I mean, just from the OPs bill, the fusilli at $20 is one example (all restaurant pasta and rice dishes are considerably overpriced). The single cookie is another. The lemonade is another. Also, the garlic bread…
I get that there are other costs, but that applies with every business, even those running on single-digit margins. None of those businesses ask for an 18% service fee + tips.
So, I’m asking are restaurants just poorly managed, or is it something else?
Labor, rent/lease, insurances, permits, ingredients (not all of which get used), and a demand by the public that going out to eat be very accessible. The list goes on.
Does this not apply to every business, including those that can’t mark up their goods by as much as a restaurant?
Going out to eat needs to be 30% more expensive to make the industry even moderately sustainable, no question.
30% would be reasonable. I’d have no issues at all with that.
But what justifies a $20 plate of pasta? Or $15 for a rice dish? Or $20 for a pizza?
These are foods based on ingredients that are pennies per serving.
Restaurants have a certain speed that they can make money in a day and have the same overhead costs no matter how busy they are. They have to average out the slow days, the time they need to prep and stock, and so on.
Every business marks up the majority of their stock by 200-300% to cover overhead. That is also why a lot of businesses can put stuff on sale for 50% off to clear stock because then they are basically breaking even by item to make room for something else with a high markup.
Grocery stores, home improvement stores, convenience stores, auto parts stores, gardening stores, bike shops, and pretty much every single business pays half or less for the vast majority of the products compared to the price on the shelves.
Yes, there are exceptions, but restaurants are routinely marking up ingredients by hundreds of percent more than even retail grocery stores. And they pay their employees less.
Even if another industry marks up more than 35%, very few ask for tips on top of that. These guys asked for a tip and charged an 18% service fee, which is ludicrous.
I mean, just from the OPs bill, the fusilli at $20 is one example (all restaurant pasta and rice dishes are considerably overpriced). The single cookie is another. The lemonade is another. Also, the garlic bread…
I get that there are other costs, but that applies with every business, even those running on single-digit margins. None of those businesses ask for an 18% service fee + tips.
So, I’m asking are restaurants just poorly managed, or is it something else?
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Does this not apply to every business, including those that can’t mark up their goods by as much as a restaurant?
30% would be reasonable. I’d have no issues at all with that.
But what justifies a $20 plate of pasta? Or $15 for a rice dish? Or $20 for a pizza?
These are foods based on ingredients that are pennies per serving.
Restaurants have a certain speed that they can make money in a day and have the same overhead costs no matter how busy they are. They have to average out the slow days, the time they need to prep and stock, and so on.
Every business marks up the majority of their stock by 200-300% to cover overhead. That is also why a lot of businesses can put stuff on sale for 50% off to clear stock because then they are basically breaking even by item to make room for something else with a high markup.
For sure, clothing companies can do this, but I don’t think most businesses can.
The restaurant industry just seems doomed if they have to rely on service fees and inflated prices on top of tips.
And those added fees and tips keep people away, so the business model itself seems flawed and self-destructive.
Grocery stores, home improvement stores, convenience stores, auto parts stores, gardening stores, bike shops, and pretty much every single business pays half or less for the vast majority of the products compared to the price on the shelves.
Average retail markup is usually under 35%.
Yes, there are exceptions, but restaurants are routinely marking up ingredients by hundreds of percent more than even retail grocery stores. And they pay their employees less.
Even if another industry marks up more than 35%, very few ask for tips on top of that. These guys asked for a tip and charged an 18% service fee, which is ludicrous.