Pricing for Restaurant

yankeeboyzbbq · Sep 25, 2014

Hello All,
I am in the process of opening a small restaurant in N.Y. and would love to get some ideas of how much I should charge. I am keeping the menu very simple and basic for starters Ribs, Chicken, Brisket and few sides. so any feed back would be great. Thanks

landarc · Sep 25, 2014

$60 a plate! Sure, it's not a bargain, but, you will not have a problem with ingredient prices. :becky:

More seriously, there are formulas and methods for establishing this, and they are best to be understood and followed. I would strongly advise you to become familiar with these, as they are proven. The most common method is to take food costs and multiply times 3, that will establish the price of finished items. That is the standard process, however, where it breaks down in terms of BBQ, is the level of meat centric foods a BBQ place sells.

Meat costs vary wildly at times, and you can go from 30% food costs to 40% food costs from order to order. At 30% you are making money, at 40% you are losing it. The best thing is to reach out to food suppliers and determine what they can sell to you, and what quality of meats and other ingredients you intend to use will be, and what you can purchase them for. Note that depending on where you are, even the 3x multiplier will not work, such as in NYC, where values of real estate leases will prevent you from making money on food at anything lower than 4x, or where your food is 25% of total ticket prices.

ynotfehc · Sep 25, 2014

Need to do some market research and see what others are charging in your area, also compare service difference, difference in products, etc.
Start with your budget, calculate your expenses (rent, payroll, food, paper, cleaning, insurance, desired profit, office products, marketing)

landarc · Sep 25, 2014

ynotfehc said:
Need to do some market research and see what others are charging in your area, also compare service difference, difference in products, etc.
Start with your budget, calculate your expenses (rent, payroll, food, paper, cleaning, insurance, desired profit, office products, marketing)

The only issue I would take with that advice, is you don't know how well the restaurant you are looking at is doing, and how much money they are making. You also won't know what they are paying for ingredients.

It is good solid advice to understand your market, I agree with that, but, it can't affect your pricing absent of the research on costs. And be really careful on lease terms, lots of places crash and burn due to lease terms. Many landlords like to get their place built out and modernized on someone elses wallet.

lionhrt · Sep 26, 2014

When I worked in restaurants one of the owners told me he calculated food costx3 plus 10%. This should cover fluctuation in prices. of course this was 20 years ago and prices are a lot more volatile now

captndan · Sep 26, 2014

landarc said:
The only issue I would take with that advice, is you don't know how well the restaurant you are looking at is doing, and how much money they are making. You also won't know what they are paying for ingredients.

It is good solid advice to understand your market, I agree with that, but, it can't affect your pricing absent of the research on costs. And be really careful on lease terms, lots of places crash and burn due to lease terms. Many landlords like to get their place built out and modernized on someone elses wallet.

And, have a cash reserve to cover at least one year of losses.

oldbill · Sep 26, 2014

landarc said:
$60 a plate! Sure, it's not a bargain, but, you will not have a problem with ingredient prices. :becky:

More seriously, there are formulas and methods for establishing this, and they are best to be understood and followed. I would strongly advise you to become familiar with these, as they are proven. The most common method is to take food costs and multiply times 3, that will establish the price of finished items. That is the standard process, however, where it breaks down in terms of BBQ, is the level of meat centric foods a BBQ place sells.

Meat costs vary wildly at times, and you can go from 30% food costs to 40% food costs from order to order. At 30% you are making money, at 40% you are losing it. The best thing is to reach out to food suppliers and determine what they can sell to you, and what quality of meats and other ingredients you intend to use will be, and what you can purchase them for. Note that depending on where you are, even the 3x multiplier will not work, such as in NYC, where values of real estate leases will prevent you from making money on food at anything lower than 4x, or where your food is 25% of total ticket prices.

captndan said:
And, have a cash reserve to cover at least one year of losses.

Good advice here! The only thing that you can do is price your products according to your expenses and as landarc said, that can vary greatly depending on where you set up shop. When Aaron Franklin was asked what advice that he'd give to someone wanting to open a Q joint he said "start small, with as little overhead as possible and don't go into debt to do it. Buy only what you can afford to pay for immediately to get started with."
He and his wife started with a small concession trailer and a pit out back under a carport structure. It was a very humble beginning for them but everything was PAID FOR when they opened.:wink:

Pricing for Restaurant

yankeeboyzbbq

Wandering around with a bag of matchlight, looking for a match.

landarc

somebody shut me the fark up.

ynotfehc

Full Fledged Farker

landarc

somebody shut me the fark up.

lionhrt

is one Smokin' Farker

captndan

Quintessential Chatty Farker

oldbill

is One Chatty Farker

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