Restaurant Business

BinaryMan
BinaryMan

Why do restaurants make little to no money?

Everyone needs food, right?

FastChef
FastChef

@BinaryMan
depends on the restaurant

BunnyJinx
BunnyJinx

Most restaurant make their money on booze. If they sell food and no booze, they will probably fail. Food margins are quite low, and labor costs very high

Spazyfool
Spazyfool

@BinaryMan
This is one of those Jewish lies to trick people into tipping "well" and all that bullshit. Kind of like "airlines make hardly any profit", or "oil companies make less money than the typical company".

Run the numbers. If they work, they work. Restaurants wouldn't exist if they all lost money.

Need_TLC
Need_TLC

Most restaurants have a 5-15% profit margin. These are the main reasons why the restaurant business should be avoided for investors.

-High labor costs (going higher with min. wage laws increasing)
-70% of your product can perish (fish lasts 3 days - if its slow you might end up throwing out thousands of dollars worth of product per week)
-Food price is increasing at an alarming rate
-The restaurant market is over saturated

Soft_member
Soft_member

@Need_TLC
High labor costs

Right... in NJ you can pay servers 2.13 per hour and cooks make barely above minimum wage. Where are you getting this from?

happy_sad
happy_sad

@BinaryMan
Depends on the restaurant really, a high end restaurant in an area where there's a significant population with high income can make a lot of money because of the huge mark up they can get away with. Of course you have to pay the chef a lot too, so to get away with making money you have to pay peanuts to everyone else.

Streetfood like food trucks or small kiosks can make a lot of dosh, you only need one or two employees (paid slightly better than minimum) and can get away with charging $10 bucks for a hamburger that costs $1-$2 to make. I know of a guy that has a food kiosk at a mall where all he sells is fried shit and he makes about 80k a year, he also never sets a foot in it so it's pretty much passive.

"regular" restaurants are the ones that get shafted, you have to pay for a big staff, lots of rent all the while charging $10-30 for a platter. Middle income people also tend to like bigger portions so they can't get away with the stuff high end restaurants can.

But from what I've seen the secret is in appearances (like almost any business) if you can make your costumers feel like they are in a high end environment but without the high end price they'll come in droves and the food doesn't even have to be that good, it just has to look good. You can also charge a bit more than that boring old restaurant in the corner.

askme
askme

I've operated as many as seven restaurants at once. 10 years in the industry. Average restaurant labor nation wide is 25% throw in another 10% for management and you have 35% labor. That's incredibly high compared to other industries

likme
likme

@askme

Investment banking pays out roughly 40% of revenue as labor costs. And I'm talking $100s of thousands/year per employee on average.

35% on labor sounds like big shit, but then again some businesses work with default rates near 35%. And still make money.

You need a plan and it doesn't fucking matter where the expense comes from as long as it turns a profit. $500 to acquire a customer who might wind up worthless, no problem in some industries.

TreeEater
TreeEater

I'm not implying restaurants cant be profitable - they are extremely hard to operate efficiently. Take a look at a typical restaurant p&l

Cost of sales - 30%
Salaries & wages - 35%
Benefits - 5%
Supplies - 2%
Repairs - 1%
Advertising - 1%
Other expenses - 2%
Occupancy costs - 8%
Interest - 4%
Depreciation - 5%

Net profit - 8%

Not much wiggle room at 8% - that is a healthy p&l for a restaurant

Emberfire
Emberfire

Most are started by people who are told they are excellent cooks and can cook a nice meal for a dinner party of about 6-8 people.

Which is an entirely different skillset to running a business successfully. Its also a different skillset to cooking 27 different meals for 40 people.

Evilember
Evilember

@BinaryMan
get a job at a sandwich shop
excited, finally getting money, but my first time working in food so im nervous
the first weeks go by, make a few mistakes and am slow at learning but im still not fired
paycheck is $100 for three weeks (they forgot to pay me for my first week). half of what I made in two weeks from my previous job
but whatever, Ill stick with this for longer
work for another two weeks
barely any hours (8 total), get called off early every day, some days I am not told to come in at all because business is slow
still kinda slow and learning, but I attribute this to not being at the shop as much as I should be
get check, its $50

Are all restaurants like this? If so, how do people put up with this shit? This is just depressing, I have felt depressed all day long because of this check. I just want a solid 20 hours part time job.

Firespawn
Firespawn

@Soft_member
The fixed costs are high. You pay for cooks when they are sitting around.
Set up costs are high and are in breakable durables.
Shrink due to pershibility is high and an over-ordering chef can run food costs up and over your profit..

RumChicken
RumChicken

@Evilember
I apologize for shitposting my blog here, im just shocked and pissed off by this and im not sure if I should stick around at this place any longer.

VisualMaster
VisualMaster

@Evilember
how old are you?

ZeroReborn
ZeroReborn

@VisualMaster
22

CodeBuns
CodeBuns

@Evilember
paycheck is $100 for three weeks
you would have made more money walking around looking for dropped coins

New_Cliche
New_Cliche

They run relatively low profit margins

Ignoramus
Ignoramus

@ZeroReborn
Jesus dude wtf are you doing with your life... leave that job ASAP.

When a restaurant isn't giving you hours, it means they want you to leave.

Nojokur
Nojokur

@Ignoramus
Yeah, I requested more hours this week. If they dont give them, then im putting in a 2 weeks notice.

Luckily im still living with my parents, so I wont starve. But I do have expenses of my own that need to be paid. Now I just need to find a new job, one which will hopefully keep me busy.

w8t4u
w8t4u

@Spazyfool

This, you will never hear anyone saying "LOL I'M FULL OF MONEY TAX ME AND ASK FOR A RAISE, BASTARDS".

Sharpcharm
Sharpcharm

@Nojokur
You don't need to give 2 weeks at a restaurant job. People come and go all the time, Just quit. It's not worth wasting 2 weeks of your life.

Anything you want to know about the biz? I have like 5-6 years exp

WebTool
WebTool

@Sharpcharm
Sure I have some questions.

1. Is it actually appropriate to just quit tomorrow? Because I already got my check for my previous work. And I would prefer to just end it all instead of being "that guy" at work that is causing drama.

2. Can I expect these low, random at times, hours out of all restaurant jobs? I dont mind working in food, the main thing I want out of a job are stable hours. If I can't get that out of the food industry then I may be better off in retail. (although retail jobs in my area are hard as shit to acquire, hence why I settled on making sandwiches.)

eGremlin
eGremlin

@WebTool
Yeah, nobody will care. It happens all the time. I've given 0 notice on jobs and then been asked to come back. I've walked out of restaurants and landed a new job that same day. People come and go, it's a pretty universal skill set and workers are always in demand.

Hours will almost always be nights, weekends and holidays. You won't know your schedule more than a few days in advance, and it's pretty much subject to change at any time. Most places though will give you as many hours as you want if you're good. My last serving job I did on average 50-60 hours a week because I'm good at what I do, don't cause drama, pick up shifts for others etc. If you suck, they'll cut your hours or like you said, just tell you to leave early. I wouldn't take it personally, you probably just don't have much experience yet.

FastChef
FastChef

@eGremlin
Is there any point in trying to redeem myself with this job? I guess my first few weeks left a bad impression for being slow and asking tons of questions. That first impression could be a big challenge for me to break away from

If it helps, the restaurant in question is Which Witch.

JunkTop
JunkTop

@FastChef
Are there other restaurants nearby? Where are you?

Also send me a sandwich pls, I hear that place is good

PurpleCharger
PurpleCharger

@BinaryMan
the sole purpose of the restaurant should be to pay off the mortgage on the property.

If you don't own the property you'd better have 10 or more restaurants to flatten out losses and make a decent living.

GoogleCat
GoogleCat

@JunkTop
There are plenty of restaurants nearby, and now that I remember I actually got a call from a different one after starting my first day at Which Witch. Well I guess that settles it, Im quitting tomorrow and reapplying at the other place that called me.

And I will admit, WW is a very good sandwich shop.

Fuzzy_Logic
Fuzzy_Logic

@GoogleCat
Just be up front with them man, say you weren't getting enough hours. You want to work and make some money, they'll respect that. That's the only reason 99% of people are in this business, is to make money. lol

Spamalot
Spamalot

@Fuzzy_Logic
Alright. Thanks for all of the advice. With this experience I know I can do better next time.

Soft_member
Soft_member

@Spamalot
good luck!

FastChef
FastChef

Thats bullshit, there are plenty restaurants who make bank

Ignoramus
Ignoramus

Thats bullshit, there are plenty restaurants who make bank

w8t4u
w8t4u

Someone post a plan if its so easy

TreeEater
TreeEater

@BinaryMan
First of all everyone needs food, but nobody needs to go out to eat. If they feel so inclined, they also have many choices other than just your restaurant.

Secondly nobody ever said restaurants make little to no money. The meme is 90% of restaurants fail within the first year. This doesn't necessarily equate to them not making money. It could be the owner mismanages the money they do make. Usually it's a poor concept and poor execution/location that leads to failure.

Study the restaurant successes. OSI chains all crush it while serving average quality meals. It's because they have the supply infrastructure nailed down tight to keep margins high. Because they know people are cheap but want to feel like they're getting a good deal, so they offer them shit steaks for $13 and make them look and taste ok. And every single OSI restaurant I've ever been to or worked at has an owner who is on site 5-7 days a week, usually in the bar talking up customers getting them to order more drinks. The owner being there and being gregarious really helps out more than people think.

If you want to run your own restaurant without the benefits of the franchise, then tap into a different market. Most successful non-chain restaurants all have a gimmick. Specialize in seafood, beef, chicken, or some hipster craze that hasn't started yet or is just catching on. Run it as if it was an outback steakhouse. Buy cheap meats that look/taste good enough when prepared properly, have a classy, upscale atmosphere with dimmed lights, and as an owner be charismatic and the life of the party. Talk to 10 different customers a night and ask them about their experience. Make friends with them. This will guarantee repeat business.

Emberfire
Emberfire

@BunnyJinx
contrary to literally every fast foot joint in existence

BinaryMan
BinaryMan

@Emberfire
They make money on soda and sides instead

You're fucking stupid.

Stark_Naked
Stark_Naked

@BinaryMan
they're taking a loss on their burgers/sandwhiches

bruh....

Spamalot
Spamalot

@TreeEater
well put

farquit
farquit

Ten year culinary experience here from both "higher end" restaurants and lower end "fast casual" restaurants.

I've never worked fast food, fast casual was the closest.

I've worked literally every position, from the dish pit/prep/float guy to General Manager.

AMA, and between me and @Sharpcharm

We should be able to sort you out

Crazy_Nice
Crazy_Nice

@Need_TLC
5-15%

Kek, you're obviously not familiar with the 500-1000% margins.

Which actually are quite common.

Methshot
Methshot

@farquit
BOH scum

StonedTime
StonedTime

@RumChicken
Are you a female or something?

Emberburn
Emberburn

Profit margin. Restaurant I work in is in an over saturated market and its one of the highest rated in town. Our profit margin is pushing 8 to 10 % maybe and that's amazing here in town. It's a shit ton of operating costs for a restaurant and it takes a sizable investment. It can also be a seasonal thing and a lot of people don't take that into account until they're in it.

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