how do restaurants calculate the prices of each dish? Do they accurately do it or just a rough estimate?
In: Economics
A lot of people believe restaurants are this low margin business, and it’s just not true.
The chains make profit as the grow, process, sell product and franchise, it’s a lot of layers of profit hidden by separate companies.
Small restaurants are notorious for being mismanaged. So many people wing it, some get lucky and some fail. The reality is each item, side, combo, etc should be on a spreadsheet. Ingredient, labour, overhead costs calculated, then you use a formula to give you a suggested sell price. The formula should vary by food category.
Once you have the big picture, and can also see sales history you can hand tweak pricing, change margins or create a loss leader if required. This way you run the business and it doesn’t run you.
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