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THE SWEET TASTE OF SUCCESS?
The Sweet Taste of Success?
Last night I ate at one of those
all-you-can-eat Chinese buffets. I love those places. They usually come and
go quicker than the seasons. My friends will tell you that it’s my fault.
Could be true. There’s no way in the world they made a profit charging me $9
for two large plates of crab legs, the accompanying butter, six chicken
wings, (with hot sauce), six spare ribs, (with duck sauce and mustard), four
clams on the half shell, (with cocktail sauce and lemon wedges), one bowl of
wonton soup, one skewer of chicken teriyaki, and one bowl of ice cream.
Throw in the free tea and water and I’m almost guilty of robbery.
Ever dine with someone who said: “$20 for a
steak? I could buy it at Shoprite for $8. Throw in the vegetables and salad
and this cost them $10 at most. They must be making a killing.” They
reinforce their “restaurants make a bundle” argument by pointing out that
servers only get paid a little over two dollars an hour. (Their below
minimum wage rate is legal because it is supplemented by tips). What our
unsavvy dinner guest is failing to consider is the unbelievable number of
unseen costs in the restaurant business.
Restaurants have enormous initial
expenditures. A building and liquor license alone can cost a million a more.
Renting a building is not much better of an option. It’s a huge monthly
overhead with no equity. And unless it’s brand new there may be some
renovations needed. And if you forgo the multiple hundred thousand excised
to procure a liquor license, you are concomitantly eliminating a major
source of revenue. But the building and the legal right to sell alcohol is
only the beginning.
Professional restaurant equipment is very
expensive. Stoves, grills, deep fryers, dishwashers, freezers,
refrigerators, all cost in the thousands. A restaurant size ice cream
machine is five to ten thousand alone. And can you imagine the amount of
electricity, gas and water it takes to run all this stuff? Then there are
the countless other items like small appliances, gadgets and tools. And how
about the dining room furnishings: tables, chairs, plates, silverware,
glasses, tablecloths, decorations, menus, etc.
Food costs are huge. For every $20 dollar
steak being served, there’s something being thrown out because it was cooked
improperly, has gone bad, was spilled, didn’t sell, or being given away to
some disgruntled customer. Most restaurants also provide their staff with a
“family meal” before or after the dinner rush. Plus there are all the little
free amenities like the extra lemon in your ice tea, the extra butter on
your baked potato, the seven sugars Mr. Sweet Tooth puts in his coffee, the
additional basket of bread, etc., that are not charged for. You might be
scoffing at those extra sugar packets but multiply all these seemingly
miniscule trivialities by a month’s worth of dinner guests and you’ll have
the equivalent of a mortgage payment. It’s like Ford having to replace a
fifty cent part on all it’s Lincolns in one year.
Servers may earn two bucks an hour but there
are many of them. As well as the bartenders, bus boys, cooks, dishwashers,
hostesses, the executive chef, and one or more managers. Every businessman
knows that staff cost much more than just their salary. Figure in social
security taxes, benefits, the cost of hiring and training employees,
(restaurants have very high staff turnover), and the accoutrements you must
supply them.
But wait, there’s many more demons lurking
behind the scenes ready to eat up the “big profit” on the prime rib.
Consider insurance, advertising, repair and maintenance, cleaning supplies,
office supplies, the telephone bill, waste removal, pest control, and many
other nickel and dime items that insidiously accumulate. Oh, and don’t
forget Uncle Sam’s cut.
One third of all new restaurants fail within
the first year. Another third will fail by the end of their second year. By
the five year mark, 80% will have gone out of business or been sold.
Competition in the restaurant business is
fierce. Customer loyalty is fickle and that elusive repeat business is the
lifeblood of any restaurant. Many other options exist if a particular
establishment miffs you with inferior service or cooks your medium rare
steak well done.
A good restaurant manager and executive chef
are worth their weight in gold. It takes noteworthy skill and incessant
diligence to maintain consistent quality in a restaurant. You’re constantly
adjusting to fluctuating product quality and availability, varying food
trends, and staff that come and go quicker than restaurants do. And when
quality drops for any length of time, you’re pretty much dead in the water.
How often do you go back to an inferior place in the hopes that they finally
got their you-know-what together?
Twenty bucks for a steak dinner? I’d say it’s
a bargain.
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