Jan 182013
 

Craig Giesecke

It has been reinforced on me several times, over the past week or so, just how much the restaurant business is just like any other business – you make money or you close. It has nothing to do with the quality of your product.

Of course, a quality product is supposed to help draw customers and therefore help you make money. But unless the cost of inventory, labor and other overhead remains at a certain level, the place won’t make it for very long. We tend to forget this as Carnival, Super Bowl and our Festival seasons appear before us. Everyone’s having a good time and the food and drink are selling so well that many owners think it will just continue that way after Memorial Day.

Nope.

Restaurants shoot for about a 30-percent food/drink cost. This means they want to spend about 30 cents of every dollar taken in to buy more food and drink to prepare and sell. They might be able to live with 35%, but much above that for any length of time can create a problem. Wages and other costs must also be met (about 35% is the target for paying staff, for instance). If a place can consistently run less than 30% food costs, it’s usually cause for celebration. These numbers can vary a little, depending on the place. But those are the general rules.

What’s bringing this to mind is walking through the French Quarter and the CBD and other areas lately in the runup to the Super Bowl and Carnival. Y’all – there are a LOT of new places opening up. The number of restaurants in the metro area a few years ago was already more than pre-Katrina numbers. But with all the additional places, plus the trailers that always appear on St. Charles at Carnival, PLUS the normal, local food trucks, it’s obvious to me not everyone is going to make a living. Our population, including even a temporary one, is only so big.

This forces your favorite restaurant to get creative and drag out a whole bunch of invisible balance scales to weigh quality against cost. Obviously, no one wants to sacrifice quality. But neither do they want to lose money. Here’s a scenario:

Your place uses a lot of bacon for breakfast and for sandwiches or whatever. You can buy a 15-pound box o’ bacon slices for, say, $25. These are the kind of slices you buy at the store. They stick together, get stringy and so forth. Some strips are unusable, so they get trashed.  Or, for like $35, you can buy the same buy the same bacon that’s laid out layer by layer on paper sheets and there’s no waste at all. Which do you choose?

…so it’s the same choices any business makes to keep costs at a minimum without sacrificing noticeable quality and production. You make a choice and hope it works. Costs can change dramatically week to week, depending on the item. Higher-volume places hire folks specifically to deal with this issue. It’s essential.

Sorry. Didn’t mean to get all wonky and Restaurant Business 101. But chefs, like most creative types, are notoriously bad businesspeople. They can also hold Rasputin-like sway over otherwise smart investors who simply like to eat. I’m seeing a lot of that these days.

This is all going to play out over the coming six months to a year, as various globs in the local culinary lava lamp rise and fall in the wake of a very strong Super Bowl/Carnival season. It’s also why that hot new place might tank in a big hurry, once everyone leaves town.

It’s a business first. It’s why, in a good place, prices can vary, portions can change and some things might vanish from the menu for awhile.

We appreciate your patience.

Craig Giesecke has been a broadcaster and journalist for over 30 years, including nearly two decades at the AP and UPI covering news, sports, politics, food and travel. He has been the owner of J’anita’s for five years, serving well-reviewed upscale bar food and other dishes. Comments are encouraged and welcomed.

Share:
  • Facebook
  • Twitter
  • StumbleUpon
  • Digg
  • del.icio.us
  • Yahoo! Buzz
  • Google Bookmarks
  • Print
  • Diogonese

    Always interesting to read your column.

  • will_k2

    I really like Root…I hope they are not shooting themselves in the foot with Square Root. Converting an antiques store to a fine-dining restaurant strikes me as a very, VERY risky investment.

  • http://www.facebook.com/1stLadyLenora Lenora Hess White

    Yeah but…. new restaurants keep moving in, way down on that end of the Lower “G”. We’ll have to see what happens. I frequent Juan’s, Maya’s and Lillly’s Cafe often, so I’m always interested in what happening on this end.