt in the spring, etc. All the cleaning supplies, all the stuff like napkins that customers take huge handfuls of and waste. Is there any point in me going on and on?

On top of that, it's not like all the profit to run a business is spread out over 12 hours - most of the business is at lunch time, or dinner time, with it usually much slower during the other hours.
Click to expand...



So true. And don't leave out the fact that one just doesn't simply waltz down to Sears and buy $200 ovens and expect them to function properly being used 7 days a week, 12 hours a day. (Hint: That's why commercial stoves/ovens/dishwashers are made.....home crap won't stand up to commercial use for a week.)

Then, please don't forget to add in the liability insurance you must carry....not cheap. Oh, and the unemployment ins., having to meet very stringent health and building codes for your establishment.

And, not in the least, are the small things one tends to overlook......silverware, plates, glasses, etc., etc.

All are expenses that have to be met before drawing one penny in real profit. Simply amazes me that so many here are so ignorant how businesses operate. So many equate revenue with profits, or see a profitable item among loss leaders and assume a business is a hugely profitable enterprise, all the while the business is rocking along at razor thin margins.
 
Food waste is a huge issue and can sink a restaurant if they throw too much away, but also sink them if they try to hold on to it too long and serve it when it's no longer fresh.
 
JEDI said:
http://restaurants.about.com/od/menu/a/foodcost.htm

Generally, food cost should be around 30-35%. This means that if you pay $1.00 for something, you need to charge minimum of $3.34.

The initial cost of a filet mignon dinner can be broken down into the following areas:

• The beef filet costs you $6.00 per portion
• The wrap (the potato, vegetable, salad and bread that comes with the filet, as well as any condiments the guest asks for) costs $2.50

Therefore, the entire meal costs you $8.50.
at 65% profit, charge $24.29 at MINIMUM. (Bump it to 24.99 to make the numbers less awkard.)


wow.. thought liquor was around 70% profit, and foods were around 25% profit.

so if food is 70% profit, how much profit for liquor?
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If the restaurant owners were to buy alternator sized cubes of beef in bulk they would be able to get that $6.00 down even further.
 
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