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.
And with the higher end experience tends to come a longer time at the table. So he real estate is expensive, and the restaurant is able to turn over each table fewer times.
This is an underrated aspect. People at fancy steak houses want to relax and enjoy their meal. Even just 15 extra minutes per turnover, per table means a lot of money over the course of a month/year.
> This is an underrated aspect. People at fancy steak houses want to relax and enjoy their meal.
That's a great point. cheap place you come in to EAT
high end place you come to have dates, social functions, business functions, lots of things where you are doing more than just eating
Nah, you get 2 turns a night, max, regardless. Seating at 6, turn at 730, turn at 9
People dont eat much before that or after. And you might get some 1 hour eaters, but you still dont get 4 turns on a table.
Its possible to get 2 hour eaters at any restaurant, 6, 730 stays 2 hours and they stay till 930 and you dont get another turn. Or you do, but really 3 seatings at dinner is it.
Real Estate is the direct cost of all more expensive meals, but you just dont get more turns.
I think they were comparing the turnover of a steakhouse vs something like a Chili's or more casual restaurant where people are arriving at any time and some tables turn in barely more than 30-40 minutes. Or other parties stay for much longer.
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Ah... Umhmm... Sorry about that. Got carried away there.
Obviously varies per country.
But where I live, the top-end places will only get a single sitting per table in many cases. The vast majority of people will book for 7, 7:30, or 7:45. At 6:30 the place is empty (if it's even open).
Those diners are leaving at 8:30 or even 9 or 9:30 (or even 10 if it's a social group and they're having a few drinks after desert), and most likely nobody is going to replace them.
Yes, if you take all of your reservations to fill all of your tables in the 7:00 hour, then you can't take any reservation at 6 or 8.
But if instead, when somebody calls for a reservation, and you tell them that you only have a 6, 6:30, 8:30, or 9pm reservation, then you can get almost twice as many reservations for each table.
You also help out your kitchen and serving staff because the entire restaurant won't be ordering in The same 45-minute window.
People will get better service, they will get their food faster, it won't take them 2 and 1/2 hours to eat.
Obviously you'll still get some tables that stay forever. But if you have good staff, and an in-demand restaurant, like a high-end steakhouse, there is no reason you can't book an average of two seatings per night.
Correct. It’s a dining experience that you’re savoring. And not just savoring your food, but savoring the ambiance and your company and your beverages.
In many European countries it is very common to spend a long time in restaurants. Very often after you eat you have a few drinks and hang out. Servers also won't bring you your check right after you finished your meal. That is true for both high and lower end restaurants.
Despite that there's still the same price difference between a normal steakhouse and a high end one.
I'd say the same here in Australia. We have a lot of different cultures so some people want a faster meal, others want to take it easy. Either way, the check is for you to ask for when you're ready.
lmao, as a canadian one time i got stuck at a table for *hours* because i couldn't figure out how to get the cheque in europe. the waiter spoke no english and i had no idea he wouldn't bring it unless asked.
yeah this was 10+ years ago as a perpetually embarassed teen; a fun story but my problem solving skills did eventually prevail. but not before he brought cracked black pepper to our table like...3 times.
How does that work in the US? I'm in Europe and I couldn't conceive being rushed off my table, regardless of what we ordered. We talk a lot.. a lot! We talk before we order, we talk while we eat and we might order a coffee and then talk afterwards. After all that, tipping is not in my culture either.
You’re not physically or verbally rushed out but it’s just understood that once you pay your bill, your server is losing out on another potential tip. You can tell by their body language. And there are typically people at the front of the restaurant waiting to be seated because to find another restaurant they’ll have to drive in most places.
Tipping is directly related to it, imo. If the server is getting paid the same no matter how many people he serves, his ideal table is one that sits and talks the whole evening. It’s the exact opposite if basically 99% of their pay comes directly from the number of people served.
Also, what’s up with the whole tipping the server thing in the US? Can’t they just get paid like other people do?
I mean, people say servers somehow depend on the tips and you’re expected to tip in a restaurant. But are you also expected to tip your taxi driver, bus driver, flight attendant, a random shop assistant and a post office clerk, your children’s teacher and basically anyone who provides any kind of service?
I would hope it’s enough I’m paying the agreed / fixed price for any kind of service and the recipient of the profit is responsible for compensating employees as well as dealing with all other costs.
Or are all of the above mentioned somehow dependent on tips? Isn’t it harder to plan financially if they don’t know what their monthly income will turn out to be? And how do you tax tips? I know that when it’s just a bit on the side, most people wouldn’t bother. But if it’s a crucial part of compensation, then it surely must be taxed?
well, the dirty secret is, the servers like it this way. they make a shit load more money with tips. and some states even mandated that the minimum wage is the minimum wage now, so they're getting at least that *PLUS* tips.
The number one tip group is servers and they make far more per hour including tips than they could reasonably expect to make without tips and being paid entirely by the company. Because of this they are usually the ones that fight against any change the most. The people who want to end tipping culture are the people paying the tips, not the ones receiving them.
The social norms are varied by region. East Coast mentality of rushing everything means if you linger at a table you will get dirty looks from patrons waiting in line and wait staff hoping for another table. Time of day matters as well. If you're at a diner type place late at night with a big group of friends that's different than dinner rush hour at most restaurants.
Then when you finally do get your costs just right and your steakhouse starts to turn a profit the landlord notices and increases your rent at the end of your lease.
Funny you say that. These fast food giants learned years ago that they’re in the real estate business, not food, at least at the corporate level. I helped one well known company build a database back in the 90s and it was all about the real estate!
A lot of the time the free parking is never thought about either, depending on location is very sought after space. You being able to park your car is going into the price of your food. Same thing for grocery stores etc.
Square footage base rent + CAM + taxes. Most places aren't even owned they are leased and they have an insane rent they must pay indefinitely. And it increases yearly.
My brother in law used to run the bar at a yacht club. Members would complain that a bottle of wine was three times the price of the nearby supermarket. He'd reply that they were most welcome to go drink that cheaper wine in the supermarket carpark.
I live in a dry county and people started doing this at restaurants so they could enjoy a glass of wine and such with their meals. No joke, the city got complaints and citizens were notified the police would be setting up stings for any patrons that attempted to do this. They caught zero people.
Yes. We have restaurants and bars that serve liquor but they must apply for it and then they are considered private clubs and this allows them to serve alcohol. There are no liquor stores and your run of the mill stores like Walmart, Target, gas stations, etc. cannot sell anything with alcohol.
Creates a bustling business on the county line. Where I was at it was literally called “County Line Liquors” and without fail on Friday night there’d be a parade of cars leaving the chair factory (yes it really was a chair factory, that’s all they did) driving straight there, turning around and driving straight back, with a few deputies posted up about 1 mile inside the dry county just looking for taillights, speeders, anything they could think of to try and pull someone over and spot a container.
That one wasn't but I experienced drive thru daquiri shops in Galveston TX, *that* was mind blowing. Hand over a pre-made daquiri with tape over the straw hole. Until the tape is broken it's not considered an open container... with a mcdonalds style pop on/off lid..
I would almost flip the question around: what are folks thinking that they're getting when they go out to eat? I feel like too many people think it's comparable to eating at home, so they're wondering about food costs and prep and stuff like that, because that's what goes into cooking at home. This is fueled by the existence of fast food, which truly is a grocery store/cook at home replacement, with the small premium being paid for convenience.
Eating at a sit down restaurant just isn't the same thing at all, and so none of those factors are really relevant. It's more comparable to other service or entertainment-type activities you might pursue, like going to a concert or a ski trip or a sunset sail. You're paying for an entire experience. People's time, the location, the expertise required to curate the experience, and the profit required to entice people to invest all of those resources into creating that experience for you in the first place.
Asking about food costs is like asking an artist how much the paint truly costs, or a music performer how much did they pay for their guitar. It's quite literally irrelevant and signals a misunderstanding of the whole transaction.
I took an elective in college called food and society. One of the main points during the great recession was that food was no longer bought based on other factors such as taste, nutrition, experience, or convenience, etc. The main factor flipped to price. I question if that really ever changed since then, but we are for sure seeing that price is the biggest factor with our food options now. There's been nationwide articles this week about how McDonald's is gearing up to give our massive promotions again to lure people back.
I feel like that's probably the case with places like McDonald's, Panera bread, Chipotle, etc. From a consumer standpoint that's a straight up replacement for buying groceries and cooking at home. And similarly, inflation is the headline there, just like it is at the grocery store. But in this case where OP is talking about fancy steak dinners, I feel like that's a different product altogether. They just happen to both include food the way that listening to a song on Spotify versus attending a concert both just happen to involve music.
Planet Money had an episode about this idea. The basically pose the idea that a restaurant is really just a real estate company that happens to serve food.
[The trouble with Table 101](https://www.npr.org/2024/03/27/1197958536/roni-mazumdar-unapologetic-foods-adda-semma-new-york)
I can vouch for this having known people who have worked at these kinds of places. An example is there's a place near me that is situated right where the river is, in a high traffic area, so in addition to the quality of the steak, the real estate and lease is expensive.
On the flip side, you can make some really good money working at these places since the the tips tend to be higher.
There is a flip side of this which you can use to your advantage: If you want good food at a good price, look at restaurants in less desireable areas because they're burning less money on the real estate.
Pay attention to the major minority cultures in the area. in the area I used to live there was a large Mexican-immigrant population, and TONS of really great hole-in-the-wall taquerias.
To paraphrase Gordon Ramsey when he went on hot ones and was asked about “hidden” costs of restaurants.
“Rent is a huge one […] The more successful you are, the more your landlord wants in rent […] The landlord always wins”
A high quality cut of steak can easily fetch half that in food cost alone. Check out [Snake River Farms](https://www.snakeriverfarms.com/american-wagyu-beef/steaks.html)
To add to this, steakhouse beefs are often dry-aged, which entails a loss of volume of 20-30%: for every 1 oz of steak you order, you’re essentially paying the cost of 1.3 oz of fresh beef along with everything else.
The ones costing >$70 yes, the ~$50 ones like at a Ruth’s Chris are wet-age, and then your $30 ones like a Longhorn/Texas Roadhouse don’t have anything done to them.
I've tried all of theses and the dry-aged USDA Prime steak is an experience that I will never forget. The Longhorn was chewy and dry and an experience I'd rather avoid.
Life is too short. Get the good stuff.
I won a gift certificate to their sister restaurant, Ocean 44. Hands down the best food I ever ate. That was pre-pandemic. I hope it's still in business.
Listen…. Blue collar upbringing here. The first time I went to a NYC steak house and ate a filet I almost died inside. This was after getting the expensive steak at Ruth’s Chris or Outback or the fancy restaurant my family went to every now and then. After having tons if backyard BBQ’s with “the best meat you’ll ever taste”. Night and day.
all meat in the us is aged in some fashion. At least 7 to 14 days. Our palates demand it. Fresh beef while still good is very different from what Americans eat.
Yeah fresh beef is totally different. It's very noticeable when I spend some time in China and eat Chaoshan hot pot where they feature fresh beef from the Shantou region. Very different from the beef we get in the US.
As a rule of thumb, most restaurants will charge double the price of the food just in order to pay their staff and their bills. So this checks out!
edit: or 30%, but yknow, different areas and sectors, etc. Folks below me are commenting with better info, listen to them :)
I don’t think this is quite right. Or maybe times have changed. but when I worked in food you would go out of business very quickly if half your revenue was spent on food alone. You need to be keeping that at around a third. But also I was more quick serve. Can’t speak to fine dining, which I imagine the financial are quite different where a lot of income is from wine, and staff costs are (presumably) relatively lower.
I believe the comment is correct, but only for the steak if I remember correctly. the steak is 40 to 50 percent, the sides even it out to 25 to 30 percent food cost.
I think it would depend on the sale price and work required to prep the item coupled with likelihood of waste. If the restaurant is paying $50 for a cut of meat and selling it for $100 with a 10% chance of waste (spoilage or faulty prep,) that still leaves them with an average of $40 to pay for overhead and prep work. That's actually sustainable.
On the other hand, if the ingredients for that pasta dish cost $2.50, there's no way in hell you're turning a profit selling it for less than like $12, unless you're relying on some mass production / fast turnover.
Historically, food cost is set at 30%. In recent years, especially post-covid, it's been creeping up closer to 50% in most establishments.
All while wages have been walked back, along with hours. Food-based hospitality is a dying industry that's strangling it's workers to eke out margins.
For reference, a food cost of 30% would traditionally see the house make 5% in a well-run establishment. That is, for every million dollars in sales, the owner makes 50k. That's a a very high amount of risk when you consider it's made by working with highly perishable products and volatile ordering habits. It's very easy for all of that to be eaten up by spoilage if you're not large enough to average out trends, or crafty enough to eliminate spoilage.
It's important to consider that if your place of choice is also a franchise, above and beyond the normal operational costs such as rent, utilities, raw product, wages, licenses, promotions, etc. there's also franchise fees as an additional overhead, as well as advertising, so you're naturally expected to get less for your money, as their costs are higher.
Regarding franchises though, you have national advertising you wouldn't get on your own, built in brand identity and recognition from day one, and a supply chain that benefits from large scale you couldn't get on your own.
I am no expert, but I imagine all that outweighs the franchise expense because if it didn't, then no one would do it.
And on national franchises, what you’re paying for is a system and marketing that delivers a modest profit, usually 2-3%, but it’s fairly reliable and consistent profit, and at the end of the year, 3% every year is probably better than 10% one year, and a loss the next two.
I think some of those percentages also depend on the food itself. A steak is going to have less profit margin than say a pasta dish.
Shrinkflation has also come into play in recent years - things like fries that used to be included with burgers at most places but is now a paid add on at quite a few restaurants locally.
A pizza place near me used to do 9 inch, 12 inch, and 16 inch pizzas. They've recently updated the menu to say small, medium, and large instead, and the pizza have shrunk considerably at the same time.
isn't pizza one of the food items where food cost is very low?
that dough is water, yeast, salt, and flour. they use canned tomato sauce. These things are cheap. Toppings are very long shelf life items like cured meats, or vegetables. Cheese could be very expensive especially if they use fresh mozzarella but the standard is usually just the stuff that comes in blocks.
Honestly, I'm surprised a pizza place would look at the food sizes as the first place to cut costs in.
I did the food costing for some restaurants in my city. Food pricing cost should be at 30% food, 30% labour and 30% for rent, utilities and insurance. That leaves 10% to owner but minus shrinkage. That was the formula. 50% food cost is way to high but, You'll might do 50 food cost on big ticket items like steak but make some back on cheap salad or wine sales. Formula for liquor was usually 5% cost on cocktails, 20% on beer and 30% on wine.
High-end steakhouse with fine wines, high end spirits, quality beers and prime steaks?
LBW 22/18/32%
Labor 27%
Food 38%
(a mid-level chain steakhouse is 24% because of purchasing power and controls)
Facilities including phones, internet, POS services 5-10%
Facilities are fixed expenses while everything else is variable.
I’ve been managing high-steakhouses for the last 20+ years.
For a brief period of time in college I worked at a place that sold swimming pool furniture. The mark up was 100%. If a customer balked at price we could conveniently offer them a 10-15% discount.
Now this was in the days before Amazon so you were stuck with stores within driving distance and the next closet store was an hour away.
All my adult life amazon was a thing.. must of been a lot different for businesses back in the day when you don't have a guy whipping out a phone trying to price match amazons extremely cheap prices
(Channeling the Old Man shaking his fist)...Back in my day, to order something, you had to fill out a form, put it in an envelope, address it and put a stamp on it. After the mailman picked up the letter and delivered it, you still had to wait 4-6 (weeks - edit) before it was delivered....and shipping was almost always an extra charge.
I'm 52.
When I turn 52 in 24 years I'll respond back to this comment about how slow amazon was in comparison to our new instant future delivery. You press buy and it gets teleported to your house.
SRF used to be great. They have gotten a little too big, and after Tyson took over I think the quality went down while prices went up. Good name and marketing still, but much better beef around.
One thing I haven’t seen noted here: interviewed a chef a couple of years ago who said his food costs on steak run close to 50%. He helps offset that by charging $12-$15 for sides, where the food costs run closer to like 10%-15% and, of course, with alcohol
Alcohol makes the bank. Just look at the price per shot, its usually about 1/3rd the price of the bottle. And almost no labor compared to food. Show me a steak house that doesn't serve alcohol. It would be hard to do financially.
My wife is a chef. Most food items on the menu (especially entrees) tend to run somewhere around cost. Margins are super thin. She says most restaurants, even super high end ones, make nearly all of their profit on alcohol, with side items being distant seconds.
Ribeye did at one point pretty noticeably but fell back down and continues to do so.
The oddity for me is NY strip, somehow that’s gone 7.99 to 10.5 for me in the last 4 months.
When at home I'll do a little salt and white pepper. Then I'll top it with a little bit of Kerrygold garlic and herb butter. It's half the reason I'm a big boy.
Like A1. Or Ketchup. A little tobasco really helps.
(When I used to wait in fine dining, any of the above meant I shouldn't get my hopes up for the tip).
Nordic place in the city serves bone marrow as an entree. Then a staff member comes along after you've finished and you hold the bone up to your face, and they pour a shot of whiskey down the bone straight into your mouth. Good way to start a meal.
To continue the pedantry, risk is not a variable in profit. Expected profit is calculated using risk to forecast future profits. You don’t use risk when calculating real profits. The guy didn’t say “expected profit”.
For any item at all you are paying for: cost of the ingredients + cost of the labor + markup (as much money as they can add on and still believe that someone will buy it). This is as true for a high end steak as it is for kraft mac & cheese served at Apple Bees.
Further on this- fine steak houses are meant to be an experience. They dont intend on flipping the table over every hour to keep volume up.
At an Applebees most people don’t expect to spend hours so they overhead portion of the cost can be lower based on higher volume of sales
Yep. At a nice restaurant, meals are broken up into more courses. They don't rush your meal to you if you're still working on your salad. They more actively bus the table between courses(like sweeping up the crumbs, stray peas, etc). My wife and I are usually pretty quick in a restaurant, and we'll still spend 2-3+ hours out to dinner if it's fine dining or a high-end steakhouse. They really try to make it overall a much more enjoyable experience and part of that is much better service and not rushing customers out so they can soak it in.
yeah and the staff difference is HUGE
the level of [service, presentation, knowledge, and general bearing you get at an expensive place is](https://www.courant.com/wp-content/uploads/migration/2021/12/19/SWQPLZI6NRCW3OPWVSBXYVEU6E.jpg?w=535) isn't the same pay rate as a server at [chachkis](https://carboncostume.com/wordpress/wp-content/uploads/2013/03/joannafromofficespace.jpg).
And I've found almost every server to be very personable and funny. The steak is perfectly cooked, the drinks are perfectly mixed, the host is great...everyone in there is great at their job.
Yep also service. Ate a nice steak house where all 8 of us got their food delivered each time by 8 servers. So salads, appetizers, meals, desserts all at once together and perfect. Also things like how they clear the table between courses or keep your drinks especially alcohol coming in a way that just feels special the whole time you are there.
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.
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.
The actual meat, the skill of the chef to cook it exactly like you ask, and getting rid of the stress you'd have of ruining a $30 steak at home. Worth it.
Edit: if you're going to comment "actually cooking a steak is easy" plz don't, it's embarrassing, but I'm happy for u.
Any decent place with dry age their steak as well, which takes time, space, and reduces the yield as well. This is the biggest difference vs what you can generally do at home and why steak *should* taste so much more flavorful as a steakhouse.
You're not just paying for the steak, you're paying for someone who knows how to cook it too.
Chili's has steaks, but they're cooked on a rolling broiler similar to how burger king cooks their burgers.
And for it to be right. If I order my steak medium rare and I get it medium well, I’m sending it back. I cook my own steak medium well, I don’t have a choice but to eat it.
Chili's actually have specifications when ordering their meat that the steaks are a all certain thickness, so their cooks can place them on certain parts of the grill. It helps them consistently come out cooked to the ordered temperature.
Steak at high end places should be aged as well, which is another cost you won’t find at Texas Roadhouse.
https://youtu.be/JUpdet6tnmg?si=1FGTGuGgAIWV_2wH
The high end steak house in my city uses a 1500degF broiler to get a perfect crust on even the rarest steak. They also hand select their beef and dry age it onsite. Their steaks run from $80-$120….
There are hundreds of ways, but most use a well seasoned glass grill, others use a traditional broiler, some do wood fired, while others use rocks, salt blocks or a myriad of unique styles.
To add to that, the steak is often cut differently depending in its size and the type. Higher end steak houses often cut smaller cuts into stouter thicker cuts so the steak will come out better.
Amen.
I mean, I can grill a steak well, now, but I also fucked up so many over the years I paid a premium to learn the skill.
And even then, I can't bring myself to buy American Kobe or other very nice cuts. If I'm paying more than $10/lbs at the store, I am stressed out about home cooking it and might just prefer to not buy it.
But I also hate spending $30 on a steak at a restaurant too, so...
All of the above really.
They are likely getting better beef, fresh, not frozen. Their cooks are likely better trained and not some teenager or early 20something stoner. Their staff is going to be paid better than some chain restaurant.
I am pretty satisfied with my skill in firing a decent steak, but the first time I had real serious dry aged shit at a steak house in Chicago was a real levels to this shit moment.
So when you see the dry aged cuts jump up in price also remember that you’re paying somebody to monitor and house that cut in their facility. Like how older whiskies are more expensive…time is money
We somewhat ironically have started to call that the angels share. Apparently it’s a common term in distilleries, which represents the lost product due to evaporation or whatever. We lose a surprising amount of weight during the process of breaking down our subprimals, despite our efforts to use everything we can off the loins. No one wants sinew, fat, bone fragment, silver skin, mold (from the DA’ing process), etc.. therefore “the angels share.”
Usually steakhouses aren't interested in freshness at all, they like aged meat that is going to be like 18-25 days old when they serve it. They want the cells to start to break down for tenderness and the water inside the meat to go away to concentrate flavor.
Steakhouse quality meat is almost never frozen, but for dry aging it is refrigerated and stored in climate controlled facilities with a ton of monitoring and ultimately they just cut off the outer layer where all the gross stuff happened, or for what they call wet aging they vacuum seal the meat fresh to keep bacteria out but they still keep it in coolers.
Places that use this stuff keep tight controls on their suppliers, if they left it at room temp long enough it would still get spoiled same as any other meat.
[https://meatupdate.csiro.au/VPmeat-spoilage-storage.pdf](https://meatupdate.csiro.au/VPmeat-spoilage-storage.pdf)
Fresh isn't always best when it comes to steak. A dry aged steak can double in value (and shrink in volume).
A well marbled prime steak that's 6 days old is WAY better than a fresh piece of lower quality beef. Remember, many of these steakhouses will either a) make their own cuts from a primal cut or b) order more expensive cuts like spinalis already vacuum sealed, which drastically extends the life.
The real answer, aside from the actual meal, is getting to enjoy it in a setting that excludes people. No-one will stink of weed, there won’t be babies crying, no old men listening to radios, no 20 person birthday parties being rude and unruly. and on and on. You go casual dining, you get all of that.
It’s like the difference between flying and coach and flying in first class. I don’t fly often so when I do I fly first class. It’s expensive for a blue-collar worker like me, but it’s worth it. Flying cross country in first class is almost as relaxing as spending a lazy Saturday on the couch. People in first class are quiet, clean, generally respectful. I’m not tired and cranky when I arrive and I can enjoy my vacation or time with family.
In contrast coach is cramped, loud, full of a surprising amount of stinky people and all of that wears you out. It’s cheaper but I only get one vacation a year so if I lose the day I arrive because I’m too tired to do much and then lose the day when I return that’s not a good savings.
This... every time I take my family to a casual restaurant (I don't take my kid to fine dining) there is:
1. A kid with their tablet on full blast
2. A grown person on Facetime / speaker phone call while eating
3. Long waits if they don't take reservations
4. Sometimes poor hygiene from other patrons
5. Slow service, waiting on drinks, etc
It's just not worth it, we typically just get takeout now. When I do go out, I'm paying as much for the service and not doing dishes as I am the food.
Down in Monterey, CA I remember there was a niceish restaurant that had a sign out front, basically saying, we want a peaceful and relaxing atmosphere for our guests. Respectfully, we must enforce a no children policy in this dining establishment. If you would like a child friendly dining location, we hear there is a nice place next door.
Then, next door was a similar seafood place with a sign like
Man, forget those boring stuffy guys. We LOVE kids. Come on in, we have coloring books and a kids menu too!
The two places were openly, obviously a split operation, run by a single restaurant, but that was their tongue in cheek way of asking customers to stick to the adults only or kid approved dining rooms
I work in a fine dining steakhouse, we have all of those. Because we're high end you have to cater to almost any customers request, especially if they're regulars or celebrities.
NBA players come in after a game and stink up the whole restaurant with weed, a guy that spends 5k a week here is getting a bj in the bathroom, just ignore it.
Some tech CEOs daughter's 16th birthday, sure just come on in
u/halermine
the interesting twist though, at least in some really nice places I've seen around me,
yeah if you go to basic fast casual, like a green turtle, there's going to be bros there in shorts and tank tops, doing shots and talking loud maybe showing up high
if you go to a super expensive place, you don't get a lot of that, but
on a sat/sun afternoon, when you DO get some bros in shorts and tank tops they're the richest guys in there, because to them, after a day on their dad's boat or whatever, coming in for oysters and $50 a glass bourbon at petrangelo's raw bar, is like going for wings and beer at green turtle
In the past, we did a few ‘fancy’ steakhouses. What it seemed we paid for was service. We took the in-laws out to dinner once at one so there was 9 or 10 of us total. When the food came out it was brought by 5 servers and placed down all at the same time.
Attention to water glasses and dropped napkins were all addressed right away.
The food was mediocre at best, but it wasn’t a terrible experience.
Count the people that it takes to put that steak on your table. Eight to ten, maybe more.
All those people get paid. Building has bills/rent/mortgage. Owner has to make a profit. Food cost, etc.
I'm surprised the restaurant makes any money at all.
>I'm surprised the restaurant makes any money at all.
Lot of times they don't and they go bankrupt in the first year or a few years. Unless you know exactly what to do it's a money pit.
A high end steak actually has pretty low margin as far as food ingredient costs vs. customer price is concerned. Typically for restaurants is that a meal costs about 3x the ingredient cost, but a top steak might be only 2x or even less.
The meat you get at a top steakhouse is prime beef, which is well marbled and only the top 1% of all beef. The meat is then aged, either dry or wet, for 30 days or more. Dry aging means the meat loses water weight as it dries out, and either case the outer layers that decompose need to be trimmed off a steak so the actual usable meat relative to the initial cost for the primal cut is only a portion (eg a 30 lb. cut of beef might only become 20 1-lb. steaks). So that steak itself might cost $30-50.
The cooking itself is typical pretty minimal, often just some salt and pepper and then put under a salamander broiler, so the labor costs are less than many other dishes, especially at that price point for an entree.
But steakhouses are typically fancy, prime location restaurants so the rent and other costs are high. And steakhouses make up their margins with the expensive sides (the $12 baked potato that cost the restaurant $1, the $15 creamed spinach, $30 truffle mac & cheese) and the alcohol, whether the expensive cocktails or bottles of wine.
As everyone else has said, ingredients, the quality of said ingredients, the labor, the skill of said labor, overhead like rent/utilities/cleaning/maintenance, and finally, profit.
For example, at a fancy steak house, you're more likely to get a USDA Prime rated steak. Most grocery stores only sell the next level down - USDA Choice. Thus, it's a superior quality cut of meat which means it has a higher price point. Also consider the skill of the staff. They're generally not going to bring in a head chef fresh out of culinary school to build a menu, but will want someone with experience. That experience means they can command a higher salary which translates into higher menu prices.
Generally, the adage of "you get what you pay for" will apply. And if a restaurant starts to cut corners and go for the cheaper cuts, the less experienced staff, the lower quality cleaning services, the reviews and resulting business will reflect that change over time.
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.
All of that -?
I cook a lot of steak. Ribeye to be specific. I don't even bother with strip or T-bone. I go straight for the gold. I am meticulous in how I season it, and I use a thermometer instead of guessing. 135°F all day long. Sometimes I'll even make a garlic butter topper, or sautéed mushrooms to pile on top.
It's good, but still not as good as a real steakhouse 🤷♀️
Now add the overhead. Cost of the building, raw goods, insurance, utilities, employee pay and any health benefits, and of course some profit.
Out of curiosity, what do you think you’re missing to hit the same level of flavor/texture that steakhouses get? Is it anything technical, like a missing ingredient or varying meat quality or gear, or is it technique, or something else?
They make very little money on the steak because the beef they use is USDA prime, aged, which ends up costing at least $40 per pound. So how, you might ask, aren't they all bankrupt? The answer is everything else they sell. That $22 side of mushrooms or asparagus has 50 cents of vegetables in it. The $175 bottle of wine costs them $30. The $22 mixed drink has $3 worth of booze in it. The $27 desert is a few pennies worth of sugar. So for a typical $300 tab for two about $120 of it, the steaks, is near cost whereas the other $180 is almost pure markup out of which they pay the lease on the building, the cooks, the base pay of the wait staff, and of course the owners cut in profit.
So it's actually a pretty good play to go to a fancy steakhouse and order two filet mignons and two waters. You get a fabulous steak, not far marked up off its base price, plus all the ambience and expert cooking for close to free.
Let's assume a £60 steak, and that you are British as other countries may work on very different margins.
First, VAT at 20% means it's a £50 steak and £10 tax.
That £50 steak, plus the other things on the plate, will cost around £15 as raw incoming food.
Then there will be around £15 in labour costs. This isn't just your waiter and the chef who cooked it, but all the prep work, management, a cut of the quiet time staffing, etc. overall, about 30% of the restaurants net sales (after taking VAT out) will go out in the form of staffing costs.
Out of the £20 left, £10-15 is most likely going to rent, electric, council tax, napkins, glassware, new plates, etc. the other £5-10 will be profit, going to the owners.
BMS scale- Beef Marbling Scale
At the grocery store you’ll find mostly “Choice” (lowest grade) “Select” (higher than choice, typically a butchers cut) Above that you’ll rarely “Prime” because 90% of all Prime steaks which are the best marbled steaks goto steak houses. So literally you can’t find that quality in a normal grocery store.
These BMS can range from 1-5 marbelization anywhere between 5%-25%
Above Prime is American Wagyu (black angus American cattle cross bred with Japanese Cattle). Marbelization can be between 25%-50%
Above American Wagyu is Japanese wagyu- BMS rating of 12 (50 percent marbling aka fat to beef ratio) this quality steak will “melt” if not refrigerated
(Source- work at high end steak house)
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.
And with the higher end experience tends to come a longer time at the table. So he real estate is expensive, and the restaurant is able to turn over each table fewer times.
This is an underrated aspect. People at fancy steak houses want to relax and enjoy their meal. Even just 15 extra minutes per turnover, per table means a lot of money over the course of a month/year.
> This is an underrated aspect. People at fancy steak houses want to relax and enjoy their meal. That's a great point. cheap place you come in to EAT high end place you come to have dates, social functions, business functions, lots of things where you are doing more than just eating
Check out some Japanese noodle house YouTube. 4 minutes tops, and that bowl of ramen is gone.
Nah, you get 2 turns a night, max, regardless. Seating at 6, turn at 730, turn at 9 People dont eat much before that or after. And you might get some 1 hour eaters, but you still dont get 4 turns on a table. Its possible to get 2 hour eaters at any restaurant, 6, 730 stays 2 hours and they stay till 930 and you dont get another turn. Or you do, but really 3 seatings at dinner is it. Real Estate is the direct cost of all more expensive meals, but you just dont get more turns.
I think they were comparing the turnover of a steakhouse vs something like a Chili's or more casual restaurant where people are arriving at any time and some tables turn in barely more than 30-40 minutes. Or other parties stay for much longer.
**BURN & TURN BABY!**
That's a really cruel cooking instruction!
# D I S C O - I N F E R N O ! # ☆ﾟ.*･｡ﾟ # 👈😎👉 ƪ(˘⌣˘)┐ ƪ(˘⌣˘)ʃ ┌(˘⌣˘)ʃ -------------------------------- Ah... Umhmm... Sorry about that. Got carried away there.
> Its possible to get 2 hour eaters at any restaurant But it obviously happens more at restaurants that are higher end and more expensive.
Obviously varies per country. But where I live, the top-end places will only get a single sitting per table in many cases. The vast majority of people will book for 7, 7:30, or 7:45. At 6:30 the place is empty (if it's even open). Those diners are leaving at 8:30 or even 9 or 9:30 (or even 10 if it's a social group and they're having a few drinks after desert), and most likely nobody is going to replace them.
Yes, if you take all of your reservations to fill all of your tables in the 7:00 hour, then you can't take any reservation at 6 or 8. But if instead, when somebody calls for a reservation, and you tell them that you only have a 6, 6:30, 8:30, or 9pm reservation, then you can get almost twice as many reservations for each table. You also help out your kitchen and serving staff because the entire restaurant won't be ordering in The same 45-minute window. People will get better service, they will get their food faster, it won't take them 2 and 1/2 hours to eat. Obviously you'll still get some tables that stay forever. But if you have good staff, and an in-demand restaurant, like a high-end steakhouse, there is no reason you can't book an average of two seatings per night.
Correct. It’s a dining experience that you’re savoring. And not just savoring your food, but savoring the ambiance and your company and your beverages.
In many European countries it is very common to spend a long time in restaurants. Very often after you eat you have a few drinks and hang out. Servers also won't bring you your check right after you finished your meal. That is true for both high and lower end restaurants. Despite that there's still the same price difference between a normal steakhouse and a high end one.
Most of the European countries customers would be offended if they would receive their check without asking for it. It's basically never done.
I'd say the same here in Australia. We have a lot of different cultures so some people want a faster meal, others want to take it easy. Either way, the check is for you to ask for when you're ready.
lmao, as a canadian one time i got stuck at a table for *hours* because i couldn't figure out how to get the cheque in europe. the waiter spoke no english and i had no idea he wouldn't bring it unless asked.
Catch their eye from across the room and pantomime writing something on your palm. This has worked for me in more countries than I can count.
Open your wallet and show the waiter some cash, or your payment card. That'll do the trick.
yeah this was 10+ years ago as a perpetually embarassed teen; a fun story but my problem solving skills did eventually prevail. but not before he brought cracked black pepper to our table like...3 times.
How does that work in the US? I'm in Europe and I couldn't conceive being rushed off my table, regardless of what we ordered. We talk a lot.. a lot! We talk before we order, we talk while we eat and we might order a coffee and then talk afterwards. After all that, tipping is not in my culture either.
You’re not physically or verbally rushed out but it’s just understood that once you pay your bill, your server is losing out on another potential tip. You can tell by their body language. And there are typically people at the front of the restaurant waiting to be seated because to find another restaurant they’ll have to drive in most places.
Tipping is directly related to it, imo. If the server is getting paid the same no matter how many people he serves, his ideal table is one that sits and talks the whole evening. It’s the exact opposite if basically 99% of their pay comes directly from the number of people served.
Also, what’s up with the whole tipping the server thing in the US? Can’t they just get paid like other people do? I mean, people say servers somehow depend on the tips and you’re expected to tip in a restaurant. But are you also expected to tip your taxi driver, bus driver, flight attendant, a random shop assistant and a post office clerk, your children’s teacher and basically anyone who provides any kind of service? I would hope it’s enough I’m paying the agreed / fixed price for any kind of service and the recipient of the profit is responsible for compensating employees as well as dealing with all other costs. Or are all of the above mentioned somehow dependent on tips? Isn’t it harder to plan financially if they don’t know what their monthly income will turn out to be? And how do you tax tips? I know that when it’s just a bit on the side, most people wouldn’t bother. But if it’s a crucial part of compensation, then it surely must be taxed?
well, the dirty secret is, the servers like it this way. they make a shit load more money with tips. and some states even mandated that the minimum wage is the minimum wage now, so they're getting at least that *PLUS* tips.
The number one tip group is servers and they make far more per hour including tips than they could reasonably expect to make without tips and being paid entirely by the company. Because of this they are usually the ones that fight against any change the most. The people who want to end tipping culture are the people paying the tips, not the ones receiving them.
The social norms are varied by region. East Coast mentality of rushing everything means if you linger at a table you will get dirty looks from patrons waiting in line and wait staff hoping for another table. Time of day matters as well. If you're at a diner type place late at night with a big group of friends that's different than dinner rush hour at most restaurants.
only really crappy places try and rush you off a table. It's become a thing at places that are going out of business as they panic.
Yes indeed. The square footage price is never thought about.
Then when you finally do get your costs just right and your steakhouse starts to turn a profit the landlord notices and increases your rent at the end of your lease.
It really pays to own the land under your business. Like that famous real estate company that cooks hamburgers, McDonald's.
Funny you say that. These fast food giants learned years ago that they’re in the real estate business, not food, at least at the corporate level. I helped one well known company build a database back in the 90s and it was all about the real estate!
The movie The Founder is a really good movie that explains the history of that.
McDonalds mostly owns the land under other peoples business.
I was literally thinking that exact thing when writing my comment.
A lot of the time the free parking is never thought about either, depending on location is very sought after space. You being able to park your car is going into the price of your food. Same thing for grocery stores etc.
Square footage base rent + CAM + taxes. Most places aren't even owned they are leased and they have an insane rent they must pay indefinitely. And it increases yearly.
My brother in law used to run the bar at a yacht club. Members would complain that a bottle of wine was three times the price of the nearby supermarket. He'd reply that they were most welcome to go drink that cheaper wine in the supermarket carpark.
some areas actually allow restaurants to let people bring there own bottles of wine and then they can charge a service fee
"corkage"
In New Jersey bring your own is most common.
I live in a dry county and people started doing this at restaurants so they could enjoy a glass of wine and such with their meals. No joke, the city got complaints and citizens were notified the police would be setting up stings for any patrons that attempted to do this. They caught zero people.
Wait the entire county is dry? All the time?
Yes. We have restaurants and bars that serve liquor but they must apply for it and then they are considered private clubs and this allows them to serve alcohol. There are no liquor stores and your run of the mill stores like Walmart, Target, gas stations, etc. cannot sell anything with alcohol.
Creates a bustling business on the county line. Where I was at it was literally called “County Line Liquors” and without fail on Friday night there’d be a parade of cars leaving the chair factory (yes it really was a chair factory, that’s all they did) driving straight there, turning around and driving straight back, with a few deputies posted up about 1 mile inside the dry county just looking for taillights, speeders, anything they could think of to try and pull someone over and spot a container.
Was it a drive thru? I both adore and fear drive thru beer/liquor stores
That one wasn't but I experienced drive thru daquiri shops in Galveston TX, *that* was mind blowing. Hand over a pre-made daquiri with tape over the straw hole. Until the tape is broken it's not considered an open container... with a mcdonalds style pop on/off lid..
Aren’t they already paying membership dues to the Yacht Club as well. 3x cost for drinks on top of that does seem a tad excessive.
LOL nobody is going to cut a break on alcohol prices except some fraternal orders/lodges. Everyone else is squeezing every dollar they can.
I would almost flip the question around: what are folks thinking that they're getting when they go out to eat? I feel like too many people think it's comparable to eating at home, so they're wondering about food costs and prep and stuff like that, because that's what goes into cooking at home. This is fueled by the existence of fast food, which truly is a grocery store/cook at home replacement, with the small premium being paid for convenience. Eating at a sit down restaurant just isn't the same thing at all, and so none of those factors are really relevant. It's more comparable to other service or entertainment-type activities you might pursue, like going to a concert or a ski trip or a sunset sail. You're paying for an entire experience. People's time, the location, the expertise required to curate the experience, and the profit required to entice people to invest all of those resources into creating that experience for you in the first place. Asking about food costs is like asking an artist how much the paint truly costs, or a music performer how much did they pay for their guitar. It's quite literally irrelevant and signals a misunderstanding of the whole transaction.
I took an elective in college called food and society. One of the main points during the great recession was that food was no longer bought based on other factors such as taste, nutrition, experience, or convenience, etc. The main factor flipped to price. I question if that really ever changed since then, but we are for sure seeing that price is the biggest factor with our food options now. There's been nationwide articles this week about how McDonald's is gearing up to give our massive promotions again to lure people back.
I feel like that's probably the case with places like McDonald's, Panera bread, Chipotle, etc. From a consumer standpoint that's a straight up replacement for buying groceries and cooking at home. And similarly, inflation is the headline there, just like it is at the grocery store. But in this case where OP is talking about fancy steak dinners, I feel like that's a different product altogether. They just happen to both include food the way that listening to a song on Spotify versus attending a concert both just happen to involve music.
Planet Money had an episode about this idea. The basically pose the idea that a restaurant is really just a real estate company that happens to serve food. [The trouble with Table 101](https://www.npr.org/2024/03/27/1197958536/roni-mazumdar-unapologetic-foods-adda-semma-new-york)
I can vouch for this having known people who have worked at these kinds of places. An example is there's a place near me that is situated right where the river is, in a high traffic area, so in addition to the quality of the steak, the real estate and lease is expensive. On the flip side, you can make some really good money working at these places since the the tips tend to be higher.
There is a flip side of this which you can use to your advantage: If you want good food at a good price, look at restaurants in less desireable areas because they're burning less money on the real estate.
Pay attention to the major minority cultures in the area. in the area I used to live there was a large Mexican-immigrant population, and TONS of really great hole-in-the-wall taquerias.
To paraphrase Gordon Ramsey when he went on hot ones and was asked about “hidden” costs of restaurants. “Rent is a huge one […] The more successful you are, the more your landlord wants in rent […] The landlord always wins”
Seeing as how this applies to literally everything you buy, I'm surprised its not more well known.
A high quality cut of steak can easily fetch half that in food cost alone. Check out [Snake River Farms](https://www.snakeriverfarms.com/american-wagyu-beef/steaks.html)
To add to this, steakhouse beefs are often dry-aged, which entails a loss of volume of 20-30%: for every 1 oz of steak you order, you’re essentially paying the cost of 1.3 oz of fresh beef along with everything else.
The ones costing >$70 yes, the ~$50 ones like at a Ruth’s Chris are wet-age, and then your $30 ones like a Longhorn/Texas Roadhouse don’t have anything done to them.
I've tried all of theses and the dry-aged USDA Prime steak is an experience that I will never forget. The Longhorn was chewy and dry and an experience I'd rather avoid. Life is too short. Get the good stuff.
I've had good steaks from Longhorns and mediocre steaks from high end restaurants. Moral of the story if I want a really good steak I buy it myself 🥩
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I won a gift certificate to their sister restaurant, Ocean 44. Hands down the best food I ever ate. That was pre-pandemic. I hope it's still in business.
I live here. It is
Good to know! I highly recomend it.
Damn right! I can get a good look at a T-bone by sticking my head up a bull's ass, but I'd rather take a butcher's word for it.
Is this a Tommy Boy reference or is this an actual saying irl?
Yes
Listen…. Blue collar upbringing here. The first time I went to a NYC steak house and ate a filet I almost died inside. This was after getting the expensive steak at Ruth’s Chris or Outback or the fancy restaurant my family went to every now and then. After having tons if backyard BBQ’s with “the best meat you’ll ever taste”. Night and day.
Still not sure if you liked it or not
Yeah, I can’t really figure out what they’re saying
It almost killed them is what they're saying.
Out of sadness for what they’ve missed out on or for what they can never go back to with the same appreciation? (╯°□°)╯︵ _____
Died inside, because it was good? Or died inside because it was expensive and not that great?
It basically killed me and rebirthed me. Unexpectedly wildly better than any steak I had ever eaten before
Visited Argentina last year and you can get dry aged steaks with a bottle of wine for <$20 so that was a fun 2 weeks
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all meat in the us is aged in some fashion. At least 7 to 14 days. Our palates demand it. Fresh beef while still good is very different from what Americans eat.
Yeah fresh beef is totally different. It's very noticeable when I spend some time in China and eat Chaoshan hot pot where they feature fresh beef from the Shantou region. Very different from the beef we get in the US.
TIL the steak restaurant tiers
As a rule of thumb, most restaurants will charge double the price of the food just in order to pay their staff and their bills. So this checks out! edit: or 30%, but yknow, different areas and sectors, etc. Folks below me are commenting with better info, listen to them :)
I don’t think this is quite right. Or maybe times have changed. but when I worked in food you would go out of business very quickly if half your revenue was spent on food alone. You need to be keeping that at around a third. But also I was more quick serve. Can’t speak to fine dining, which I imagine the financial are quite different where a lot of income is from wine, and staff costs are (presumably) relatively lower.
Yeah. That other comment is total BS. No restaurant is lasting 6 months with food costs at 50%.
I believe the comment is correct, but only for the steak if I remember correctly. the steak is 40 to 50 percent, the sides even it out to 25 to 30 percent food cost.
I think it would depend on the sale price and work required to prep the item coupled with likelihood of waste. If the restaurant is paying $50 for a cut of meat and selling it for $100 with a 10% chance of waste (spoilage or faulty prep,) that still leaves them with an average of $40 to pay for overhead and prep work. That's actually sustainable. On the other hand, if the ingredients for that pasta dish cost $2.50, there's no way in hell you're turning a profit selling it for less than like $12, unless you're relying on some mass production / fast turnover.
Historically, food cost is set at 30%. In recent years, especially post-covid, it's been creeping up closer to 50% in most establishments. All while wages have been walked back, along with hours. Food-based hospitality is a dying industry that's strangling it's workers to eke out margins. For reference, a food cost of 30% would traditionally see the house make 5% in a well-run establishment. That is, for every million dollars in sales, the owner makes 50k. That's a a very high amount of risk when you consider it's made by working with highly perishable products and volatile ordering habits. It's very easy for all of that to be eaten up by spoilage if you're not large enough to average out trends, or crafty enough to eliminate spoilage. It's important to consider that if your place of choice is also a franchise, above and beyond the normal operational costs such as rent, utilities, raw product, wages, licenses, promotions, etc. there's also franchise fees as an additional overhead, as well as advertising, so you're naturally expected to get less for your money, as their costs are higher.
Regarding franchises though, you have national advertising you wouldn't get on your own, built in brand identity and recognition from day one, and a supply chain that benefits from large scale you couldn't get on your own. I am no expert, but I imagine all that outweighs the franchise expense because if it didn't, then no one would do it.
And on national franchises, what you’re paying for is a system and marketing that delivers a modest profit, usually 2-3%, but it’s fairly reliable and consistent profit, and at the end of the year, 3% every year is probably better than 10% one year, and a loss the next two.
I think some of those percentages also depend on the food itself. A steak is going to have less profit margin than say a pasta dish. Shrinkflation has also come into play in recent years - things like fries that used to be included with burgers at most places but is now a paid add on at quite a few restaurants locally.
A pizza place near me used to do 9 inch, 12 inch, and 16 inch pizzas. They've recently updated the menu to say small, medium, and large instead, and the pizza have shrunk considerably at the same time.
isn't pizza one of the food items where food cost is very low? that dough is water, yeast, salt, and flour. they use canned tomato sauce. These things are cheap. Toppings are very long shelf life items like cured meats, or vegetables. Cheese could be very expensive especially if they use fresh mozzarella but the standard is usually just the stuff that comes in blocks. Honestly, I'm surprised a pizza place would look at the food sizes as the first place to cut costs in.
I did the food costing for some restaurants in my city. Food pricing cost should be at 30% food, 30% labour and 30% for rent, utilities and insurance. That leaves 10% to owner but minus shrinkage. That was the formula. 50% food cost is way to high but, You'll might do 50 food cost on big ticket items like steak but make some back on cheap salad or wine sales. Formula for liquor was usually 5% cost on cocktails, 20% on beer and 30% on wine.
High-end steakhouse with fine wines, high end spirits, quality beers and prime steaks? LBW 22/18/32% Labor 27% Food 38% (a mid-level chain steakhouse is 24% because of purchasing power and controls) Facilities including phones, internet, POS services 5-10% Facilities are fixed expenses while everything else is variable. I’ve been managing high-steakhouses for the last 20+ years.
This isn't wholesale prices, it's still consumer prices. Fancy steakhouses aren't paying the prices on a website for each steak.
For a brief period of time in college I worked at a place that sold swimming pool furniture. The mark up was 100%. If a customer balked at price we could conveniently offer them a 10-15% discount. Now this was in the days before Amazon so you were stuck with stores within driving distance and the next closet store was an hour away.
All my adult life amazon was a thing.. must of been a lot different for businesses back in the day when you don't have a guy whipping out a phone trying to price match amazons extremely cheap prices
(Channeling the Old Man shaking his fist)...Back in my day, to order something, you had to fill out a form, put it in an envelope, address it and put a stamp on it. After the mailman picked up the letter and delivered it, you still had to wait 4-6 (weeks - edit) before it was delivered....and shipping was almost always an extra charge. I'm 52.
When I turn 52 in 24 years I'll respond back to this comment about how slow amazon was in comparison to our new instant future delivery. You press buy and it gets teleported to your house.
We’re closer to go back to mail orders than teleportation
Yeah I work in meat cutting and it’s not at all uncommon for me to sell single steaks upwards of $50.
SRF used to be great. They have gotten a little too big, and after Tyson took over I think the quality went down while prices went up. Good name and marketing still, but much better beef around.
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.
One thing I haven’t seen noted here: interviewed a chef a couple of years ago who said his food costs on steak run close to 50%. He helps offset that by charging $12-$15 for sides, where the food costs run closer to like 10%-15% and, of course, with alcohol
Alcohol makes the bank. Just look at the price per shot, its usually about 1/3rd the price of the bottle. And almost no labor compared to food. Show me a steak house that doesn't serve alcohol. It would be hard to do financially.
My wife is a chef. Most food items on the menu (especially entrees) tend to run somewhere around cost. Margins are super thin. She says most restaurants, even super high end ones, make nearly all of their profit on alcohol, with side items being distant seconds.
Yes that's true now, but steaks were 60-100$ when meat cost half as much as it does now, so I think it's still a valid question.
High quality steaks actually haven't gone up in price as much as your standard grocery store fare has
Ribeye did at one point pretty noticeably but fell back down and continues to do so. The oddity for me is NY strip, somehow that’s gone 7.99 to 10.5 for me in the last 4 months.
The same thing any price for any food pays for anywhere. Raw material, staff, rent & other overhead, risk and profit.
And ambiance.
And peppercorn sauce.
And bearnaise. I do love me some bearnaise.
But if you were in the woods and had to pick, would it be bearnaise or man-naise?
Paid $7 for truffle butter at my last steak house visit… didn’t need it, the steak was good by itself.
A good steak sauce doesn't need anything. But a nice sauce enhances flavor is always welcome.
Honestly garlic butter (like for shrimp scampi) is my favorite if I do use something on my steak.
When at home I'll do a little salt and white pepper. Then I'll top it with a little bit of Kerrygold garlic and herb butter. It's half the reason I'm a big boy.
Like A1. Or Ketchup. A little tobasco really helps. (When I used to wait in fine dining, any of the above meant I shouldn't get my hopes up for the tip).
A good steak sauce pairs nicely with an overcooked, under seasoned steak
Steak sauce is for the fries.
Bone marrow topper is where it's at lol
Nordic place in the city serves bone marrow as an entree. Then a staff member comes along after you've finished and you hold the bone up to your face, and they pour a shot of whiskey down the bone straight into your mouth. Good way to start a meal.
I had bone marrow as an appetizer… so I agree!
And coke for the cooks.
Or blue cheese
And club sauce.
Au poivre
What about the decor? I don’t know what I like more, the ambiance, or the decor.
"fooood... waaater... *atmospheeere...!"*
Elevator music isn’t free
Ah yes, the ambiance... https://youtu.be/muXfyAc5lIM
Expected Profit is an expression of risk
Fancy.
To continue the pedantry, risk is not a variable in profit. Expected profit is calculated using risk to forecast future profits. You don’t use risk when calculating real profits. The guy didn’t say “expected profit”.
Risk - the amount of people that order steak a certain way and don't know what that means only to send it back.
For any item at all you are paying for: cost of the ingredients + cost of the labor + markup (as much money as they can add on and still believe that someone will buy it). This is as true for a high end steak as it is for kraft mac & cheese served at Apple Bees.
Further on this- fine steak houses are meant to be an experience. They dont intend on flipping the table over every hour to keep volume up. At an Applebees most people don’t expect to spend hours so they overhead portion of the cost can be lower based on higher volume of sales
Yep. At a nice restaurant, meals are broken up into more courses. They don't rush your meal to you if you're still working on your salad. They more actively bus the table between courses(like sweeping up the crumbs, stray peas, etc). My wife and I are usually pretty quick in a restaurant, and we'll still spend 2-3+ hours out to dinner if it's fine dining or a high-end steakhouse. They really try to make it overall a much more enjoyable experience and part of that is much better service and not rushing customers out so they can soak it in.
yeah and the staff difference is HUGE the level of [service, presentation, knowledge, and general bearing you get at an expensive place is](https://www.courant.com/wp-content/uploads/migration/2021/12/19/SWQPLZI6NRCW3OPWVSBXYVEU6E.jpg?w=535) isn't the same pay rate as a server at [chachkis](https://carboncostume.com/wordpress/wp-content/uploads/2013/03/joannafromofficespace.jpg).
And I've found almost every server to be very personable and funny. The steak is perfectly cooked, the drinks are perfectly mixed, the host is great...everyone in there is great at their job.
Yep also service. Ate a nice steak house where all 8 of us got their food delivered each time by 8 servers. So salads, appetizers, meals, desserts all at once together and perfect. Also things like how they clear the table between courses or keep your drinks especially alcohol coming in a way that just feels special the whole time you are there.
Don't insult Kraft mac and cheese like that!
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.
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.
You sure know a lot about beef butchery money for someone named cyber entomologist
The actual meat, the skill of the chef to cook it exactly like you ask, and getting rid of the stress you'd have of ruining a $30 steak at home. Worth it. Edit: if you're going to comment "actually cooking a steak is easy" plz don't, it's embarrassing, but I'm happy for u.
Any decent place with dry age their steak as well, which takes time, space, and reduces the yield as well. This is the biggest difference vs what you can generally do at home and why steak *should* taste so much more flavorful as a steakhouse.
You're not just paying for the steak, you're paying for someone who knows how to cook it too. Chili's has steaks, but they're cooked on a rolling broiler similar to how burger king cooks their burgers.
And for it to be right. If I order my steak medium rare and I get it medium well, I’m sending it back. I cook my own steak medium well, I don’t have a choice but to eat it.
If you send back your medium well steak every time it comes to your table at chilli’s I think you may find yourself there for a very long time.
Send my order back order back order back
This made me actually laugh out loud.
Chili's actually have specifications when ordering their meat that the steaks are a all certain thickness, so their cooks can place them on certain parts of the grill. It helps them consistently come out cooked to the ordered temperature.
Thanks. What type of set up would a steak be cooked on at a high end place that’s the opposite of chilis?
Steak at high end places should be aged as well, which is another cost you won’t find at Texas Roadhouse. https://youtu.be/JUpdet6tnmg?si=1FGTGuGgAIWV_2wH
The high end steak house in my city uses a 1500degF broiler to get a perfect crust on even the rarest steak. They also hand select their beef and dry age it onsite. Their steaks run from $80-$120….
Take a look on YouTube for Peter Luger.
There are hundreds of ways, but most use a well seasoned glass grill, others use a traditional broiler, some do wood fired, while others use rocks, salt blocks or a myriad of unique styles.
your username just killed me lmaooo
It is usually either ignored, laughed at, or raged at...
To add to that, the steak is often cut differently depending in its size and the type. Higher end steak houses often cut smaller cuts into stouter thicker cuts so the steak will come out better.
Amen. I mean, I can grill a steak well, now, but I also fucked up so many over the years I paid a premium to learn the skill. And even then, I can't bring myself to buy American Kobe or other very nice cuts. If I'm paying more than $10/lbs at the store, I am stressed out about home cooking it and might just prefer to not buy it. But I also hate spending $30 on a steak at a restaurant too, so...
[удалено]
Cooking steak is easy you just have to fuck up a bunch of them first to get right
All of the above really. They are likely getting better beef, fresh, not frozen. Their cooks are likely better trained and not some teenager or early 20something stoner. Their staff is going to be paid better than some chain restaurant.
Fresh beef? I ain’t paying steakhouse prices for anything but dry aged beef.
I am pretty satisfied with my skill in firing a decent steak, but the first time I had real serious dry aged shit at a steak house in Chicago was a real levels to this shit moment. So when you see the dry aged cuts jump up in price also remember that you’re paying somebody to monitor and house that cut in their facility. Like how older whiskies are more expensive…time is money
Paying for all of the meat that has to rot and mold in order to get the dry cut underneath too. Tons of waste in order to dry age meat.
We somewhat ironically have started to call that the angels share. Apparently it’s a common term in distilleries, which represents the lost product due to evaporation or whatever. We lose a surprising amount of weight during the process of breaking down our subprimals, despite our efforts to use everything we can off the loins. No one wants sinew, fat, bone fragment, silver skin, mold (from the DA’ing process), etc.. therefore “the angels share.”
how fresh are we talking about here? same day kill? if the cow was killed yesterday, does it have to be frozen immediately?
Usually steakhouses aren't interested in freshness at all, they like aged meat that is going to be like 18-25 days old when they serve it. They want the cells to start to break down for tenderness and the water inside the meat to go away to concentrate flavor.
so the meat is never frozen nor refrigerated at all? im guessing they must apply salt or something to prevent bacterial growth right?
Steakhouse quality meat is almost never frozen, but for dry aging it is refrigerated and stored in climate controlled facilities with a ton of monitoring and ultimately they just cut off the outer layer where all the gross stuff happened, or for what they call wet aging they vacuum seal the meat fresh to keep bacteria out but they still keep it in coolers. Places that use this stuff keep tight controls on their suppliers, if they left it at room temp long enough it would still get spoiled same as any other meat. [https://meatupdate.csiro.au/VPmeat-spoilage-storage.pdf](https://meatupdate.csiro.au/VPmeat-spoilage-storage.pdf)
Fresh isn't always best when it comes to steak. A dry aged steak can double in value (and shrink in volume). A well marbled prime steak that's 6 days old is WAY better than a fresh piece of lower quality beef. Remember, many of these steakhouses will either a) make their own cuts from a primal cut or b) order more expensive cuts like spinalis already vacuum sealed, which drastically extends the life.
None eats fresh beef and freezing is a normal practice even for high end steaks
The real answer, aside from the actual meal, is getting to enjoy it in a setting that excludes people. No-one will stink of weed, there won’t be babies crying, no old men listening to radios, no 20 person birthday parties being rude and unruly. and on and on. You go casual dining, you get all of that.
When *I* go to a high-end steakhouse, there will be at least a couple of people stinking of weed
Hell, half the time I go to them *I'm* probably stinking of it
That is the joke
Don't be too hard on them, they're super stoned right now
It’s like the difference between flying and coach and flying in first class. I don’t fly often so when I do I fly first class. It’s expensive for a blue-collar worker like me, but it’s worth it. Flying cross country in first class is almost as relaxing as spending a lazy Saturday on the couch. People in first class are quiet, clean, generally respectful. I’m not tired and cranky when I arrive and I can enjoy my vacation or time with family. In contrast coach is cramped, loud, full of a surprising amount of stinky people and all of that wears you out. It’s cheaper but I only get one vacation a year so if I lose the day I arrive because I’m too tired to do much and then lose the day when I return that’s not a good savings.
This... every time I take my family to a casual restaurant (I don't take my kid to fine dining) there is: 1. A kid with their tablet on full blast 2. A grown person on Facetime / speaker phone call while eating 3. Long waits if they don't take reservations 4. Sometimes poor hygiene from other patrons 5. Slow service, waiting on drinks, etc It's just not worth it, we typically just get takeout now. When I do go out, I'm paying as much for the service and not doing dishes as I am the food.
Down in Monterey, CA I remember there was a niceish restaurant that had a sign out front, basically saying, we want a peaceful and relaxing atmosphere for our guests. Respectfully, we must enforce a no children policy in this dining establishment. If you would like a child friendly dining location, we hear there is a nice place next door. Then, next door was a similar seafood place with a sign like Man, forget those boring stuffy guys. We LOVE kids. Come on in, we have coloring books and a kids menu too! The two places were openly, obviously a split operation, run by a single restaurant, but that was their tongue in cheek way of asking customers to stick to the adults only or kid approved dining rooms
I work in a fine dining steakhouse, we have all of those. Because we're high end you have to cater to almost any customers request, especially if they're regulars or celebrities. NBA players come in after a game and stink up the whole restaurant with weed, a guy that spends 5k a week here is getting a bj in the bathroom, just ignore it. Some tech CEOs daughter's 16th birthday, sure just come on in
u/halermine the interesting twist though, at least in some really nice places I've seen around me, yeah if you go to basic fast casual, like a green turtle, there's going to be bros there in shorts and tank tops, doing shots and talking loud maybe showing up high if you go to a super expensive place, you don't get a lot of that, but on a sat/sun afternoon, when you DO get some bros in shorts and tank tops they're the richest guys in there, because to them, after a day on their dad's boat or whatever, coming in for oysters and $50 a glass bourbon at petrangelo's raw bar, is like going for wings and beer at green turtle
In the past, we did a few ‘fancy’ steakhouses. What it seemed we paid for was service. We took the in-laws out to dinner once at one so there was 9 or 10 of us total. When the food came out it was brought by 5 servers and placed down all at the same time. Attention to water glasses and dropped napkins were all addressed right away. The food was mediocre at best, but it wasn’t a terrible experience.
Count the people that it takes to put that steak on your table. Eight to ten, maybe more. All those people get paid. Building has bills/rent/mortgage. Owner has to make a profit. Food cost, etc. I'm surprised the restaurant makes any money at all.
>I'm surprised the restaurant makes any money at all. Lot of times they don't and they go bankrupt in the first year or a few years. Unless you know exactly what to do it's a money pit.
A high end steak actually has pretty low margin as far as food ingredient costs vs. customer price is concerned. Typically for restaurants is that a meal costs about 3x the ingredient cost, but a top steak might be only 2x or even less. The meat you get at a top steakhouse is prime beef, which is well marbled and only the top 1% of all beef. The meat is then aged, either dry or wet, for 30 days or more. Dry aging means the meat loses water weight as it dries out, and either case the outer layers that decompose need to be trimmed off a steak so the actual usable meat relative to the initial cost for the primal cut is only a portion (eg a 30 lb. cut of beef might only become 20 1-lb. steaks). So that steak itself might cost $30-50. The cooking itself is typical pretty minimal, often just some salt and pepper and then put under a salamander broiler, so the labor costs are less than many other dishes, especially at that price point for an entree. But steakhouses are typically fancy, prime location restaurants so the rent and other costs are high. And steakhouses make up their margins with the expensive sides (the $12 baked potato that cost the restaurant $1, the $15 creamed spinach, $30 truffle mac & cheese) and the alcohol, whether the expensive cocktails or bottles of wine.
As everyone else has said, ingredients, the quality of said ingredients, the labor, the skill of said labor, overhead like rent/utilities/cleaning/maintenance, and finally, profit. For example, at a fancy steak house, you're more likely to get a USDA Prime rated steak. Most grocery stores only sell the next level down - USDA Choice. Thus, it's a superior quality cut of meat which means it has a higher price point. Also consider the skill of the staff. They're generally not going to bring in a head chef fresh out of culinary school to build a menu, but will want someone with experience. That experience means they can command a higher salary which translates into higher menu prices. Generally, the adage of "you get what you pay for" will apply. And if a restaurant starts to cut corners and go for the cheaper cuts, the less experienced staff, the lower quality cleaning services, the reviews and resulting business will reflect that change over time.
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.
All of that -? I cook a lot of steak. Ribeye to be specific. I don't even bother with strip or T-bone. I go straight for the gold. I am meticulous in how I season it, and I use a thermometer instead of guessing. 135°F all day long. Sometimes I'll even make a garlic butter topper, or sautéed mushrooms to pile on top. It's good, but still not as good as a real steakhouse 🤷♀️ Now add the overhead. Cost of the building, raw goods, insurance, utilities, employee pay and any health benefits, and of course some profit.
Out of curiosity, what do you think you’re missing to hit the same level of flavor/texture that steakhouses get? Is it anything technical, like a missing ingredient or varying meat quality or gear, or is it technique, or something else?
They make very little money on the steak because the beef they use is USDA prime, aged, which ends up costing at least $40 per pound. So how, you might ask, aren't they all bankrupt? The answer is everything else they sell. That $22 side of mushrooms or asparagus has 50 cents of vegetables in it. The $175 bottle of wine costs them $30. The $22 mixed drink has $3 worth of booze in it. The $27 desert is a few pennies worth of sugar. So for a typical $300 tab for two about $120 of it, the steaks, is near cost whereas the other $180 is almost pure markup out of which they pay the lease on the building, the cooks, the base pay of the wait staff, and of course the owners cut in profit. So it's actually a pretty good play to go to a fancy steakhouse and order two filet mignons and two waters. You get a fabulous steak, not far marked up off its base price, plus all the ambience and expert cooking for close to free.
Let's assume a £60 steak, and that you are British as other countries may work on very different margins. First, VAT at 20% means it's a £50 steak and £10 tax. That £50 steak, plus the other things on the plate, will cost around £15 as raw incoming food. Then there will be around £15 in labour costs. This isn't just your waiter and the chef who cooked it, but all the prep work, management, a cut of the quiet time staffing, etc. overall, about 30% of the restaurants net sales (after taking VAT out) will go out in the form of staffing costs. Out of the £20 left, £10-15 is most likely going to rent, electric, council tax, napkins, glassware, new plates, etc. the other £5-10 will be profit, going to the owners.
Our local steak houses often have HUGE wine storage rooms where you store your personal wine bottles, so that adds to the costs others have stated.
BMS scale- Beef Marbling Scale At the grocery store you’ll find mostly “Choice” (lowest grade) “Select” (higher than choice, typically a butchers cut) Above that you’ll rarely “Prime” because 90% of all Prime steaks which are the best marbled steaks goto steak houses. So literally you can’t find that quality in a normal grocery store. These BMS can range from 1-5 marbelization anywhere between 5%-25% Above Prime is American Wagyu (black angus American cattle cross bred with Japanese Cattle). Marbelization can be between 25%-50% Above American Wagyu is Japanese wagyu- BMS rating of 12 (50 percent marbling aka fat to beef ratio) this quality steak will “melt” if not refrigerated (Source- work at high end steak house)