Restaurant Business 101 - Selling


we have a formula for that for each

individual recipe that we produce which

tells us exactly what it's cost us to

produce and from that figure obviously

we derive what we need to charge to hit

the food cost that we know we need to

hit we're always looking to be 30

percent or less and in some cases we're

looking to be 26 percent and possibly

less if we can get there we're not big

fans of loss leaders right so we're if

something's over the food costs we're

trying to hit we're pretty much its on

the chopping block we love this dish but

we can only charge X for this dish and

it's killing us when you're talking

about creative process that's so

unattractive but it is an economic

reality you get into trouble when your

most popular dishes have your worst cost

of goods turning sandwiches into a

profitable business model is very

challenging very challenging because as

you know sandwiches are expected to be a

certain price point it's really hard to

charge more than let's say 12 or 13

dollars for a sandwich and the way that

we dealt with that was creating menu

items that make a good profit to balance

out the ones that don't

the dry-aged bone-in rib eye is $50 when

we receive it before we've ever touched

it it cost $50 you cannot mark that up

the way you could annoy stur rockefeller

you just can't we might have a hamburger

that we charge $15 for and a customer

might be able to go down the street and

have a hamburger for $7 but if that

place down the street doesn't have great

music doesn't have great lighting

doesn't have the entire kind of

atmosphere then we think we have the

upper hand in the beginning we had a

lamb sandwich it was a PITA

we made the pita the lamb was sourced

locally the sandwich if you priced it

out at a food cost that was at least

breaking even it would have to be an $18

sandwich but you just know that you

can't serve a sandwich for $18 so you

take a loss on that one

you know you serve it for 14 if you can

or over 13 and then you have another


grilled cheese that has a low a low cost

to make it but it's still popular and

then that one is also say ten or eleven

dollars you've got better margins on

alcohol it doesn't go bad it requires

less labor I don't want to be in the bar

business but it's a vital ingredient in

a successful restaurant you buy a bottle

it'll sit there and when Jared comes to

work tonight he'll start pouring that

bottle I mean it you really do make your

money on alcohol when I see BYOB

restaurants or I I don't understand I

mean especially on King Street if you

didn't sell alcohol I don't know how

you'd make it we have a CFO and she's

consistently and constantly checking to

make sure what are the dishes that are

selling how much do we charge for them

what are they bringing to the bottom

line what is our margin and does the

whole soup add up to two profit this is

an Italian restaurant people expect to

have the opportunity to ask for like

some Parmesan cheese on the side right

or chili flake so a tiny little ramekin

of parmigiano-reggiano may not seem like

that much but let's say that you know

ramekin cost seven cents just pick a

number out of thin air okay seven cents

not a big deal to that one table if that

happens 50 times in a night times seven

days a week per month per year all of a

sudden at the end of the year you've

given away $15,000 worth of

parmigiano-reggiano huge deal that's a

raise for someone that's a profit

distribution for someone