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Highest Mark-ups on the Menu


weinoo
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I was wondering about the pricing of different food items on restaurant menus. Some stuff seems reasonable for what the raw materials must cost; others don't look reasonable at all.

For instance, I think prices at some restaurants are outrageous for items like:

Guacamole - I mean, avocados cost me $1.50 - $2 each; restaurants that "specialize" in Mexican cuisine can't be paying that much, and yet I've seen guacamole at $14 a portion. I'm looking at you, Dos Caminos and Rosa Mexicano, et.al.

What about a wedge of iceberg lettuce with some blue cheese dressing? Isn't $10 or more a little crazy?

Am I being unreasonable, or do restaurants need to charge this much for some of their dishes so that the raw material costs are better averaged over the entire menu?

Mitch Weinstein aka "weinoo"

Tasty Travails - My Blog

My eGullet FoodBog - A Tale of Two Boroughs

Was it you baby...or just a Brilliant Disguise?

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I think beverages generally have the highest profit margin of anything on the menu. The tremendous mark up for wine/beer/spirits is well known, but that pales in comparison to the mark up for non-alcoholic beverages. A fountain soda literally costs pennies but restaurants charge well over $1. Ditto coffee, tea.

Still, like Lisa mentioned, the high beverage mark-ups really just defray the big ticket entrees which are not nearly as profitable.

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I think beverages generally have the highest profit margin of anything on the menu. The tremendous mark up for wine/beer/spirits is well known, but that pales in comparison to the mark up for non-alcoholic beverages. A fountain soda literally costs pennies but restaurants charge well over $1. Ditto coffee, tea.

That's why I put the word "food" in my OP. It's pretty much known that beverages carry a high mark-up. But so do things like guac, garden salads, some soups, etc.

Mitch Weinstein aka "weinoo"

Tasty Travails - My Blog

My eGullet FoodBog - A Tale of Two Boroughs

Was it you baby...or just a Brilliant Disguise?

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There is a place near by that charges $15 for Guacamole. Its just insulting to charge that much. There is a restaurant that I like that charges $9 for deep fried spinach tossed with salt and sesame seeds.

Dan

"Salt is born of the purest of parents: the sun and the sea." --Pythagoras.

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I think it is likely that appetizers and desserts are particularly high-margin items, for the simple reason that when evaluating the "price point" of a restaurant we typically only consider entree prices (especially when comparing a number of unvisited restaurants to each other to decide which to go to).

Chris Hennes
Director of Operations
chennes@egullet.org

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Roasted bone marrow, I find it incredulous that anyone would actually pay good money in a restaurant for what my butcher gives me for free. What cooking is involved? Put bone in oven for 15-20 mins, toast bread, dress some leaves. Bam, a tenner!

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Roasted bone marrow, I find it incredulous that anyone would actually pay good money in a restaurant for what my butcher gives me for free. What cooking is involved? Put bone in oven for 15-20 mins, toast bread, dress some leaves. Bam, a tenner!

Restaurants certainly don't get it for free, not that I've ever seen anyway.

James.

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I agree that some restaurants really mark their prices higher on some of their menu which are not really very reasonable considering the taste and the serving. When that happens, I don't order those kind of food. :) I think it's up to the restaurant management how they will charge every food on their menu.

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To be honest, I have a hard time begrudging the restaurants their markups: none of the restaurant owners I know are exactly "striking it rich." They push markups around to take advantage of the way potential customers eyeball restaurant prices: if you actually care, it's easy enough to evaluate the cost of including the extras. And this way it gives the savvy price-sensitive customer the opportunity to enjoy reduced-price entrees at the expense of those who either don't know or don't care that the guac is marked up 1000%.

Chris Hennes
Director of Operations
chennes@egullet.org

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I think the other thing to consider with food markups is like anything else, it's not just the product you're receiving, it's the labor costs behind that and the cost of space, utilities, etc. Even at the piddly wage that American waitstaff make, there's still a labor cost per person, not to mention chefs, dishwashers, etc. You have to keep the lights on, the heat on, pay the landlord, the tax collector, and all that fun stuff. So it's not just food costs.

Joanna G. Hurley

"Civilization means food and literature all round." -Aldous Huxley

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Guacamole has to be made to order, or covered carefully, or destroyed with lemon juice, to keep it from going grey. There's a price associated with that.

Avocados have a short shelf life. There's a price associated with that.

There's a base price associated with getting a plate dirty, regardless if its with lobster tail or cheerios. It has to be plated and brought to you.It has to be bused and washed.

Still, I am intrigued at the cost of the 'wedge' salad. Iceberg has a long shelf life, and bleu cheese even longer. I wonder how much of it is balancing low margin items, and how much is marketing (if it costs more it must be better) and how much is overhead, and how much is something I havent guessed at.

"You dont know everything in the world! You just know how to read!" -an ah-hah! moment for 6-yr old Miss O.

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Roasted bone marrow, I find it incredulous that anyone would actually pay good money in a restaurant for what my butcher gives me for free. What cooking is involved? Put bone in oven for 15-20 mins, toast bread, dress some leaves. Bam, a tenner!

Wait 'til your butcher finds out how much people are willing to pay for marrow bones.

As for "gaming the menu" -- trying to get the absolute most value -- that's something my mother-in-law does. My do I get withering stares if I order something with a low food cost. (Even if the prep involved is tedious.) That's what I tend to order when I go out -- things that I dislike making myself because they take so long. (Or things that make no sense to prepare for just two diners.)

Who cares how time advances? I am drinking ale today. -- Edgar Allan Poe

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Guacamole has to be made to order, or covered carefully, or destroyed with lemon juice, to keep it from going grey. There's a price associated with that.

Avocados have a short shelf life. There's a price associated with that.

There's a base price associated with getting a plate dirty, regardless if its with lobster tail or cheerios. It has to be plated and brought to you.It has to be bused and washed.

Still, I am intrigued at the cost of the 'wedge' salad. Iceberg has a long shelf life, and bleu cheese even longer. I wonder how much of it is balancing low margin items, and how much is marketing (if it costs more it must be better) and how much is overhead, and how much is something I havent guessed at.

I've often thought the same thing about escarole, the darling of chefs everywhere for its zombie-like lifespan. It can sit in the walk-in for ten days and still be springy. Same deal with arugula. While its lifespan is considerable shorter, it isn't called Rocket in the UK for nothing. It literally grows like a weed and doesn't need pampering. I find the whole trend toward "peasant" food to be amusing. Oxtails, grits, dandelion greens, et al, are all items we ate when I was a kid because we were poor and they were cheap.

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Here's another point of view:

The other day I made a batch of orange marmalade. From one case of Valencias I got 60 1/2 pint bottles that I will sell for $5.95 ea. I paid $24.oo for the oranges. Sugar another 8 bucks and jars costed me $40.00

Oe hour labour to peel the oranges, about 30 minutes total time to blanch the peel three times. About 30 minutes to process the fruit. About 25 minutes total time involved with cooking the marmalade. Since I can only process in small batches, 8 jars at a time, and each batch takes me 10 minutes to process, the canning time is almost an hour and half, during which I can't do much else. Labels are 8 cents each and about an hour to label the works.

As a bonus, I can keep about half of the peel, which I will candy and use in pastry and confection.

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