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Old 09-08-2019, 03:51 PM
Ravenman is offline
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Restaurant vs grocery store prices


I just bought a 12 oz. steak for $15 at the grocery store. Is there any rule of thumb for what I would expect to pay for that steak in a restaurant?

Granted, the valued added of someone who knows how to season and the equipment to sear a steak are worth a good markup, Iím just not sure by how much. Would that steak probably run me $20? $35? $50? Any of those prices for the same piece of meat?
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Old 09-08-2019, 04:10 PM
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Percentage of Cost Rules of Thumb. Food cost. Food cost as a percentage of food sales (costs/sales) is generally in the 28 percent to 32 percent range in many full-service and limited-service restaurants.
https://www.restaurantowner.com/publ...-Standards.cfm
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Old 09-08-2019, 04:11 PM
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Originally Posted by Ravenman View Post
I just bought a 12 oz. steak for $15 at the grocery store. Is there any rule of thumb for what I would expect to pay for that steak in a restaurant?

Granted, the valued added of someone who knows how to season and the equipment to sear a steak are worth a good markup, Iím just not sure by how much. Would that steak probably run me $20? $35? $50? Any of those prices for the same piece of meat?
According to what I have learned, food costs in a restaurant should be around 33%. So a $15 steak would be priced at $45.
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Old 09-08-2019, 04:13 PM
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As mentioned, the traditional rule of thumb is that menu price is three times the price of ingredients. Like any such rule even if accurate there must be many exceptions. The Economist magazine had a short article this week comparing sandwich prices in the UK and US. Prices at Pret a Manger outlets in Boston are around 74% higher than same chain in London on average for various types of sandwich, although those two cities come out close to one another in overall cost of living rankings at the current USD/GBP exchange rate. It mentioned the rule but noted it was just a starting point and also subject to differing customer expectations and competition in a particular type of dining places in different locations. It noted that lobster roll prices are still higher at that chain in Boston than London though the lobster meat comes from Maine in either case, so presumably the menu price/ingredient ratio is lower in London at that type of place at least.

Last edited by Corry El; 09-08-2019 at 04:18 PM.
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Old 09-08-2019, 04:21 PM
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From the supermarket pricing stated you (most likely) overpaid as it is a odd amount for that size for 'choice' cuts ('choice' is the typical supermarket steaks). Either that or you were dealing with prime meats (few supermarkets have that). Thus I suspect your restaurant price would likely be lower than the 3x markup due to you paying too much.

Last edited by kanicbird; 09-08-2019 at 04:22 PM.
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Old 09-08-2019, 04:31 PM
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I think this thread might do better in Cafe Society, with all the other food questions.
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Old 09-08-2019, 04:32 PM
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Do restaurants pay supermarket prices for their steaks?

If not, you shouldn't use the supermarket retail price to estimate what the restaurant will charge.
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Old 09-08-2019, 04:37 PM
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They're more likely to pay what the supermarket pays their suppliers before markup.*

So a $15 steak at a supermarket cost the market less than $15.

*Steaks are complicated, because supermarkets generally sell choice, while restaurants sell better grades.

Last edited by RealityChuck; 09-08-2019 at 04:37 PM.
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Old 09-08-2019, 05:57 PM
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Granted, the valued added of someone who knows how to season and the equipment to sear a steak are worth a good markup, Iím just not sure by how much. Would that steak probably run me $20? $35? $50? Any of those prices for the same piece of meat?
Not to mention the added value of having your entire dinner (not just the meat) cooked better than you can cook; the added value of someone serving you and cleaning up after you; the added value of having a variety of wines (that have been pre-selected as not being total dreck) available right then and there; the added value of the "dining experience," etc. etc.

It's like asking how much the Mona Lisa is worth based on how much DaVinci paid for the paint.
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Old 09-08-2019, 06:16 PM
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Not to mention the added value of having your entire dinner (not just the meat) cooked better than you can cook; the added value of someone serving you and cleaning up after you; the added value of having a variety of wines (that have been pre-selected as not being total dreck) available right then and there; the added value of the "dining experience," etc. etc.

It's like asking how much the Mona Lisa is worth based on how much DaVinci paid for the paint.
Well, yes, which is why I mentioned added value. I mean, I literally wrote it in the OP.

Very interesting about the rule of thumb on ingredient costs, and point taken about retail vs wholesale costs of food. Thank you all.
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Old 09-08-2019, 06:26 PM
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They're more likely to pay what the supermarket pays their suppliers before markup.*

So a $15 steak at a supermarket cost the market less than $15.

*Steaks are complicated, because supermarkets generally sell choice, while restaurants sell better grades.
The only grade better than choice is prime, and there just isn't that much prime around. Most restaurants, except high end jacket-and-tie places, serve choice.

Last edited by wolfman; 09-08-2019 at 06:28 PM.
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Old 09-08-2019, 06:52 PM
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As to the difference between retail and wholesale cost of foods: I know a small rural cafe owner who gets part of the food for the cafe from a grocery chain rather than off the truck (from the food service supplier) because it's cheaper. So while restaurants are paying a little less for food than the general public, it is not a huge percent.
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Old 09-08-2019, 07:06 PM
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Well, yes, which is why I mentioned added value. I mean, I literally wrote it in the OP.
It still seems strange to me to think of a restaurant meal as ingredients + added value because the "added value" is most of what you are paying for. Think of all the expenses the restaurant has before they even open for business: renting the property, designing the interior, buying equipment and constructing the kitchen, furniture & decoration, developing the menu, developing the supply chain, advertising, hiring, etc. Then the day-to-day expenses regardless of how many people eat there that day - rent, electricity, wages for all workers (cooks don't get tips), buying all the ingredients which may or may not get used, taxes, etc. These are some of the things you are paying for when you eat at a restaurant, not just an ingredient + a few minutes of a cook's time.
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Old 09-08-2019, 07:23 PM
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The only grade better than choice is prime, and there just isn't that much prime around. Most restaurants, except high end jacket-and-tie places, serve choice.
Most of the prime goes to restaurants (I seem to recall a figure of like 95%). It will be higher end steakhouses, but they need not be jacket-and-tie places; I'm not even sure there's many jacket-and-tie places around anymore. Business casual and sometimes even looser than that (Ruth's Chris, Smith and Wollensky, Morton's all have prime and, while on the fine dining end of things, don't have that strict of a dress code.)

But if you do want to find prime, Costco is great for that. And for certain cuts of meat, it's not crazy expensive. I would buy packer cut prime briskets for barbecues at something like $3/lb within the last 5 years. Your steak cuts are going to be more, but not prohibitively expensive (IMHO). Nothing over $20/lb there, and I think closer to $15/lb last I remember for something like prime strip.

And then Whole Foods and those types of upmarket supermarkets will often carry prime, as well. Though if given a choice between dry-aged choice and prime, I'll go for the dry-aged choice most every time. (And if you like filet mignon, there's just no point, IMHO, in getting a prime filet vs a choice. Just get the choice. There's no difference I can tell.)

As for the rule of thumb, 3x-4x cost is what I was taught when I briefly worked in a restaurant, but it slides around a bit. Cheaper stuff gets closer to 4x, more expensive stuff is towards 3x, and maybe even slightly less.
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Old 09-08-2019, 07:41 PM
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Jesus Christ, I HOPE your restaurants aren’t buying their steak at a supermarket.

I never order steak at a restaurant, unless I’m a a place like Peter Luger’s. You’re better off buying the best cut of rib steak you can find, at a good butcher, and grilling or broiling it yourself.

Simply, with salt and pepper. Or, if you want fancy, rub in a mash of olive oil, garlic, black pepper and a little anchovy. Let rest for an hour before cooking. Bliss.

https://en.m.wikipedia.org/wiki/Peter_Luger_Steak_House
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Last edited by Ukulele Ike; 09-08-2019 at 07:43 PM.
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Old 09-08-2019, 08:05 PM
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Originally Posted by pulykamell View Post
But if you do want to find prime, Costco is great for that. And for certain cuts of meat, it's not crazy expensive. I would buy packer cut prime briskets for barbecues at something like $3/lb within the last 5 years. Your steak cuts are going to be more, but not prohibitively expensive (IMHO). Nothing over $20/lb there, and I think closer to $15/lb last I remember for something like prime strip.
I want to shop at your Costco.

As for overpaying, don't read too much into that. Much depends on location. "Certified Black Angus" and/or "Organic Grass Fed" rib eyes or filets can easily cost $15 for 12 oz. for choice in NYC. Location is important. Every time I hear some chef show talk about cheap cuts of beef like flank or skirt, I want to throw something at the TV hoping it will go through and strike the chef. Those cuts are a minimum of $10/lb here when discounted. Even chuck roasts run $7 to $8/lb when not on sale.
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Old 09-08-2019, 08:28 PM
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I want to shop at your Costco.

As for overpaying, don't read too much into that. Much depends on location. "Certified Black Angus" and/or "Organic Grass Fed" rib eyes or filets can easily cost $15 for 12 oz. for choice in NYC. Location is important. Every time I hear some chef show talk about cheap cuts of beef like flank or skirt, I want to throw something at the TV hoping it will go through and strike the chef. Those cuts are a minimum of $10/lb here when discounted. Even chuck roasts run $7 to $8/lb when not on sale.
I'll have to go soon to double check my memory, but I looked online, and here's a prime NY Strip from 2018 at $13.99/lb from Costco, so I don't think my memory is too far off or outdated (though I have not bought prime beef this year yet, so it is possible prices have spiked.) Here's a prime brisket at $3.29/lb from this year. It may very well be a good bit cheaper here in Chicago for some reason. I did find a post on another message board that prime ribeyes were at $17.99/lb in a suburban Costco here last month, and last year in June they had prime tomahawks at $12.49/lb.

So, yeah, I guess not too bad around here.

But when it comes to regular choice cuts at regular grocery stores, chuck fluctuates, but it's typically about $4/lb, but might be cheaper on sale. I have choice shank in the freezer from July of this year because it was down to $1.99/lb at my local grocery, and it's one of my favorite stewing cuts. Flank or skirt isn't that cheap, though, but it's still cheaper than where you're at. We're looking at $7-$8/lb for those cuts (which I think is crazy high for those cuts.)
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Old 09-09-2019, 06:18 AM
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As to the difference between retail and wholesale cost of foods: I know a small rural cafe owner who gets part of the food for the cafe from a grocery chain rather than off the truck (from the food service supplier) because it's cheaper. So while restaurants are paying a little less for food than the general public, it is not a huge percent.
I've seen a few smaller restaurant, Cafe or even deli owners buying at the supermarkets. I think for them it makes sense, at larger restaurant however availability and needing mass quantities makes this a tricky option to manage and the truck is more dependable.
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Old 09-09-2019, 09:29 AM
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Restaurant vs grocery store prices


Quote:
Originally Posted by PastTense View Post
As to the difference between retail and wholesale cost of foods: I know a small rural cafe owner who gets part of the food for the cafe from a grocery chain rather than off the truck (from the food service supplier) because it's cheaper. So while restaurants are paying a little less for food than the general public, it is not a huge percent.


‘Small’ and ‘rural’ are the two operative words here. Delivery is one of the biggest costs in buying food wholesale. If you’re ordering small quantities for remote locations, the wholesaler is going to whack some serious delivery charges onto your order. The same wouldn’t be remotely true in a city of any decent size.

Retail is usually be anywhere from 50-100% more than the price the retailer paid the producer or wholesaler.


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Last edited by SanVito; 09-09-2019 at 09:31 AM.
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Old 09-09-2019, 09:43 AM
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Retail is usually be anywhere from 50-100% more than the price the retailer paid the producer or wholesaler.
Markup is going to vary wildly depending on what exactly is being sold (and where).

Supermarket margins are as low as 1-2%; the profit is entirely in the volume. The store only makes a few pennies on any given item, but they count on 1000 customers buying 200 items every single day, and 1000 more buying 10-50 items every single day.

ETA: Yes I am aware that markup and profit margin are not the same thing.

Last edited by DCnDC; 09-09-2019 at 09:44 AM.
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Old 09-09-2019, 11:58 AM
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I know that Chili's used to have a streak meal for around $16. At one time I thought that was cheaper than I could buy a comparable steak at the grocery store.
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Old 09-10-2019, 10:13 AM
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What type of steak was that in the OP? At my local supermarket in the UK I can get 30-day aged ribeye for £22.67/kg which according to Google works out to $12.70/lb.
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Old 09-10-2019, 10:19 AM
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What type of steak was that in the OP? At my local supermarket in the UK I can get 30-day aged ribeye for £22.67/kg which according to Google works out to $12.70/lb.
That seems crazy, crazy cheap, especially for the UK. Dry-aged stuff usually starts at around $20/lb here, and I've bought it at prices of up to $50/lb (For a couple of years, I would have a tradition where I bought myself a 45-day or maybe it was 60-day aged dry ribeye from an upscale grocery called Fox and Obel. My recollection was that they were $50/lb, and this was back in 2005/2006.)

That price would be about right for a choice-grade (second highest grade) ribeye at most places around here.I'd venture that cut at choice grade would be anywhere from $8-$16/lb, depending on where you shop. I've never seen dry-aged ribeye at that low a price, though. Like I said, I'd expect around $20/lb, maybe $16/lb at the very lowest end.

Last edited by pulykamell; 09-10-2019 at 10:22 AM.
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Old 09-10-2019, 10:29 AM
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That price would be about right for a choice-grade (second highest grade) ribeye at most places around here.
Or sometimes you can find prime at that price, depending on the store and time. I did manage to snag some prime ribeye from a local grocery (which I was shocked to find, as that grocery does not typically sell prime meats) during one of the recent holidays, and it was at I think $12.99/lb. But that price is more typical in the choice grade ribeye level, maybe a buck or two higher than usual, but within the range to be expected for that cut of meat at that grade.

Last edited by pulykamell; 09-10-2019 at 10:31 AM.
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