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4/30/2018 Profit and Sauce: How Much Do D.C. Restaurants Really Make Off of Meals?

Pro t and Sauce: How Much Do D.C.

Restaurants Really Make O of Meals?

Pulling back the curtain on food costs reveals some restaurants are more like magicians
than money-making machines.
BY LAURA HAYES — JAN 17, 2018 1 PM

Photo by Laura Hayes

Kanom jeen nahm phrik was the most popular dish at Baan Thai this past December. But Tom
Healy, a partner in the northern Thai restaurant on 14th Street NW, wishes it wasn’t. The rice
noodle dish with shrimp, chicken, and tempura watercress only makes the restaurant 71 cents. “This
is one of our more extensive production dishes,” he explains. “I’d like to sell the cheaper dishes.”

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The inclusion of shrimp increases the cost, especially in December, when the price of America’s
favorite crustacean can skyrocket because of the abundance of shrimp cocktails served at holiday
parties. The food cost percentage for the kanom jeen nahm phrik is about 50 percent compared to
the restaurant’s many chicken dishes that come in closer to 30 percent.

A dish’s food cost percentage is calculated by dividing the per-portion cost of ingredients by the
price the restaurant sells it for on the menu—the lower the food cost percentage, the more money the
restaurant makes. For example, if a sandwich’s ingredients cost $1 and the restaurant sells it for $4,
the food cost percentage is 25 percent.

But food cost is only one part of calculating a restaurant’s bottom line. Operators must also shell out
for labor, rent, utilities, and other fixed costs that quickly add up. Because of razor-thin profit
margins, especially in a high-cost city like D.C., running a successful restaurant can seem more like a
magic trick than a money-making enterprise.

Alcohol has long been the panacea for making up the difference. “Liquor is everything,” Healy says.
“The best thing you can do for a restaurant is order a vodka soda.” Baan Thai marks up rail liquor as
much as 1,428 percent to make ends meet.

To better understand how much restaurants make off meals, Young & Hungry asked five local
eateries to break down food costs for popular dishes. Baan Thai offered a complete cost breadown
for one dish, while the other four restaurants sent spreadsheets with ingedient costs, but talked
about labor and other fixed food costs in interviews.

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Baan Thai

1326 14th St. NW

The dish: Kanom jeen nahm phrik with Thai thin rice noodles, coconut milk, peanuts, ground
chicken, ground shrimp, red onions, garlic, tempura watercress, chili powder ($15)

Healy calculated how fixed costs factor in to how much Baan Thai makes off of this rice noodle dish.
“Everything I make costs me about $6 to put on someone’s table,” he says. To arrive at that number
he took the total cost of what it took to run the restaurant in December, not including food
ingredients, and divided it by the total number of dishes and drinks sold that month.

“One of the biggest misconceptions is that if the restaurant is full, you’re cranking money hand over
fist,” he says. “You really have to have a place packed out seven days a week with a line before you
start making huge numbers. We’re just a small business.”

Every choice the restaurant makes is profit-driven. When a couple asks to sit at a table set for four,
Baan Thai staff decline. “We are waiting in the hopes that a four-top will come in,” Healy says.
“We’re not trying to be rude—we need the money. Please take this slightly less awesome table so I
can pay our employees tonight.” That’s also why the restaurant charges for substitutions. Want
shrimp instead of chicken? That’s $3 extra. “Otherwise we take a loss,” Healy says.

“Obviously we are making money—we wouldn’t be doing it if we weren’t making money, but do not
assume we’re millionaires,” he says. “We’re always a heartbeat away from not making money and
that’s what drives us to be good at what we do.”

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Tiger Fork

922 N St. NW

The dish: Kowloon buns with dairy cow beef, ginger, and black vinegar ($10)

It costs Tiger Fork $2.93 to make one order of Kowloon buns at a food cost percentage of 29
percent. Using a niche ingredient like dairy cow beef from Virginia increases the expense, but chef
and partner Nathan Beauchamp says it’s worth it. “We use dairy cow meat because the flavor is
more reminiscent of what you’d find in Asia—it’s what local beef tastes like in Hong Kong.”

Beauchamp also priced out how much labor it takes to make one order of buns. “Each bun takes
three minutes to make and since there are two per order it requires six minutes to complete the
dish,” he says. “That’s $1.40 of labor per plate based off a person making $14 per hour.”

Tiger Fork is a Hong Kong-inspired restaurant and some diners associate Cantonese food with
affordability. “We sometimes struggle with this,” Beauchamp says. Diners will say they can go to
suburban Virginia and get Chinese food for much cheaper. “We’re not saying you can’t,” Beauchamp
says, “but it’s mostly families that are working in those restaurants and the labor is free.”

In addition to Tiger Fork, Beauchamp helped open Calico and Primrose in 2017. They’re all in
operation now, but the restaurateur recognizes how easy it is for new businesses to fail. “Food cost
and labor cost are the two things you have to manage and if they get out of whack, absolutely it can
make your restaurant fail fairly quickly.”

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Centrolina

974 Palmer Alley NW

The dish: L’Inverno with warm roasted vegetables and garlicky bagna cauda ($14)
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To determine how much Centrolina makes off of its plate of roasted vegetables served with a side
of savory bagna cauda sauce made from anchovies and garlic, chef and owner Amy Brandwein
calculated how much she pays local farms per pound for various vegetables, and then how many
ounces of the vegetables she uses in a single order.

“We’re making about $9 off of it before labor and everything,” Brandwein says. That’s 36 percent
food cost. “It’s a misconception that vegetables are cheap.”

In previous jobs, Brandwein was pressured to keep food cost closer to 20 percent. “It was
unattainable,” she says. “It was very hard to manage like that not in a fast food atmosphere.” At
Centrolina, she says she could try to get down to 28 percent but it would be difficult.

Brandwein pegs the cost of labor at $1.85 per L’Inverno order but notes other factors that cause
Centrolina’s food cost to creep up. “We serve bread and olive oil and there’s no charge for that,”
Brandwein says. “That’s not cheap.” The restaurant spends $550 per week on bread service. “In an
Italian restaurant, people expect to have bread and oil and they get bent out of shape without it.”

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Alta Strada

465 K St. NW

The dish: Fettuccine with wild mushrooms, truffle, and Parmigiano ($23)

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The cooks at Alta Strada make pasta in house daily using premium flour. The fettuccine costs the
restaurant $5.81 to make, putting the food cost percentage at 25.25 percent. Chef Matt Adler, the
culinary director of Schlow Restaurant Group’s Italian concepts, hammers home the point that profit
margins in restaurants are thinner than lasagna noodles.

“Even if you’re going to a restaurant and you’re paying $20 for pasta, it doesn’t mean the restaurant
is profiting $10,” he says. “It’s probably profiting $1.50 if it’s a good restaurant. If you’re running a
20 percent profit at a restaurant, you’re killing it.”

As far as labor goes, Adler notes the restaurant pays people to order the ingredients, receive and
store the food, prep the food, cook the food, serve the food, clean the plates, and supervise all of
these activities. The D.C. minimum wage is currently $12.50 an hour.

“We pay between $12.50 and $17.50 depending on the position,” he says. “Therefore, the total labor
cost for producing this dish is around $8.25. The cost of the ingredients, plus the cost of labor means
it takes $14.06 to make the fettuccine. That leaves Alta Strada $8.94 to cover things like rent,
cleaning supplies, insurance, taxes, unemployment, workers comp insurance, employee benefits,
advertising, trash removal, repairs, utilities, and credit card processing fees.

Adler explains that the Italian restaurants in Michael Schlow’s portfolio shoot for a slightly lower
food cost because the labor cost is higher due to the effort it takes to roll fresh pasta and knead pizza
dough. He’s already preparing for increases in D.C.’s minimum wage, which will reach $15 in 2020.

“The liberal side of me wants everybody to make all the money they can and support their families,
but the part of me that has to operate a business knows how much it costs to pay people and you
have to run a successful business otherwise people don’t have a job,” Adler says.

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Bub and Pop’s

1815 M St. NW

The dish: Bub’s Italian Hoagie with Genoa salami, prosciutto, capicola, pepperoni, aged provolone,
arugula, Roma tomatoes, hoagie relish, mayo, Bub’s vinaigrette, and pecorino Romano ($18 for a
whole)

One of Bub and Pop’s best-known sandwiches isn’t doing the Philly-inspired deli any favors. The
food cost percentage on the full-size Italian hoagie is 30 percent. “We price according to what kind
of profit we want to make,” says chef and co-owner Jon Taub. “We have a general idea on our total
formula to run the restaurant. We don’t want our food cost to be over 25 percent.”

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To stay in the black, Taub has made profit-driven decisions, include ceasing production of the
restaurant’s addictive potato chips. “If Le Diplomate made those chips in a bistro environment,
they’d sell them for $12 with the dip it comes with,” he says. “I’m selling the same bag for $2 and
only making five cents. It requires a skilled cook to make them, so it got to the point where it wasn’t
worth it.”

Two years ago Bub and Pop’s upped its prices by about $2 per sandwich and customers recoiled.
“One guy said he was going to boycott us,” Taub recounts. “The minimum wage just went up, all
cooks have to go up.” Minimum wage increases have ripple effects. If a dishwasher makes $15 per
hour, for example, a restaurant must pay its more experienced employees even more.

Taub says his mom, Bub and Pop’s co-owner Arlene Wagner, typed up a letter to the disgruntled
customer explaining the rationale behind the price hike. “You want everybody to come in and enjoy
your stuff but you have to know what you’re getting into and if you don’t like it, don’t patronize the
business,” Taub says. “I don’t roll into a Bentley lot and say, ‘Dude, I can’t afford this shit.’”

Eatery tips? Food pursuits? Send suggestions to lhayes@washingtoncity paper.com.

 JOIN THE CONVERSATION!


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Posted by kangpin Jan 23 2018 21:20

It never, ever ceases to amaze me how the "older you get you get, the more conservative you
get" & "you'll become a 'conservative' once you start paying taxes" sayings are more evident
than in countlesss stories such as these, almost w/o fail. But damn the facts(/reality). As we
all know, ideology trumps all, and "ppl like what they like."

Posted by jimmyfross Jan 18 2018 16:54

Restaurants must always be aware of the delicate balance involved when creating custom
meals and also keeping costs in check. They also need to be aware of price points that
consumers can afford and nd attractive. Affordable meals in DC can be di cult to nd.
TwentyTables - a new socially conscious DC startup, helps restaurants by allowing them to
create affordable meals based on their current inventories and offer affordable price points
to a large community of patrons that normally don't know about your business or can't afford
them. By participating in TwentyTables everyone wins - restaurants get access to more local
patrons; consumers access affordable meals through a mobile app; and we all help feed the
hungry through our local charity partners: Capital Area Food Bank, DC Central Kitchen and
Martha’s Kitchen. For every 20 meals a consumer orders, they donate 5 meals to one of their
charity partners. Check us out at www.twentytables.com and receive a free meal on us.

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4/30/2018 Profit and Sauce: How Much Do D.C. Restaurants Really Make Off of Meals?
Posted by Typical DC BS Jan 17 2018 16:55

Great article!!!!!

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