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Pizza Prices

When I was growing up in Brooklyn in the 70's I remember walking home from school and stopping at a local Pizzeria and we'd always get a pepperoni slice and a cup of soda. It was $1. Even when I first moved to Westchester in the mid-80's I could go and get a slice and a can of soda for $2. Today I went, got a slice and a bottle of lemonade, handed the guy $10 and he handed me $4 back. $6 for a slice and a drink? Where do they get the nerve to charge that much? Oh and back in the 70's the pizza was actually good!

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  1. Minimum wage in the 70's was 65 cents.

    It's two slices and a drink for $6 in San Diego.

    1. It's called inflation and that price for your lemonade and slice sounds about right.

      http://data.bls.gov/cgi-bin/cpicalc.pl

      30 Replies
      1. re: ipsedixit

        I completely understand the concept of inflation but it still only costs about $1.75 to make a slice pie. Maybe $2 with pepperoni. So is it crazy to try and make $34 on one pie? In my opinion yes.

        1. re: jhopp217

          Well 1.75 in 2010 is 0.66 in 1980. http://data.bls.gov/cgi-bin/cpicalc.pl

          And, really, how do you know it costs "only" 1.75 or 2.00 to make a slice of pie? I'm not saying you are wrong, I'm just curious where you get your numbers.

          1. re: ipsedixit

            Yes, I wonder how one comes up with such a uniform estimate of allocating overhead, labor and waste to the costs of the ingredients themselves.

            1. re: Karl S

              Of more concern (and perhaps morbid curiosity) is whether the OP is making more now (in 2010) than s/he did back in 1980, or 1970.

              And let's hope that the OP does not believe that the buying power of $1 has held constant for the past 30 or 40 years ...

              Greenspan may be intoning the coming of years of deflation, but still ...

              1. re: Karl S

                The standard restaurant formula is to cost out the ingredients in a recipe, divide by number of portions, then triple that amount to cover labor and overhead. If I remember correctly from my schooldays. Then you mark it up accordingly, depending on whether you want a 12% profit as in fast food, or 35% for high end. Something like that, anyway there IS a standard formula.

                1. re: coll

                  There is no way that a high end restaurant makes a 35% profit on a dish. Not a chance in hell.

                  1. re: bookhound

                    That was the high end we learned, of course they were probably talking about Per Se (not that they existed then). I think we were supposed to aim for 20 to 25%. Hey this was school, not the real world!

                    1. re: bookhound

                      And given that labor and overhead costs tend to vary much more than ingredient prices, the ratio approach to get to break-even is also pretty creaky.

                      1. re: Karl S

                        Yeah just a starting point, I never got far enough in the restaurant business to actually cost out a menu myself. I remember the teachers warning us about LILCO's rates at the time, so there are definitely variables, but this is almost 30 years ago and it's sort of fuzzy to me. Good way to put yourself out of business if you only go by this basic formula and don't really know what you're doing, based on life experience.

                      2. re: bookhound

                        "There is no way that a high end restaurant makes a 35% profit on a dish. Not a chance in hell."

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                        Well, to be fair to coll who quoted that number, the 35% margin probably includes a combined number for food an drinks, both alcoholic and non.

                        1. re: bookhound

                          "There is no way that a high end restaurant makes a 35% profit on a dish. Not a chance in hell."

                          Depends what the "dish" is. It's not about one item, it's about all the items and what they'll average out to be. But, highly unlikely a high end restaurant will make a 35% across the board.

                          I'd wager to say most mom and pop pizza places have no idea what their cost for a slice of pizza is or how to calculate it.

                          1. re: monku

                            "I'd wager to say most mom and pop pizza places have no idea what their cost for a slice of pizza is or how to calculate it."

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                            Having grown up, literally, in the back of "mom and pop" places (not pizza, though) I can assure that that is not accurate.

                            1. re: ipsedixit

                              I've seen the books for all kinds of restaurants and mom and pops are the worst.
                              No wonder mom and pop type restaurants have the highest rates of failure. You see two or three employees on the books and you see six to eight others working the restaurant....they can't all be family. They think if they've got more money in the drawer than they started with they've made a profit.

                            2. re: monku

                              I worked for a mom and pop pizza joint when I was in college in the early 70s. You can be sure they knew their costs to the penny. Nothing went to waste. Bacon was always precooked to use on pizza, and the bacon fat in the roasting pan (from a 20# case of bacon) was always used as the base of cooked tomato sauce for grinders, cheaper than oil.
                              The owners shopped the produce market every day for the best prices on vegetables. They'd buy bottled and canned sodas on sale at supermarkets to resell (at prices less than the bottlers offered small accounts).
                              Dough was made, and then portioned and weighed. The maximum overage allowed was 1/8th ounce. Owner had a coffee can by the register and every beer bottle cap had to go into the can. The wife then checked caps, against sales and inventory in the fridge.
                              In those days, the retail price was 5X cost. It cost 60 cents to make a small cheese pie which sold fro $3. On Wednesdays the same pie was sold for 99 cents, still at a profit.
                              BTW, that mom and pop managed to put 4 kids through college and grad school and retire at age 60 debt free.

                              1. re: bagelman01

                                Good for them.
                                I'm sure they're the minority.

                                Anyone that thinks they're a good cook thinks they can open a restaurant.
                                I've seen many owners go through hundreds of thousands of dollars thinking they had a great idea for a restaurant.

                                1. re: monku

                                  That's the truth! So many people think dreams come true like a fairy tale, and go through their, and other people's, money like water. They should all work for someone like bagelman01 first and learn how to control their costs, whether that extreme or not. And find a great accountant to watch over them too. Food is fun but selling it is a business, first and foremost.

                                  1. re: monku

                                    Actually, they were a MINORITY, one of the ethnic groups from the eastern end of the Mediterranean who dominated the restaurant business in the northeast for the last 40+ years.

                                    1. re: bagelman01

                                      Yes, they're in a minority in more ways than one.
                                      Brilliant keeping track of the beer bottle caps....watch the pennies and the dollars will follow.

                              2. re: bookhound

                                Why wouldn't you think so? Remember, when s steakhouse dry ages their steaks, it doesn't mean they cost more than when they buy them. I would suspect a porterhouse for two at Peter Luger which is between $85-90 cost them about $25. So what's the profit? Almost $400 percent. I'm not including overhead, just cost of product. What about a la carte places that charge $9 for a potato?

                                1. re: jhopp217

                                  The restaurant might make 35% profit on the dish itself but the restaurant doesn't only account for the food, add in rent, labor, insurance, and everything else and they are lucky to clear 10% - 15%.

                                  There was an article in the NYTimes a few years back and it told of how Daniel Boulud has an account for each of his restaurants and if gross margins drop off below 10% a forensic accounting is done. That is a pretty low margin for any business.

                                  Beef prices have skyrocketed since everyone is now interested in eating prime beef. I have no idea what Peter Luger pays per pound for their meat and I'm guessing you don't either.

                                  1. re: bookhound

                                    Interesting little dig, but if you've been to Luger's lately, you'd know the price of their porterhouse has dropped (and I doubt they are lowering it and paying more). But you knew that I'm sure.

                                  2. re: jhopp217

                                    That poster is referring to a 35% profit after all expenses.
                                    Profit is all your expenses and food costs for a place like PL is more likely to be 30%+. Very few places can sell a baked potatoe for $9. What about the free bread and other things? Everything averages out in the end. The steaks are probably their largest expense. They probably make a good profit because they own the properties.

                                    FYI if a restaurant can make a net profit of 10% they're doing well.

                                    1. re: jhopp217

                                      if you are not including overhead, you are not actually figuring out the mark up based on real numbers.

                                      1. re: thew

                                        Those are the people who think they can make a killing in the restaurant business.

                                      2. re: jhopp217

                                        What increase the cost in this case is the need for a much bigger inventory, at any time, you need steaks in your inventory that will be sold only 20 days from now, some that will be sold 10 days from now.. and so on + the space needed for the infrastructure that allows you to dry age the meat properly.

                                        This by itself carry a cost which needs to be factored in the price your paying.

                                        1. re: westaust

                                          The other expense of dry aging is the shrinkage which can be up to 18%.
                                          Figure an inventory of $100,000 in prime meat the loss from aging alone is almost $20,000 before you even serve the steak.

                                    2. re: coll

                                      Well, assuming that the pizza place the OP visited was aiming for a 12% profit and again assuming the retail price of the pizza was $5 (minus the soda's price which assuming was $1), then the "cost" of the slice of pie would have to be in the range of something like $4.40 or thereabouts, right? Or do I have my math wrong?

                                  3. re: ipsedixit

                                    I know four pizzeria owners. It's in the ball park of that for a plain slice pie (Yes it went up about two years ago when flour went through the roof, but it came back down...the prices didn't).

                                    1. re: jhopp217

                                      Prices are heading dramatically back up due to crop failure in Russia, which is withdrawing wheat from global markets. Expect flour and baked goods to be pricey come the holidays.

                                      1. re: jhopp217

                                        Well, then, it must be asked how much are those "four pizzeria owners" of yours charging for a slice of pie?

                                2. The price of everything is going up, in some cases astronomically. Just the other day I paid six samolians for a bundle of asparagus and boy was I pissed.

                                  1. Or for that Price, you can go to Little Caesar's, get one of their $5 pizzas, then to McD for a any-size-for-a-dollar soda or lemonade or whatever, and if you don't want the whole pizza, the birds will love you!

                                    1 Reply
                                    1. I remember dollar slices! After our favorite place let us down a few times, ($20 delivery pies) I started making my own. The whole (organic) pizza with our favorite toppings probably costs $4 to make. It's a fun family activity, everybody helps decide on toppings and load up the pie.

                                      During the real estate bubble, the rent costs for small businesses got out of hand, plus they have to pay high credit card fees.

                                      2 Replies
                                      1. re: MCFAC

                                        I remember when a loaf of bread was 5 cents and a haircut was 10 cents.yadda yadda yadda". Now it is minimum wage, insurance, rents, ingredient costs...all up,up,up!!!!!!

                                        Really, though..... I do remember when the U.S.Dollar bought 4 Deutschmarks!!!!!!!

                                        1. re: MCFAC

                                          Dollar slices still exist. There are a few in Manhattan.