10/12/2026
Whenever I hear people complain about prices at a restaurant, it makes me wonder if they truly know how items are priced.
So, if I may, I’d like to do an education post
Food cost (30%) - This is literally what we pay for all the ingredients that go into each dish. Each and every ingredient is measured or weighed, and added up to find a total cost to make that dish.
Labor cost (28-32%) - Someone has to make the dish, right? Well, it’s probably multiple people, because you have a prep cook, a line cook, and a head cook that all have a part to play in physically making the dish. With that, it’s also paying for the knowledge that these cooks have to make the dish. It takes some know-how to add ingredients, spices, herbs, stock, and protein to make a wonderful dish.
Rent (10%) - Let’s be honest, there may be a handful of restaurant owners that own the building outright, but the rest of us have to pay a building/land owner.
Overhead and Operations (22%) - Utilities are not free and if you complain about your home electricity bill, imagine a business’s. Gas, water, electricity, equipment maintenance, building maintenance, POS systems, Internet, snow removal, or anything else that costs money just to open the doors.
Profit (6%) - In a perfect world, your striving for 6% profit margin.
This is industry standard for restaurants. People do not go into the restaurant business to become millionaires. We do it because it’s what we love to do.
