In an industry dedicated to hospitality, it’s easy to forget that restaurants are businesses. Some are so good at providing service, diners often overlook the bottom line truth: restaurants exist to make money. But which dishes are the rainmakers? Is the roast chicken or the poached egg? We asked experts for clues about which menu options are paying the rent at your local eatery. Here’s what they had to say.
Look at the Ingredients"More profitable items for the restaurants are going to have the least perishable ingredients. The restaurant will have less waste, so their costs will be lower,” says Ezra Eichelberger, professor of hospitality management at CIA. “Meat will keep longer than seafood and vegetables will keep longer than both.” However, some ingredients can eat up profits of low-cost items. “Omelets are inexpensive to make, but if it has expensive ingredients in it, like avocados, the restaurant will make less margin.”
Read the HeadlinesWorld events will affect the pockets of both diner and restaurateur. “For example, beef is so expensive right now because the heads of cattle are at an historical low in the US,” says Alex Susskind, associate professor of food and beverage management at Cornell University. Eichelberger adds, “The weather affects costs. If all of a sudden there are bad crops, or a problem getting fish from the gulf, a restaurant’s costs are going to be higher.”
Go LuxuryTurns out you really do get what you pay for sometimes. “How are chain restaurants able to offer a steak and a lobster for $19? It is only possible because they have enormous buying power and they are not buying the highest quality product at all,” says Katy Sparks, chef and owner of Katy Sparks Culinary Consulting. “They are buying just good enough. But certainly not quality-driven.” On the other hand, Sparks points out that often, diners have to spend more to get more value. Susskind agrees: “You get higher value sometimes on luxury items because the restaurant will tend to mark it up less than non-luxury items. It is a smarter strategy for the restaurant to take a higher cost on luxury items and focus on the margin and selling more.”
Example: if a lobster costs a restaurant $20 to make, they may only mark it up once, costing the diner $40. The restaurant will make a $20 profit on that lobster, but they will only make $10 on a $15 chicken that has been marked up three times. Restaurants will make more margin by selling more $40 lobsters than $15 chickens; diners in turn get more for their money.
The Secret MoneymakersThe panel agreed that while pasta, chicken and lesser cuts of meat often make the most money for restaurants, there are some deceptively high-priced items that are not necessarily high cost. “Shrimp are often priced much higher than you would think based on the cost of it now. Most of the shrimp we consume now is farmed and the price has stabilized. But people are used to paying more for shrimp, and so it is deceivingly expensive on menus,” Susskind warns.
Sparks points to asparagus as a costly culprit to the diner: “It is always crazy overpriced as if it was a French delicacy or something. It’s all over the place and it is not a luxury item and restaurants are getting good wholesale prices on it.”