There is No Such Thing as a Free Lunch

Posted: 08/08/2024

Ever wondered how your favourite restaurant decides on the price of that mouth-watering dish you love? Or even how we make those decisions? Let’s dive into the delicious (and sometimes messy) world of food pricing!

So, chefs typically learn through TAFE to aim for food costs of 25%. That means the ingredients should only make up a quarter of the price you pay. But hold on—there's a twist! Enter the GST (goods and services tax), a sneaky 10% that's added to the price but hidden from plain sight. That’s the taxman taking his slice of the pie.

Now, here’s the kicker: that 25% target is more like a wishful thought. There’s always food wastage, seasonal price changes, cooking mishaps, hungry and clumsy chefs—you name it.

Let’s crunch some numbers. Say your favourite spot has a steak on the menu for $55. To break it down, the taxman takes his $5 cut first. Then, to get our 25% for food costs, we divide by four, meaning there should be $12.50 worth of deliciousness on your plate.

You might be thinking, "Wow, $37.50 goes to the restaurant? The owners must be ballin’!" Not so fast. Running a restaurant is no picnic. Wages gobble up 40% to 45%, and overheads (rent, insurance, etc.) munch away another 20-25%. Add it all up, and a restaurant doing well might be pocketing just 10% of each sale after GST. The reality is even grimmer than a burnt toast—many eateries actually lose money, with owners working hard for little to no pay.

As a bonus for sticking around, here’s our secret sauce: We aim for a 33% food cost.

So, next time you’re savouring a fab meal, remember: there’s no such thing as a free lunch. Every bite has a story, and every dish has its price!