The cost of a sammich
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How a New York City Restaurant Loses Money on a $14 Sandwich
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Menu price: $14
Total cost to the restaurant: $14.80
Profit (pickup): -$0.80 (loss)
Profit (delivery): -$2.92 to -$2.48 (loss)
Profit (outdoor dining): $0.90 (profit)Food Costs: $3.45
Bread: $0.48
Bechamel: $0.27
Gruyere: $0.71
Celeriac: $0.34
Spinach (sauteed): $0.30
Spinach puree: $0.03
Grainy mustard: $0.05
Fried egg: $0.14
Butter: $0.03
Cornichon: $0.01
Packaging: $1.10Overall, the business averages 20.7 percent food cost. By outsourcing bread (“Pain D’Avignon makes it way better than I ever could”) and using expensive cheese sparingly, the ingredients for this dish manage to stay just over 16 percent. Until we include packaging, a current requirement for the takeout and delivery sales on which restaurants depend. The choice of an oval container, made of biodegradable and compostable sugarcane pulp, hurtles food costs upward to 24 percent.
But the cost to make any dish at a restaurant goes beyond the food itself. There’s also paying the people who cook and serve it, owning and maintaining the equipment that enables them to do so, and, also the space in which to do it all in the first place. The price on the menu reflects the costs of operating the business; here’s how.
Labor Costs: $7
Since relocating in 2015, Dirt Candy has been one of the handful of full-service American restaurants to operate without tipping. Paying employees a livable wage, rather than allowing their earnings to be subsidized by tips, is expensive. Comparable restaurants typically operate at around 30 percent labor cost. Dirt Candy runs closer to 50 percent. Because of that, workers’ wages account for half of what customers spend on the dish.Fixed Costs: $4.34
With the shrinking of revenue, fixed costs (rent, insurance, bank charges, POS, garbage, dishwasher, security, exterminator, hood cleaning, phone, and so on) as a percentage of sales have effectively doubled, from 15 percent to 31 percent. The $14,500 rent has not gone down. Meanwhile, there are new costs, like heating a patio. Dirt Candy’s electricity bill jumped from $2,000 in February 2020 to $6,000 for February 2021.Third-Party Delivery and Takeout Costs
Despite all that, the croque-monsieur is almost profitable, until third-party delivery commissions. Companies charge different rates to different clients. For Grubhub/Seamless, it’s 13.05 percent plus 30 cents. That’s $2.12 on a $14 order. Instead of using Grubhub’s couriers for orders placed through its app, Dirt Candy uses Relay for delivery. Relay charges $5.50 per order, which is passed on to the customer.For DoorDash/Caviar, it’s 20 percent for delivery, adding up to $2.80. For pickup orders, DoorDash charges 12 percent, which is $1.68.
If you order through ChowNow, which charges a flat fee of $149/month, there is no commission, so the restaurant holds on to more revenue. Like Grubhub, ChowNow uses Relay for delivery, with the $5.50 fee charged to the customer.
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I'm seeing more and more places in my area using ChowNow.
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$7 labor cost per sandwich? That would indicate they are selling around 3 sandwiches per worker per hour. There’s your first problem.
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$7 labor cost per sandwich? That would indicate they are selling around 3 sandwiches per worker per hour. There’s your first problem.
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You can’t account for the cost of the heated patio for the dine in customer and the delivery cost for delivery customer on the same sandwich. One or the other... Also, why do we decry the cost of delivery services to the restaurant while not considering the actual costs to the delivery company?
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One of the job perks I had, was a pretty good hospital cafeteria at dirt cheap prices. No choices, no salad bar, just a regular plate lunch (or supper), take it or leave it. In 1981, it was $1. When I retired in 2015, it was $3.50.
For a long stretch, we had a marvelous head cook named Henry Johnson. Navy-trained, Henry could cook and took pride in his work. Man made the best chicken-fried steak I've ever had anywhere. I never had a bad meal that Henry cooked, even the split pea soup that we knew was coming on the first cold, miserably wet day of the winter.
Henry wasn't alone, though. In those days the kitchen had their own baker/desert person and both had adequate help for all the prep work. We also had a cook for the evening meal, but the day guys usually helped her out with part of the menu. Lastly, the Head Dietician and kitchen manager worked with Henry to run a very tight kitchen...Miss Helen was Old Skool, very proper in that Southern way, with a blond beehive hairdo and immaculate starched whites.
Interestingly enough, patients and staff got the same food, if the patient was on a regular diet. We had a reputation for having the best hospital food in the area.
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Another thought about the old hospital cafeteria...Staff was not served breakfast, except for doctors. And the docs got whatever the patients were having.
But no doctor ever paid for any meal.
Another story... British regiments have a tradition of 'dining in". The hospital had a Resident's Dinner, once a month. Residents were required to attend and most staff physicians did also. Dress was coat and tie. Food was a grade up from our standard fare and was eaten off of china on white tablecloths, with silver utensils and crystal stemware. Alcohol was not allowed on campus, but it was rumored the docs enjoyed very strong grape juice with their meals, limit of two.
Henry (or the head cook at the time) would be present, along with two of his staff. Short welcoming remarks to the hospital would be made by the Administrator and the CMO, before the doctors were served. After that, the docs could eat, visit or talk about whatever. It was very old-fashioned, but it served its purpose.
