[sisenor]

Is there a resource or an easy way to find cost information like this for different companies?

 

[AuroraProject]

Years ago (in high school) I managed a Pizza Hut. A large pizza that sold for $14.99 cost around $2 to make. You have to factor in all sorts of things to arrive at a profitable figure though, not just the actual cost of the ingredients.

 

[kugino]

i wonder if the consumerist has answers: http://consumerist.com/

 

[beemer]

Yeah when I was working at dominos way back when, it cost 2 or 3 bucks to make a large pizza

 

[ricksome]

I had my own pizza shop about 13 years ago. A 16" box was 25 cents. A dough ball was 25 cents for ingredients + labor. To cheese that pizza was $2.00. Sauce was about 35 cents. $2.85 back then. I sold it for $8.50. Because the business is competetive, you would rarely get list price. Coupons would bring it down in the $6 - 7 range.

BTW. Statistics prove that the food business (non-franchise) has the highest failure rate of all businesses.

Cheers!
Rick

 

[braillediver]

Isn’t the actual food the least expensive part of running a restaurant? With labor and location up at the top?


Mitch

 

[GAD]

Quote:

Originally Posted by ricksome /img/forum/go_quote.gif BTW. Statistics prove that the food business (non-franchise) has the highest failure rate of all businesses.

That's interesting. Any idea why? I'd think people think it's "so easy" when it's not...

GAD

 

[Assorted]

Quote:

Originally Posted by GAD /img/forum/go_quote.gif That's interesting. Any idea why? I'd think people think it's "so easy" when it's not... GAD

You're right, a lot of people have no idea how difficult it is. A lot of the pressure is finding enough employees.

 

[skudmunky]

the food cost is low, it's labor, advertising, paying the bills, taxes, etc that makes it all so expensive. it's like saying the ipod only costs 80 to make, if they gave you the 80 dollars worth of parts would you be able to make the ipod? can't forget about all the other stuff a business needs to run.

 

[Blitzula]

Quote:

Originally Posted by GAD /img/forum/go_quote.gif That's interesting. Any idea why? I'd think people think it's "so easy" when it's not... GAD

Because it's got low barriers to entry and there's too much competition.

 

[rb67]

Quote:

Originally Posted by GAD /img/forum/go_quote.gif That's interesting. Any idea why? I'd think people think it's "so easy" when it's not... GAD

My family owns a small restaurant and has been doing so for 25 years in Las Vegas. We've moved around a bit.

Basically the hardest part is the beginning. It's really hard getting people to start coming when there are no reviews or word of mouth. Normally you expect to run in the red for at least 3 months, at least that's what my father has said. A lot of people getting into the business just don't have enough reserve to live off of while losing $5-10k a month after the initial investment.

The second issue, and one we are facing now, is it's not very stable. Small family business basically have a very small clientele with many repeat customers. What this means is that we don't get many new people trying the food. This is opposed to a franchise where everyone in the public knows what the restaurant is all about and is readily accessible. Thus, business is very unstable. If the NFL is going on, then we might only get a few tables that night. If the stock market is in a slump, we'll be stuck in the red for a while.

Currently, my family is having to extend their hours and lay off some employees to balance the books. Hopefully the slump will end soon and my parents can go back to more reasonable hours.

The third issue is finding good workers. I know it's a cliche, but it is definitely true. The really ambitious waiters and waitresses go to the larger franchise restaurants because there are better benefits (health care, hours, etc) and larger customer base. We have a very limited amount of workers, some good, some mediocre. The issue with that is when one decides not to work for the day, we don't have a list of people we can call. So should someone call in sick when they've decided to go out the night before we are stuck with no dish washer or 1 (of 3) waitresses missing. A place like Cheesecake Factory just has to find someone out of their long list.

Also, since we are in Vegas, a lot of the good chefs and waitresses get sucked up by the hotels due to superior benefits and wages.

The fourth is location. Large franchises have the funds to buy really nice land and build their own buildings. Small family businesses are stuck with being in strip malls.

Hope this didn't sound like a rant..... But that's how it is from someone raised in a family restaurant atmosphere.

 

[Spareribs]

wow, that sucks. In most cases, I eat in family owned joints.

 

[EyeAmEye]

Quote:

Originally Posted by GAD /img/forum/go_quote.gif That's interesting. Any idea why? I'd think people think it's "so easy" when it's not... GAD

Let me throw in amongst some of the other very valid reasons why they fail is the type of service and the quality of food. At work, we order food for lunch on a daily basis, and some of the service is horrendously poor, and some of the food clearly inferior to other places. Bad service or food can turn away a good deal of customers aside from the normal competition and inevitable price wars (such as the weekday pizza deals and such).

 

[ken36]

Owning a business of tough, in that it's a 7 day a week job maybe 16-20 hours a day. No time for anything else. I loved it.

 

[mbriant]

I managed a Pizza Delight franchise, an ice cream parlour, and a sub shop all at one time many years ago. I also pretty much eat exclusively at restaurants. Underfunding is the main reason most new restaurants ( and all businesses) quickly go under. You only get one chance at a first impression with customers, and if they come in and the service is slow because you're penny-pinching and therefore understaffed, or you're out of menu items, or serving stale food, they probably won't give you a second chance. You have to be willing and able to operate at a loss for the first year ( if need be ) so you can have the staff on hand in case it does get busy, and so you can keep your supplies fresh....even if that means throwing a lot out.

The other problem many new restaurants encounter is in their quest to keep costs down, they become a "me-too" establishment serving the same old frozen fries and burgers ( if that's what they're into) as a million other places. I know of several restaurants that although more expensive than most, offer higher quality food and/or unique menu items and are therefore, despite being more expensive, are always busy. Many people are willing to pay extra and will go out of their way to patronize an establishment that offers consistant high quality and/or something special/unique, so you wind up drawing customers from a wider geographic area than you would if you were selling the exact same average boring thing as the next guy. If your establishment is indeed "special", you also get the added benefit of positive word of mouth advertising ... which is worth a lot.