Quality meat? Quality cooking? Staff and other overhead costs? Etc.
In: Economics
From the table in Item 6 here, [2018 10-K – Del Frisco’s Restaurant Group, Inc. – BamSEC](https://www.bamsec.com/filing/141530119000028?cik=1415301), you can see the financial statements of Del Frisco’s Restaurant Group through 2018 (they went private after that).
The two biggest costs are: Cost of goods sold (i.e. steaks, ~25% of revenue) and Restaurant operating expenses (i.e., rent and salaries, 40-50% of revenue) followed by General and Adminstrative costs (i.e. executives and managers, <10% of revenue) and Depreciation and Amortization (usually the reduction in value of their buildouts, <10% of revenue).
There are a few other items in there, but across the 5 years shown, they showed very little operating profit.
Admittedly, there are several confounding variables in there (the business was investing heavily in a new concept so costs weren’t optimized), but you can expect that the actual cost structure for the business is around 70-90% of the amount you’re paying.
Separately, they make a lot on alcohol, so the steaks may even be less profitable than that from a fully-loaded cost perspective.
I’m in central Indiana. We have a gluttony of *good* steakhouses. (They stay open for us plebes, but they exist for all the sporting events and associated high net worth folks).
St. Elmo’s dry ages their own meat for 45 days. I have no problem dropping a hundred bucks for an aged bone-in ribeye (cooked for a nanosecond over a lit matchstick.) Can’t get that at home.
Pro tip: Ask for a table in the basement. That’s where the back door VIP guests dine. Chatted with Payton Manning briefly just before Covid.
Now, a *better* question would be, “What is my $50 bottle of Ecco Domoni Pinot Grigio get me that my $7 bottle of Ecco Domoni Pinot Grigio at home doesn’t provide?!”
Aging for a steak. A 35 day dry aged steak has wonderful flavor, but you’re probably throwing away 1 steak worth of rotten meat per steak of edible meat. So double the price of beef prior to even cooking it. Longer aging probably ruins significantly more meat.
Do 30+ day dry aged steaks, special temp, hum controlled space and time for dry aging, 15-20% water shrinkage from process, trimming pellicle etc.
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