>...food should never cost more than 25% of your total sales price)
I'm in the food industry, and this pervasive food-cost mentality is one of the things I think people often do unwisely.
Here's a simple example with made-up numbers: The burger ingredients are $2.50 and the burger sells for $10. There's a 25% food cost. The filet of beef tenderloin costs $10 and sells for $25. The food cost is 40%.
Focusing on food cost means the burger is a better item for the restaurant. But I'd take the 40% food cost instead of the 25% food cost and then net $15 instead of $7.50. A percentage means nothing compared to cash in hand. That's nothing groundbreaking to say, but that discrepancy is often lost on food-industry people because they focus too much on the food-cost percentage.
Side note: if your paying that much for beef for a burger portion, your getting ripped off.
Look the basic principle is: 25% to each: food, staff, facility, profit. Now all experienced managers know that profit is a variable.
The point being, never sell for under, unless you can guarantee an over. Which is difficult to say the least. Yes, if you have gaming section and can rip off your customers from there, go ahead (nb: this is why I never working in venues with gaming facilities). If you have an amazing wine selection or just plain know your clients are going to order great pricepoint wine? Well, just be careful.
Otherwise, you better be selling a lot of overpriced stock with low staffing rates, otherwise son, your going to come undone(as was put to me during training).
Look, all rules are made to be broken, but there are reasons why there are general rules of thumb. At %40, how are your staff doing, with all that running. Is the service good enough? Is your kitchen overstressed? Maybe no, if so - I'm happy for you, but do you think every place can run at %40?
Focusing on costs is the main thing. If you don't, you will find yourself in water deeper than you can handle one day. I'm happy that you can run at %40, I just hope it doesn't go over your head before you realise.
I think we disagree that focusing on costs is the main thing. Figuring out what to charge is something I find easy—it's largely a one-time exercise for items—but executing on product excellence and even better service is where I put much more of my time and energy. More specifically, I simplify my employees' work down to five categories:
Great products
Even better customer service
Safety
Sanitation
Organization
I've set our rates so that staff can focus on those listed areas instead of sweating every cent, a common industry behavior which I think inhibits the customer experience and leads to lower-quality products. Certainly, costs matter (to me and to employees), but I want their focus to be on what they make and servicing our customers, and I'll do the bulk of the the economics. So far, for my food business as a wholesaler, that's worked.
I don't actually disagree with anything you have said there.
I was talking from a cost management point of view. If you would like to talk more about this(we're almost at the end of hn's threads haha), check my profile for my email :-) I'm guessing you're in the us(most hners are), so I can't exactly visit your place, but I would if I could :-)
I'm in the food industry, and this pervasive food-cost mentality is one of the things I think people often do unwisely.
Here's a simple example with made-up numbers: The burger ingredients are $2.50 and the burger sells for $10. There's a 25% food cost. The filet of beef tenderloin costs $10 and sells for $25. The food cost is 40%.
Focusing on food cost means the burger is a better item for the restaurant. But I'd take the 40% food cost instead of the 25% food cost and then net $15 instead of $7.50. A percentage means nothing compared to cash in hand. That's nothing groundbreaking to say, but that discrepancy is often lost on food-industry people because they focus too much on the food-cost percentage.