Quality meat? Quality cooking? Staff and other overhead costs? Etc.
In: Economics
About 30-50% for the food. 40% for the staff and overhead costs. 10%-30% profit.
This is going to fluctuate a lot depending on restaurant management. Been to some where you can’t figure out how they’re making money, and others where it’s like they just bought it from Kroger.
A quality cut of steak can run half that price. Add in the employee cost and other materials. You’re getting close to the cost of the meal.
Avoids setting up the table, washing the dishes pots pans, cleaning the stove, clearing the table
A lot of good answers so far. One factor I haven’t seen yet – you are also paying for real estate. Nice restaurants often have expensive buildouts and are in highly trafficked locations which come with expensive leases. Those high fixed costs necessarily result in higher menu prices to hit break-even.
Steak is one of the easiest things there is to cook. You can get good cuts of meat at steak houses, but really you are going there for the service, the setting, and the sides.
You can cook a perfect steak at home.
Believe it or not, they are probably selling that steak at or close to cost when factoring in all of the overhead. They make most of their margin on the apps, sides, and alcohol.
And what would be a good cut from the grocer???
The meat itself is a large part of it. Generally with normal items you aim for a 25-35% cost of goods and hopefully make $10 a plate sold. With an $80 steak, you can put $40 of meat on the plate and still make $25 per plate, so a higher cost of goods is more acceptable. It would also be hard to sell at 25% because it would be a $160 plate, or a much smaller steak.
A $100 steak is probably 40-50% cogs and 15-20% labor, maybe 10% depreciation on equipment and overall about 20% profit or less
Standard “restaurant math” is that your menu price is broken down into 3 roughly equal parts:
– food cost
– labor cost
– everything else (rent, equipment, taxes, maintenance, utilities, advertising, technology, and so on).
Whatever is left after all that (if anything) is profit for the owner, but that’s usually only in the low single-digit percentages, and only for a well-established restaurant. On a $50 steak, if the owner gets to keep $1 at the end of the night, they’ve had a good night.
In a steakhouse that focuses primarily on steak, your labor cost for preparing a steak is a fair bit lower, and offsets the higher cost of quality ingredients , and so the food cost at a steakhouse is closer to 40-50% of the menu price. (And in fast food, labor is closer to 20-25%).
If the restaurant is not dedicated to steak/chops and doesn’t buy the meat pre-cut, something called “carcass management” comes into play, because they typically order their beef as entire sides of the animal (which is considerably less expensive). But there is a finite number of each cut on that hunk of cow – you’ll only have a few dozen ribeyes, or a rib roast of a particular size, and so on. This is how you end up with daily specials on burgers or unusual cuts, or soups. They need to maximize the use of that side of beef – if they’ve covered the cost of that side on steak sales, then anything else they can sell from it is valuable.
But in modern beef production, breaking down the carcass into individual cuts and grinds is now mostly done at the processing plants and vacuum packed so a restaurant can order a case of nothing but ribeyes if that’s what sells well.
another factor to consider is that a really good steakhouse will sous vide your steak. there’s a lot of prep work needed to get that steak tasting great.
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