It’s no secret that restaurants spend tons of money on food, but many might be surprised by just how much restaurants spend on food, especially considering that they have to charge customers to break even on the cost of their meals and pay back the loans they took out to buy restaurant equipment and supplies. Here are some stats on how much money restaurants spend on food.
The cost of raw ingredients
Perhaps surprisingly, food costs are only a small percentage of your overall operating costs as a restaurant owner. While fresh ingredients can be pricey, they generally comprise only 10 to 20 percent of total costs. Most restaurants spend more on labor and utilities than they do on food, according to industry research . Keep in mind that some restaurants buy ingredients in bulk to save money and budget for weekly losses due to spoilage or theft. How much food you buy (and how much you throw away) depends entirely on your menu and how each item is cooked or prepared before it hits customers’ plates. check out our list of the 20 best food restaurants in Wolverhampton.
The cost of kitchen equipment
Kitchens require a lot of stuff. And that stuff can cost you thousands of dollars to get going, even if you’re not planning to hire any employees. If you’re just starting out and don’t have much capital, figuring out how much kitchen equipment costs can be intimidating. However, even on a strict budget, every restaurateur should consider investing in the right restaurant equipment. But it doesn’t have to be; here are some tips for how much money do restaurants spend on food.
The cost of labor
You’ll need to pay your waitstaff, cooks, and other food-service employees. This is one of your biggest expenses. Many restaurants look for experienced servers and chefs with a proven track record for keeping costs low. Pay attention to taxes: you’ll be able to find the perfect food restaurant in Wolverhampton to suit your needs on this list of the 20 best food restaurants.
Taxes vary from state to state, but plan on paying at least 15 percent in payroll taxes (which are paid by you), as well as 10 percent in income taxes for yourself. Review health insurance policies: Many restaurateurs offer their staff some form of health insurance; either full or partial coverage for their workers can help offset some of these costs, so be sure you know what’s included in any given package before you take it.
The cost of business overhead (rent, utilities, insurance)
Depending on location, rent is generally a restaurant’s biggest expense. There are regional variations to consider; for example, high-end restaurants in New York may pay up to £80 per square foot annually in rent, while only £35 is average for mid-range restaurants across much of Colorado.
But even with these variables factored in, there’s still a significant disparity between average restaurant overhead costs and actual rents (especially given that many landlords will require tenants to pay their share of maintenance and repairs—for example, painting walls after five years of wear and tear). For those reasons, it’s worth factoring in an additional 10 percent when estimating how much money you’ll spend on rent.
Additional costs (energy, packaging, waste disposal)
Don’t forget to factor in additional costs like energy, packaging, and waste disposal. Of course, if you’re using your own home kitchen and dining room table to prepare meals for yourself or others, there are no extra costs here. Just be sure you set your thermostat a few degrees higher during winter months to keep heating costs down. And don’t forget that food is a consumable item (unlike supplies or other items that don’t need to be replaced) so think about how much food will cost over time as well! It may seem like a daunting task but once you break it down into pieces, it becomes easier.
What can you do with this information?
There are a lot of factors that go into how much money restaurants spend on food. First, it depends largely on what type of restaurant you’re talking about, and what kind of food they serve. For example, fast-food restaurants like McDonald’s and Burger King have very low food costs (around 20 percent), since they use a lot of processed foods—and even some frozen products—and don’t make anything to order. For more food restaurants visit our website best bizz.
They can also keep their prices relatively low because they offer convenience: People know exactly what they’ll get when they walk in the door; there aren’t any surprises, which means there isn’t any risk for people who are worried about not liking their meal. It doesn’t hurt that these restaurants generally have larger footprints, meaning more seats in their dining areas and more square footage for things like bathrooms or kitchens—meaning less labor cost as well.
Bonus information – data analysis using R language
As restaurants are notorious for low profit margins, food costs and food cost percentage is an important concept to understand. In fact, there are entire studies dedicated to identifying trends in food costs and food service pricing (see References). One of these studies states that for all meals combined (breakfast, lunch and dinner), average menu price at full-service restaurants in 2013 was £17.97 (+/- £1.46). The study also reports average menu price per meal in 2005 was £11.95 (+/- £0.34) – representing a 40% increase from 8 years prior.
The restaurant industry, as a whole, spends £1.8 billion per day. That’s an amount that most of us can barely comprehend. The fact is that restaurants are expensive to run and if you’re trying to get into your own business by starting a restaurant it’s important to plan for food costs and make sure you keep your overhead low so that you can keep a healthy profit margin in place.
You don’t want to be surprised later when your profit margins start dropping from high overhead expenses like rent and utilities (and employee salaries). To learn more about reducing food costs in restaurants, read my recent post here . Additionally, I wrote another post here about 8 Ways Your Restaurant Could Be Cheating You out of Profit . Happy reading!