Check out this crazy example of huge mark-up
i dont know if this is old news or not, i was SHOCKED:
my friend used to work at macaroni grill about 6 years ago and he was the "executive chef". ( i know, i know, macaroni grill is a chain and it sucks...whatever....)
well, there are many pasta dishes on their menu within the 8.99-13.99 range. he told me that THEIR COST for these dishes, which include: the bowl, the ingrediants, the labor, and waste is .28 cents -- .33 cents.
isnt that crazy???!!!
I'm betting he slipped a decimal point on it, $2-3 for industrial pasta would be about right to get it to the table.
Brinker Int'l has the advantage of buying across all their chains, If you and I can buy a pound of decent pasta for under a buck, what do you think they pay for a ton?
Yeah, that's crazy. There's also no way that's really accurate. For someone making $8 an hour to spend two minutes on something it would cost 30 cents. The bowl itself isn't a cost item, its overhead. Actual food costs on a dish like pasta at a Macaroni Grill is probably more in the $2 range. Labor costs and overhead costs will vary with each restaurant and in each locality.
Most restaurants I've worked at (although I've never worked at a chain) tried to keep food costs at about 30% of the menu price. As ray mentions above, food costs include all those things, plus waste/spoilage, the inevitable broken dishes and stolen silverware (yes, people do steal silverware, and cloth napkins too!) Then there is linen service if the restaurant uses it, which isn't cheap, and paper products if they don't, which include things like to-go boxes and so on. If you've ever waited tables at a place which serves nicish steak knives with meat dishes, you will be able to confirm that people steal those all the time.
Also keep in mind that the 30% thing is an average. A steak plate generally will have a higher food cost than a vegetarian pasta dish with a simple sauce. Where most restaurants really make their money is on alcohol.
I guess I'm not really that surprised. My s-i-l worked in retail for years and she told me the markup on [women's] clothing is equally outrageous, especially since so much of it is mfr'd overseas where labor is notoriously cheap. Still, it wasn't enough to get me to break out the sewing machine, lol!
Assuming that the cost estimates are true, it seems that they apply only to the actual cooking of a meal. But you also need to pay for the wait staff, fuel costs, facility insurance, facility lease/rental, advertising, equipment, electricity (including A/C), etc. You also pay people for standing around if business is slow. Yes, they are making a profit, but the profit margin is much smaller.