What It Costs To Run a Restaurant 

Yes that's why everyone is under paid. Think about the freezers running 24 hours a day. If your closed 1 day a week ,that's 4 days a month with zero income. It all ads up. People run restaurants because they love people and they love food.

Hmm... I guess that's why Subway only gives you 2 napkins.

Anyone who doesn't TRULY want to run a restaurant for the love of it has just left the room. Which is a very good thing.

Here Is again a spoiler of restaurant business. I have 4 restaurants and I am getting rich. Yes my dear, I AM GETTING RICH BY THE DAY. I am opening another branch this January and another by March 2019. I cannot understand why you are discouraging people to go into restaurant business. People have to eat. Restaurant business is definitely the most safe business in this planet. I have two restaurants that are adjacent to each other and both are earning.

I was thinking about opening one Now I changed my mind

Well, owner makes 5-7¢ per dollar but will net $10,000-25k a day not including weekends. That number is far higher

Challenge accepted. I’ll be back in 5 years

I have been cooking since I was 15 and I am now 24 and love cooking hopefully I can afford my own place some day

This explains why everyone that works for restaurants is very underpaid

That's still not the portion that owners or investors take home directly. Much profit is reinvested into the company in efforts to innovate or to expand, or it's stored away in financial investments to be saved for a rainy day so that market turbulence doesn't kill the company. Profit margins need to be comfortably higher than zero or the company risks going under, either because they weren't prepared for temporary economic downturns or their competitors were innovating faster than them. Plus, profit is also the incentive needed for entrepreneurs to leave whatever options for work they currently have and take the risk of starting a business. The larger the prospective profit margin, the more secure they will feel about starting the business The bad rap that certain political factions give to profit is very damaging. Profit is critical to economic growth for the reasons I have just described.

This is an awesome breakdown. I think that being upfront and honest with your employees can help a lot to improve moral and not have them misunderstand that you are making a killing from having them at minimum wage

Whoa! That was good. I love the idea of being more open with staff about a restaurant's operating costs. And profitability?

lets not forget costs to cover vandalism, food inspector bribes, crashes through by drivers who can't tell difference between gas and brake peals, robberies, lawsuits by gluten-free folks, and repairs after a shooting by a customer who you couldn't break a $50 for....i'll update with other costs when i think of more LOL

Four minutes. Straight to the point. It doesn't take twenty minutes to break this down. Great video!

i hear what you’re saying but i have a few comments. as a foodservice consultant who advises on back end issues and operations management, i can tell you that most restaurants do not properly account for their costs and pass them on to customers appropriately. i have saved many small restaurants tens of thousands a year by implementing simple cost solutions including adequate menu pricing and cost accounting. it’s hard work, but that’s why i have a business in this niche. accounting for costs and passing them properly into your asking price alleviates much of this cost pressure. q factors like the cost of linens, dishwashing, use of utilities, and to go containers, even labor (partially) should be applied to your asking prices in a methodical way, which increase the value of your sales. most owners DONT do this, and those are usually the more draconian whiners about the cost of this or that. as a matter of fact, these people tend to actually over value their services and charge too much by shooting from the hip. in those cases they are complaining to their labor unjustly, and are just plain dishonest about their poor spending. it’s not the fault of the workers that these types don’t know how to manage money, they are their own worst enemy AND they’re jerks about it!

Thanks for posting this video! Last year I watched this before starting my own restaurant. The problem I ran into though was not having the money to get a location with high foot traffic. Here in Taiwan the price of a good location can be pretty expensive. After doing a whole lot of research I was able to met a restaurant finance manager Mrs Kathleen who taught me some skills and strategies on her platform where i got some good amount of money. I was able to start up my own restaurant with a nice location and recipes here in Taiwan been so blessed ever since i met Kathleen she is my mentor

Why is the labor cost so high? Don't the owners already shift the waiter/waitress wages to the customers through tipping already?

So true I've been in business 20 years Just sold out

This apply mostly to fine dining restaurants...fast food and local spots make money if ran right

This is one of the best videos I have seen on the restaurant business.

Sir, you are forget to say or I didn't see about "staff stealing money and ingredients". That was happened to me. Business was a Bakery. Lost the house for that. I am experience person now and a better position .

One of my favorite thanks alot for your notes I hope you can help me with more information about restaurant because I'm going to open restaurant soon Thanks alot

I am a restaurant staff and now I am also learning English, so this video is really helpful for me

This video is spot on and it’s the bold reality of the cut throat restaurant industry. If your restaurant is not fighting for customers it’s not fit for business for long. Just do the math. I work at a restaurant that struggles to sell 2,000 everyday. With over 60+ seats. I can’t imagine the owners are making a dime off the business.

lentils bags 2.5 kg for nearly 3 pounds i can make a very good amount of lentil dish how I have to cut 30 percent of pound

My restaurants will be like the English chuck e cheese

Very useful information in short time, nice .thanks

Jeez so everyone wants a piece of your pie huh when owning a restaurants the government,the bookkeepers etc

Wow, an eye opening Video... :)

Why would anyone run a restaurant

I wish everyone that works I the restaurant business, can appreciate such a great video that emphasizes the fact that you as an employee should look at the business as your own. Why? Because if the service staff is careless and losses silverware in the trash and does not care about the business then everything goes wrong. Restaurants are giving people an opportunity to make a living as long as they protect their livelihood. I worked as a server for many years. I always said to myself if the investor is not making a profit I don’t have a job.

The 4-minute video did an excellent job of explaining the importance of cost optimization and efficient resource utilization to run a restaurant. Thank you so much! 🙌

Very simple: if an average restaurant returns 30% profit, there won't be wall street. All the money in the world will go into opening up new restaurants. Then there will be strong competitions, which will drive the profit margin down to reality.

Jeeze! Too hard to set up a business. Just the first one of having 5 staff is like 70k! Plus my wage...

I dont think labor cost is 30% since most restaurants dont pay even minimum wage to the waiters. Waiters earn from tips mostly.

Amazing he demotivated everyone ,why u still in the food bussinus then 90 percent is all bullshit what he said by the way word of the advice and belive me or not I don’t care good luck with ur food bussinus it’s all about location rent and what type of food ur selling everyone is different when it comes to success it’s based on ur creativity and kind humble great service u give and ur hard work

this is one hell of an informational video thank u so much god bless u

U can avoid all of that by going to a different country and buying your land to build your own restaurant and have wayyy less expenditures. America is just built different when cums to regulations & demands on businesses

Thank you very much for sharing. This is very useful for those who wish to run a restaurant and great for hospitality students.

Well, lawn care it is.

Great advice given 🤗 thank you

A pie chart would have been nice.

Thank u for killing my dream

Open restaurant only when you loves the food.

this guy really tryin to get u shook 😂

100% TRUE THANKS FOR SHARING

Show your employees this video.. I am

you really need to stop trying to discourage people like sound like a hater they sell used stuff and dollar store sell must of that stuff and you can take cash only to and everybody has to pay uncle sam stop hating

I looked with pleasure.

Just what I was hoping to find for researching about investing in food

If your profit is 5-7% I’m pretty sure in most cases the managers/owners salary is included in labor. That 5-7% is meant to be put back in the restaurant.

Wow This is why travel centers of america(TA) are closing all of their full service restaurants in exchange for fast food vending So, there must be a way to retain some traditional coffee shop traits without going full junk food drive through

Wooooooooow I stop dreaming to open one

Rent is your killer

Thank u for this

Extremely helpful! Thank you very much

here is another discouraging thing about the restaurant or a food business. lets say you buy a mom and pop food business and you start making a decent profit. guess what, people with money will notice and the next thing you know a well known franchise pops up near you and then another. now your profit margin sinks because they are luring away your customers.

Amazing Video !

very interesting info

This video seems to be directed at employees that have no understanding of restaurant costs in an attempt to educate them a little as to why laziness, incompetence, carelessness and theft are intolerable. Unfortunately most have no understanding of even basic economics so they wont get it. They will continue to fit in the above categories until you cant suffer them anymore and then you will have to replace them, which will be a crapshoot and you'll be paying someone extra to train them, even if you can make every detail of your operation idiot proof, kinda like chains have succeeded in doing. If your lucky they will care about you and then pay attention but they still dont understand. If you have a good employee, you have to always worry that the morons will run them off, even though you do all you can to make them happy. When you have people who dont understand "costs" and go around preaching that everyone deserves $15 and hour, what chance do you have when most of your employee base will immediately believe that bullshit while you end up not paying yourself because of their shit. You can only absorb the blame for it for so long. I get this video and why they felt they needed to tell the story of how they arent the horrible dirty rich people that their employees think they are. Everyone hates rich people, until you are rich or you understand economics and how wealthy people got wealthy and what they actually do to help society with that wealth. They also hate them when they "think" their wealthy, which is anyone making more money than they are. With all that said, you get lucky from time to time and you have a good mix of people and you start to forget the BS but it will be back.

if true no one would do it

💚

❤️❤️

The video explained costing very well. Optimizing cost, optimal resource utilization, high footfall reduces costing, eventually, you would develop the unique selling proposition that will make you lead. All in one cloud-based software now making things easily manageable with lower resources and efforts.

I see a lot of experts saying that payroll costs should be between 28 and 30%. However, no one ever breaks this down between the chef, kitchen staff, wait staff and bar staff for a full service restaurant like Applebees, Texas Road House or Olive Garden. Can you help??? Thanks

VERY VERY GOOD

What a freaking NEGATIVE video! I am sure if Starbucks saw this video before then they would've never started the business, but since they didn't; now they have more than 23,000 branches all over the world while this man is still talking to a screen.

Nice Explanation Finally A Presentation About Restaurants That Is Easy To Understand. Thank You Great Job.

Great great video. I wish I could like more than once

❗ wow ❗

Thanks ..very interesting Video 🌎

This is more suitable for franchise or chains if you want a small family restaurant especially with the labor thing

A good video to show the staff!

WOW 10/10 I got a 9 from this

Wondering.. if only 5 or 6 % profit. How the chef Ramsay making all the restaurants he got . And making big buck ????

Not true! Roblox McDonalds Franchise game mode helped me set up a restaurant for only 900 Robux!!!!!!!!!1!!!!!!!!!

Not correct at all from that I used to work in restaurant from many years of my experience.

your tips are cool, what program do you use to edit your videos?

We want to use this video for a college course in Credit and Lending Analysis at Santa Rosa Junior College. Would you please grant us permission to caption the video so it has punctuation and clear sentences? If you turn on Community Contributions in RU-vid, we could add the better captions to these videos. Alternatively, we can send you a corrected caption file that you can upload in RU-vid. One more option is to use a site such as Amara.org that will embed the video and give us an interface to overlay the video with the better caption file. All of these options leave the control in your hands. If you take down the video, it will no longer appear in the course, we will just be embedding from RU-vid, not downloading the video.

It seems restaurant business is not tht profitable anymore lot of restaurant gets closed down in a year or two.......10% margin

Wait if your selling food and beverage at a higher price or even if it was 1 cent you’d still make a profit cuz he said just the food and drink fuel and stuff like that was separate so how can you be losing money on the product your selling

Thanks. Very good information.

Do you have this in transcript?

Shoutout mrs.mckay

Wuaoo , thank you so much 🙌🏿🔥🙌🏼

The stressing of supporting your employees in this and your other videos is such a welcome change compared to other videos I've seen. Most others give it an afterthought or no mention.

Well yeah, that's what we expected

great tips to follow thanks

Excellent content ! I enjoyed watching this.

With $80,000 or $100,000 dollars can I open a business?

I wanna own Marie Callender's

superb . its going to be very helpful

You are amazing!

Nice

Thanks

too much noise!!!

Your employees don't care how much you make and you shouldn't be telling them how much you make. They should be doing as there told. it's none of their goddamn business how much money the owner makes. I say this owning several restaurants myself

Very valuable info

Daym

so basically, you should NEVEReven try.