Around my neighborhood, there’s a number of very small restaurants that have very limited hours - they’re open only for breakfast and/or lunch. One diner near me is open for breakfast and lunch for only a few days of the week.
I always wondered how such restaurants were able to survive, financially speaking. The rent for the space is the same as a restaurant with longer hours. The have the same equipment as a restaurant with longer hours; it’s sitting idle during what could be dinner. Many of these restaurants are quite small; the diner I mentioned above only has five or six tables. So, how do they manage to stay in business?
All the ones I’ve seen are in industrial complexes, or areas w/ lots of offices. They cater to the working crowd, which goes home at the end of the day.
Limited hours operations are often family run. You don’t need to bring in nearly as much revenue if you’re not paying salaries to your employees and trying to make a profit. Your profits are your salaries or your salaries are your profits and the place is otherwise break even.
If it’s in a place where rents are relatively low, a lot of the overhead costs of running a restaurant are food costs (which are much lower for breakfast and lunch than dinner) and labour costs (which are a lot lower if you’re not paying someone to cover the hours of 2-5 when no one is there anyway). Not being open for dinner also means you’re less likely to need/want a liquor license and liquor inventory (which also brings down insurance costs).
I don’t know how they do it but I remember seeing a Chicago style hotdog place open in a strip mall near my house. However I never got to eat there because they were only open from 12-3, Monday-Friday and I worked 9-5 on the other side of town.
Apparently the business lunch crowd was enough to keep them in business.
They survive the same way that summer-only ice cream stands survive in the frozen north.
They make enough money at the limited time period they’re open.
This is not unusual at all for retail. Many retail stores lose money during the year and make their annual profits during the Christmas sales period. That’s where “Black Friday” comes from. It’s the day when stores start operating in the black. They’d love to just operate for this limited time but that’s not a realistic option. So they try to minimize their losses for the rest of the year to be around to take advantage of the boom times.
Why not ask how the restaurants that are only open for dinner make money without breakfast? It’s exactly the same principle. They only open for the time that will make them money. Why lose money by operating at non-profitable times?
Oh, does that take me back. There used to be a restaurant on Phila Street in Saratoga Springs that opened around 1:00 am to cater to the crowd that thought that a big plate of fried eggs, sausages, and home fries was the best thing after a night of debauchery. I don’t even know if this place stayed open for lunch, they may have closed around 11:00 am. I could get two eggs, toast, and coffee for 69 cents. With side items like home fries and bacon I could still bring breakfast in for under three bucks.
It was a counter style diner, no waitstaff, run by the owner, who did all the cooking and serving. The guy’s name was Phil, and we, in an unfair alliterative fashion, always called it Filthy Phils’. It wasn’t though, not fancy, but clean. He’s probably been gentrified out of existence for 25 years or more by now. Thanks for the nostalgia.
In Ann Arbor there’s a very popular bar which, due to its unique position vis-a-vis zoning laws, must close at 10pm. 10 pm in a college town. In addition, it is completely closed for business November-March. Apparently they make enough during the warmer months, before the hour of 10pm, that it lasts them the whole year.
While the fixed costs stay the same, the marginal revenues of staying open possibly don’t outweigh the marginal costs. In other words, they might be losing money when they stay open for the other costs, labor, electricity, food costs (meaning to stay open they might need to have more food prepared or prepped).
Our local hole-in-the-wall, breakfast and lunch only diner is the Cozy Cafe. It’s difficult to tell from that photo, but that little building sits just in front and to the right of a little house, the side of which borders the rear patio area of the cafe, on which they’ve hung all their menus, etc. I suspect that the owner of Cozy’s, George, is also the owner of the house, and therefore doesn’t rent the restaurant space, but actually owns the building. Great place, by the way!
I have a restaurant like this in my hometown, they are open 7am-4pm only about 3 days a week. I know the owners personally, and they do it as a hobby, not for a living.
I’m sure the building is paid for, but they still have salaries, electricity, etc. I think they just barely break even every month.
I was like, now which bar did she… oh yeah! Place is always packed.
Anyway, perhaps Elmwood’s question isn’t just about the limited hours they are open, but that they are only serving meals which (at many places) seem to be low in price.
Are ingredients sufficiently cheap so that the margins on breakfast and lunch are good?
That too. The restaurants that are open for lunch and dinner tend to be middle-end and higher-end establishments, or high-traffic fast food and take-out/delivery joints. The breakfast-only and lunch-only restaurants around me are usually low-end diners, where you’ll seldom pay more than $6 or $7, including tip, for your meal.
Lots of those places in my area, too. Their big business is truly carryout, though. They spread their handbills to all of the hundreds of light industrial and office workers in the area. The guys in shipping pool their money to send George out to Jean’s Ham Cafe on Monday, while the office ladies send Georgia out with their money to Frank’s Luncheonette. They come back with huge bags full of styrofoam containers will full means, napkins, spices and salt, and eating utensils, plus beverages. Cheap food, quick, and super quality, and a hell of a lot better than most of the roach coaches.
Well, yes. Think about it. 1 dozen eggs costs $1.25 at the most, sometimes as low as 89 cents in a retail setting. That’s less than 10cents per egg, and we can assume that people who buy in bulk pay less. Onions and potatoes are the second cheapest foods known to man, after eggs. and can’t be more than 10-20 cents per diner serving.
You can slap an 10 cent egg on 20 cent bun, charge $1.50 and people will call it a bargain. What is that, 500% markup?
Put 2 10 cent eggs next to some 20 cent fried potatoes and you can charge $3.00, throw in free coffee just for kicks, and still come away with a hefty profit per unit sold. Now, the profit per meal is somewhere in the $2.50 range, so you need a lot of volume to earn a living.
Part of the reason is that breakfast/lunch is, by itself, a long day. My favorite place opens at 6:00 am and closes at 2:00 pm. That’s an 8-hour day. The owner wants to be there personally and work the restaurant all the time. If she stayed open for dinner, she’d be looking at 15-hour days at least.
Additionally, many of the breakfast-only places are small. They have enough room to store everything they need for preparing a good breakfast menu, but not enough for a good dinner menu, too. People frequently expect dinner places to serve beer and wine, which means more different kinds of glasses, an expensive liquor license, and cooler space for the beer. If you’re open for dinner, you need desserts, dessert plates, different breads than you serve with breakfast, a wider variety of drinks, more cooking utensils, and so forth. A lot of the smaller restaurants barely have room to store what they need to prepare and serve breakfast in a day.
Operating hours are a very personal decision. I run a retail store, and many of the nearby shops have pushed me to stay open later. I’ve done some experimenting and found that keeping my bookstore open after 6:00pm during the busy season generates plenty of traffic, but it doesn’t generate enough sales to pay for the extra employee time. It also doesn’t cover the headache of having to juggle schedules and bring in extra people, since I won’t ask my employees to work longer than 8 hours in a day.
Along the Jersey shore, there are a number of restaurants that do breakfast from 7am - 1pm, Memorial Day through Labor Day. The rest of the year the owners hang out in Florida.
I worked for a guy who ran a ‘pancake hoouse’ from Mem Day to Labor Day (a touch more than three months for those not familiar with USA holiday season) and he cleared 300k for the season after every expense was paid. Plus many of his staff were sisters, nieces and other family members who pulled in salary plus tips.
The whole business model was built on good, fast breakfast, all which has very very good margins and little stress compared to serving dinner. OMG, cranking out breakfast in a pancake house is a joke compared to trying to serve dinner to people. I’ll take the pancake house business model any day. Heck, we were on the beach or boating by 2pm every day.
We have a place like that near us, only it’s open for dinner not breakfast or lunch.
It’s a pizza place that is open 4-10, no Mondays. There’s a tiny dining room. They don’t take credit cards. They don’t deliver. But they are always packed and considered the best pizza in town (a small town with a dozen pizza places).
My assertion has always been that they are the least convenient place to eat at, but it’s still worth going there for the food and the prices. Their pizza is so good and the price is great - that is how they stay in business.
Same with your lunch/breakfast places - good enough food, good prices, convenience…works for them.
