Cost vs Profit

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In a previous post about why restaurants charge for different extras, I discussed the difference between the guest’s perception of profits and reality.  It is not uncommon to hear a guest say, “I can buy this for half as much at the grocery store.”  The problem is that food in a restaurant carries far more costs than the price of the food on a plate.  I thought of a number of different ways to address this.  The easiest way to explain a complex topic is in relatable terms.  For this reason I have decided to look at the topic by addressing the most common item on restaurant menus: The Cheeseburger.

A friend in the business was able to supply me with the actual numbers from a Midwestern restaurant that is part of a far larger national chain.  These are the actual costs broken down to their individual components on a hamburger.  I won’t name the chain for obvious reasons, but it is fair to say that their volume allows them to buy these items for less than their independent counterparts.  Here is how the actual cost of a half-pound cheeseburger and fries break down.

Read the full post at The Manager’s Office

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About David Hayden

David Hayden is the creator of The Hospitality Formula Network, a series of websites dedicated to all aspects of the restaurant industry. He is also the author of the book Tips2: Tips For Improving Your Tips and Building Your Brand With Facebook.

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4 comments on “Cost vs Profit

  1. I was working in a restaurant (no longer in existence) and a local restaurant critic (also no longer in existence) had written a review, part of it complaining that the bottle of wine she’d ordered was $36 and she would have paid half that at Costco. Really.

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