Your Dinner Cost You $40… What Did You Really Pay For?
The Real Cost Of Going Out
Made with Midjourney
Want to know something crazy?!
When you order a 1-ounce alcoholic drink that costs you $10, that same drink would have cost you less than $2 at home.
And that $40 meal you ordered last weekend - that would have cost you $8 to make at home.
Regardless of these prices, every day people go out and make these purchases.
I’ve been a restaurant owner and a nightclub owner, and time and time again I’ve heard people complaining about the price saying it would be cheaper to eat or drink at home.
The rising costs of living are frustrating, I know. However, when you know the reasons behind the prices of that delicious meal you just ate… it makes sense.
I am going to explain to you what you’re actually paying for when you go out.
Environment
Let’s be honest here. Your house sucks… for many reasons!
It’s small
It’s ugly
There’s no one there
The sound system sucks
Your chairs aren’t comfy
It makes you sleepy
There are no girls (or guys) there
There’s no A/C
Anyways, you get the point.
You’re going out because you don’t want to be at home. That means you’re entering someone else’s home (their business). You have to pay to do that.
This business you are entering has to pay for rent - which is one of their biggest expenses.
They have nice furniture, a sound system that costs close to $100,000.00, brand new tile floors, plants that need to be maintained, big windows that make the energy bills high, and so on, so on.
Oh, and don’t forget the marketing expenses to make sure the environment is busy so that you don’t walk in and say:
“Why isn’t it busy here? Let’s go to the next place!”
All of these expenses are necessary in order to create this beautiful environment that you are entering. These cost needs to be factored into the price of what you are buying from them.
What does that mean?
Your food or drinks are going to cost more than they cost if you were going to buy them from the grocery store.
Service
You don’t want to make that steak yourself.
While we are being honest, you don’t want to drive to the liquor store, let alone know how to make an Old-Fashioned.
That is why you came here after all, isn’t it? So that you wouldn’t need to make it yourself.
Typically the cost of the staff that is making your food and beverage will be 20-30% of a business’s expenses.
Do you see that pretty girl serving you? She has rent to pay, and a mouth to feed too. That’s why you’re paying $40 for your meal - you’re feeding her too.
You’re paying to feed her, and you’re also paying her to feed you.
Weird how that works, isn’t it?
The Ingredients
Now lastly, you are paying for the actual cost of the ingredients in your food and drinks.
And guess what?
That restaurant or bar, is paying the same cost (for the most part) for the alcohol, and food, that you are if you went to the grocery store.
Typically the ingredients in your meal and drink will only be around 20-25% of the business's expenses.
Do you see what I’m getting at here?
Conclusion
Let’s break this down quickly.
What are the expenses looking like for a restaurant or club?
Labour 20-30%
Product 20-30%
Rent+Utilities 20-30%
Marketing 10-15%
Miscellaneous 10-15%
This doesn’t include the hundreds of thousands (if not more) that it costs to get the business launched and ready for business.
And then the business has to add a markup so the risk of investing to create the business pays off. So they can survive, pay themselves and create a good workplace for the employees for years to come.
Of course, things will be more expensive when you go out, but it’s worth it from time to time!
Hopefully, this explanation helped.
Thanks for reading!
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