Food Costing continued.....

Had to leave for work, so I left one important step out of the process- How Much Do I Need To Charge and Why?! This is the question that can make or break a restaurant. Statistically 80% of all restaurants fail in their first year!

It can be simply a lack of knowledge of how tough a business this is. Statistically, restaurant workers have the third highest suicide rate in the US; The second (Kitchen or back of the house workers) and third (front of the house folks- bar, waitstaff, etc.) highest rates of alcohol and drug abuse just behind Trauma doctors and nurses; we have one of the highest levels of cigarette smokers of any profession. Your family hates that you work weekends, often nights and most holidays. Relationships outside of the business can be rough.
It might be that their food and/or service stinks. Or maybe the location sucks. Its the wrong type of food or price range for the area. Maybe the boss is stealing the place blind- I've seen it happen. Then there is just inexperience in owning a business with ALL it takes.

How about one of the biggest fallacies I know- "But everyone told me it I was the best cook they knew and that my food was better than any restaurants'. How hard could food service be. After all, most people I've run into working in restaurants don't seem all that bright. Any idiot can do this". And so the endeavor begins on a faulty premise.

I can name many more reasons why restaurants fail,but most often its underfunding to begin with- restaurants, outside of well known and established franchises and chains like McDonald's and Red Lobster, rarely make any money in the first year and a fine dining restaurant can take up to 5- and so they run out of cash before they're well established. Sometimes they use better quality ingredients than the guy down the street, but are afraid to charge the justified higher price; even when their product is better. Charge to just a little to little and you'll slowly go broke. Charge way to little and the business will close much faster. Charge too much and no one will return a second time, if they'll come in in the first place.

So what DO you need to charge? Well, each dish needs to cover part of your "Fixed Costs"; i.e.: rent utilities, insurance, etc, that are predictable from month to month, barely change (except for seasonal changes like higher electricity from air conditioning in the summer) and one MOST pay. Then there the other costs, which can change drastically and you have, hopefully, more control over. Labor- do you really need  3 wait people working at 4pm on a dead Monday afternoon- and the cost of the products you buy- does a burger joint near a community college really want all organic products (as nice and responsible as such a choice will be) or do you really want to serve blood oranges out of season when they cost double or more than in season. There are ratios- more detail than most people want- to the type of establishment. Suffice it to say that a fine dining restaurant like Shevek & Co.spends less on food and more on skilled labor- since we make things like our broths from scratch and cut our own steaks by trimming up sides of meat- the raw products cost less, but one pays more for an employee skilled enough to do the work. Places like fast food restaurants are reverse- a higher food cost and lower labor cost- since the lettuce comes in pre-shredded and the chicken for sandwiches is all ready breaded and frozen and ready to fry- all of which costs more; so it takes less a skilled person to do the work and therefore they get paid less. One needs to keep labor and food costs within bounds and control it with an iron fist.

With all that, a fine dining restaurant averages a 5 to 8% profit margin. That's what one has to work on. And this is why  food costing is SO important! I LOVE it! Yeah, I'm sick, but I find it something I'm good at and enjoy every bit of the process.

Now you know more about the workings of a restaurant than you probably ever wanted to know. Hopefully it gives you an appreciation as to just how much it takes to run your favorite place to dine.

I'm going to bed now. Tomorrow will be long, but fun and rewarding. Farmers' Market in the am, prep all day and then dinner service. Probably not another post until, once again, after midnight. Until then, share a good joke.