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How do Steak Houses get away with it?

This has been bugging me for years and I figured this would be a great place to get an explanation..Can anyone explain to me how Steak houses get away with charging the ridiculous prices that they do for sides? I get paying top dollar for a great piece of meat.. ( I do...really!) ...In this case $38.00 bucks and that's in NH ( for those that were wondering). . Charging $7.00 for a baked potato!!??!, ... $8.50 for creamed spinach?...it's freaking potato and spinach!!! I get it ( somewhat) for say...Potato Au Gratin...there is some work to getting this dish together.. And extra for a sauce to compliment the steak? Come on!? It makes me feel that management must be in the back howling with laughter. I can't imagine ( well I can and the image sends me into a fit of giggles) ordering..say the halibut at a seafood restaurant and all that arrives on my plate....is a piece of.... fish....No sides...no sauce.....nothing..? What am I missing here?

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  1. Because people pay it. If enough people refused to pay the price it would come down.

    2 Replies
    1. re: PotatoHouse

      Yes. And the average American is not thinking she or he is getting ripped off compared to a steak with two sides being priced at $53 inclusive.

      1. re: Karl S

        I dunno...That's what I find hard to understand..I love a good/great steak I was just asking the question as to what others thought of the practice...If your good with it...no prob!

    2. How do you feel about $20 for popcorn and a fountain drink at the theater?

      3 Replies
      1. re: porker

        To be honest....ripped off...I know!....free markets...I agree with the idea that if you don't like it don't go! I just wondered why others do...Peace...

        1. re: porker

          High price to pay for that poison.

          1. re: porker

            I refuse to pay it and will do without. Nor will I pay $5 for a bottle of water at the ballpark.

          2. High end steakhouses are the worst value in restaurants. I think I've eaten at one maybe twice in the past many years.

            5 Replies
              1. re: carolinadawg

                That mostly because in many non-steak restaurants a steak is not a very cost effective menu item. Many places offer steaks right around their break-even point.

                A steakhouse can't afford to do that. High end steakhouses also tend to be high profit steakhouses. LoL

                1. re: JayL

                  Yeah, I pointed out further down that part of the reason high end steak houses are so expensive is that they have higher profit margins.

                2. re: carolinadawg

                  All the best steaks I have had are prepared at home kitchens, because having them at a restaurant would break my wallet.

                  1. re: vil

                    I normally feel the best steaks are prepared on my own grill as well, but occasionally I have one when dining out that is outstanding.

                    Case in point...my wife ordered a ribeye at the Peninsula Grill in Charleston this week. I rarely describe food with the "like butter" saying, but I have to in this instance. It was like eating a fillet with ribeye flavor. Perfect char and seasoning. Absolutely delicious. Fairly expensive, but more than worth it for the occasion. (PS...my rack of lamb was as good as I've ever had)

                3. Most steak houses are located where rent and expenses are higher than in NH, and customers have higher incomes.
                  I noted on a recent thread that the $150 fee to uncork and pour a bottle of wine at The French Laundry is equal to one year's pay in Cuba.
                  Bottom line: rich guys like red meat.

                  19 Replies
                  1. re: Veggo

                    The French Laundry is on my bucket list ..but $150 to uncork and pour a bottle of wine? .Was it a expensive bottle of wine that was brought to the restaurant or a bottle purchased there? I'm confused..It sounds like that was the fee to open a bottle?

                    1. re: tunapet

                      A corkage fee is for when you bring your own wine to the restaurant. IMO, they're doing that high price to discourage people from doing it. But off-topic for this thread.

                      1. re: c oliver

                        I know what a corkage fee is...but you're saying that they charged $150 to open a bottle of wine?
                        How do they know what the bottle is worth? Do they run a check on it? I'm not trying to be a smart ass here...I am really curious as to how that works...I can't imagine it makes any difference, except to the people drinking it?

                        1. re: tunapet

                          The resto doesn't care what its worth - its a flat rate. Sure its expensive, for a $50 bottle of wine.
                          I'd think its a bargain if you brought a $3000 bottle where with markup would otherwise cost you $6000.

                          1. re: porker

                            Thanks for the clarification...I would imagine that you would only bring a bottle of wine there if it had some sentimental value to be shared with the ( amazing ) experience/meal.. and I guess it's all in the eye ( and pocket) of the drinker? I would just probably order an $150 bottle of the menu...I dunno...I do have a couple of bottles of Stags Leap left...not sure they will survive the wait....:)

                          2. re: tunapet

                            The restaurants want to sell you their wine. If they can't it a loss for them, so they charge you their corkage fee. At a restaurant like The French Laundry where every seat is occupied at every meal I think it's justified.

                            1. re: zackly

                              Exactly (and agreed off topic for this thread). You are not paying for the restaurant to "uncork and pour a bottle of wine." You are paying for the restaurant's opportunity cost which is the profit they lose from losing a sale on a bottle of wine they otherwise would have sold you. Obviously they do not know how expensive a wine you personally might have otherwise bought, but they do know their average profit margin on wine, and through experience, set the corkage to reflect that. If they didn't charge that much, but only based it on the actual cost of corkage service, everyone with any sense would always bring their own bottle (at zero restaurant markup) and pay the nominal restaurant fee for the labor of uncorking and pouring the wine (and washing the glasses), and the restaurant would lose a key source of earnings/profits.

                              1. re: MagicMarkR

                                True. But the no-so-subtle message of a $150 corkage fee is BUY OUR WINE. Exceptions may be if you inherited wine from Thomas Jefferson and you have been appointed Ambassador to Switzerland and want to enjoy the moment.

                                1. re: Veggo

                                  Yes, I completely agree --it is not a subtle message, nor do I think it is intended to be. The BYO practice in Napa/Sonoma e.g. French Laundry is so ubiquitous of course because restaurants know that people have been wine tasting and may have just bought a lot of wine they might want to try with food (or perhaps the TJ-inherited bottle). Their view is fine, if you want to bring in your own wine, ok, but we are going to treat is as though you bought it from us and apply a markup, a.k.a. "corkage." (So one take-away I guess is if you are going to bring in your own bottle, make sure it is super expensive such that the corkage fee is a small percent of the price:-) )

                                  1. re: MagicMarkR

                                    Well stated. As I wait for an order of serious vintage port from NY, delayed by 2 weeks of lousy weather! I'm in FL.
                                    I like to get those warm socks in a drawer so I can sleep better.

                        1. re: Veggo

                          "Most steak houses are located where rent and expenses are higher than in NH, and customers have higher incomes."

                          Veggo there's a steak house in Chapel Hill, NC that charges exactly these prices. I've never been and never will go. There are too many other restaurants around here who offer great food at more reasonable prices.

                          I wouldn't say that Chapel Hill exactly fits into your category.

                          1. re: Jeanne

                            Jeanne, I would guess that a steakhouse in Chapel Hill gets a fair amount of business from visiting parents taking their children to dinner who are in college there.

                            1. re: Veggo

                              I agree that most college towns have that one steakhouse that everyone goes to when their parents visit. For me it was the 50 Yard Line in Lubbock - late '80s. Long wait to get in and horrifically expensive for the quality, but I was in Lubbock last year and it's still going strong.

                              1. re: Veggo

                                The occasional weekend in Chapel Hill is all the r&r lots of rich alumni ever really get (including my jackass investment banker brother and half the people I graduated with.) There's a reason you can't get a hotel room in Chapel Hill for less than $250/night...
                                Go for a basketball/football game, spend lots of money on bourbon and rich food, go home and get back to work. That's Chapel Hill once you start getting "old."

                                1. re: caganer

                                  Hey, at least it's still vibrant. I went to college in Philly in the 70's, and the 2 best restaurants at the time, Bookbinders and Le Bec Fin, are now closed.

                                  1. re: Veggo

                                    Bookbinders was one of the best in the 70s, but it was never very good, even then. The Philly foods scene is much better now...even vibrant!

                                2. re: Veggo

                                  Yeah kind of like 10 Prime Steak House in Providence Rhode Island, every time I go to visit my daughter at Johnson and Wales.

                                3. re: Jeanne

                                  RTP is a pretty high income area, and as Veggo points out, there are many occasions for special event meals.

                              2. Here in D.C., it's no coinkydink that the big steak houses are located where the expense accounts are.