Which is more profitable: a trendy pizza business with foreign cheese and a wood-burning oven, or a regular gas-oven slice joint? We urged the owners of Williamsburg’s Motorino and the Lower East Side’s Rocket Joe’s to open up their records.
Labor: $432,000 ($9,000 per week for twenty workers; Motorino is a full-service restaurant and pizzeria)
$832,200 in pizza (21,900 margherita pies at $10 each, plus 51,100 speciality pies at $12 each).
$90,000 in annual profit (revenue of $900,000 minus expenses of $810,000).
$182,500 in labor ($3,500 per week for five full-time workers and two part-time deliverymen)
$70,080 worth of pizza ingredients (domestic mozzarella cheese, sauce, flour, and sesame seeds for the crusta Rocket Joe’s specialty)
$348,444 from pizza (10,721 cheese pies at $13 each, plus 11,946 topped pies at $17.50 each)
$55,000 in annual profit (sales of $435,555 minus expenses of $380,555)
How do you figure out how much it costs to run a restaurant’s utilities?
Restaurant utilities typically cost $3.75 per square foot each year. A restaurant owner should expect to spend over $1,000 per month on gas and electricity if their establishment is roughly 4,000 square feet.
What are the costs of running a restaurant on a monthly basis?
Before we look at restaurant cost-cutting measures, let’s take a look at what normally makes up monthly restaurant spending. Know thy enemy, and so on.
The most frequent restaurant expenses are divided into two categories: beginning costs and operating costs. In this essay, we’ll look at common restaurant operating costs.
Typical Restaurant Operating Expenses
Here’s a list of restaurant operating expenses that can help you understand what you’re up against:
- The cost of occupying a space. This includes your rent, as well as utilities such as power, water, cable, phone, and internet, as well as property insurance.
- The price of liquor. Similarly, it is the cost of obtaining and preparing alcohol.
- The expense of labor. Payroll, benefits, on-site meals, sick leave, taxes, and uniforms are all covered.
Woof. The cost of an excellent corned beef sandwich adds up quickly in a restaurant. Now let’s look at how much they should cost.
Beginning Inventory + Purchased Inventory Ending Inventory = Cost of Goods Sold (COGS)
Let’s have a look at an illustration. Assume you want to acquire a better understanding of your inventory from the previous month. At the beginning of the month, you had $3,000 in leftover inventory, which included food, drinks, spices, and other materials basically anything and everything needed to put a meal on a plate and a drink in a glass.
You ordered $8,000 in additional product during the month and ended up with $2,000 in inventory.
After inserting those figures into the restaurant cost of goods sold equation, we arrive at the following:
Cost of Goods Sold = $9,000
In this case, your restaurant’s cost of products sold the entire amount spent on food and drink provided in your institution over the month is $9,000.
This interactive restaurant cost of goods sold calculator allows you to play around with the numbers. The calculator will ask you to add up all of your COGS and will assist you in breaking down your food and beverage products more precisely.
What should COGS be for a restaurant?
According to the Food Service Warehouse, your restaurant’s cost of goods sold (COGS) should not exceed 31% of sales. While COGS at fine dining restaurants may be slightly higher due to higher food prices, COGS in pizza shops should be in the low to mid 20% range due to reduced running costs.
How much electricity does a restaurant consume?
Restaurants have one of the highest energy intensities of any form of commercial structure in the United States. They utilize 38 kilowatt-hours (kWh) of energy and 111 cubic feet of natural gas per square foot on an annual basis.
What are the advantages and disadvantages of owning a restaurant?
Natural gas, electricity, water, cell phone, internet, cable, and other related items are all included as expenses. The cost of utilities varies depending on the size of your restaurant, its location, infrastructure, and weather. In general, restaurant operators should budget roughly 5% of their entire costs for utilities.
You can negotiate rates and bundle offers with your cable and internet service providers to keep your utility bills under control. Energy-efficient appliances can also help you save money on power.
In a restaurant, what is utility?
This is a low-level position in the restaurant industry, yet it has a significant impact on the whole atmosphere. During your shift, your main responsibilities will be to clean all of the dining room floors and detail the restrooms. You will be in charge of keeping the dish area clean, sterilized, and put away.
What is the cost of utilities?
The cost of using utilities such as power, water, waste disposal, heating, and sewage is known as utilities costs. Expenses are incurred throughout the reporting period, computed and accumulated for, or payment is made.
What are the most significant expenses in a restaurant?
The most significant costs for every restaurant are food and labor. Instead than looking at raw figures, concentrate on percentages. For example, instead of stating that the weekly food order would not exceed $5000, state that it will not exceed 30% of your weekly sales. The same can be said for your labor costs. In general, labor should account for less than 30% of overall revenue at your restaurant. There will inevitably be weeks when sales fall and costs stay the same or grow somewhat, putting those percentages back up.
What is a tiny restaurant’s budget?
The average size of a restaurant is 1500 square feet. The cost of land per square foot varies greatly between cities. There are two approaches you can take. You might either buy or rent a space to start your restaurant. The typical cost of purchasing space could range from 50L to 1Cr. Alternatively, the average monthly cost of hiring a place for your restaurant is between Rs. 30,000 and Rs. 1,00,000.
What should the price of a 16-inch pizza be?
The majority of customers understand that larger pizzas are a better deal than small or medium pizzas. Have you ever estimated how much better the huge or extra large pizzas are than the regular pizzas?
According to NPR’s The Salt, the 16- to 18-inch sizes look to be the best value.
The explanation is straightforward math: Four 8-inch pizzas or 1.3 14-inch pizzas have about the same number of square inches as one 16-inch pizza. However, a 16-inch pizza does not cost four times what an 8-inch pizza costs.
The Salt analyzed Grubhub Seamless price data to calculate a $16.59 average price for a 16-inch pizza (based on more than 74,000 prices from pizza places across the country.) The average cost of an 8-inch pizza is $8.25.
To get the same amount of square inches as one 16-inch pizza, we’d need four 8-inch pizzas, as we just witnessed. So you’d have to pay four times $8.25, or $33, to receive the same amount of pizza. In other words, ordering an 8-inch pizza will cost you twice as much per square inch as ordering a 16-inch pizza.
Aside from the math, a larger pizza also comes with a greater number of toppings. This is because a 16-inch pizza has less inches of crust per square inch than an 8-inch pizza. According to my calculations, there are about half as many: For every 50 square inches of pizza, an 8-inch pizza will have about 25 inches of crust. A 16-inch pizza, on the other hand, has 50 inches of crust for 201 square inches of pizza.
We can reduce the amount of crust if we want to get very geeky. If we assume the crust is one inch wide (for simplicity), an 8-inch pizza will have around 28 square inches of toppings. A 16-inch pizza, on the other hand, contains 154 square inches of toppings. As a result, the 16-inch pizza has 5.5 times the amount of toppings.
Some disclaimers, cautionary notes, and opinions on this math argument for ordering larger pizzas:
- To begin, let’s talk about money: ordering the largest pizza possible is only a good deal if you really eat it. Otherwise, you’re squandering your money.
- Second, there’s the issue of health: much of the pizza available in large sizes isn’t particularly healthy. If you buy more pizza, you’ll be more likely to consume it, possibly at times when you wouldn’t have ordered it otherwise. So buying in bulk isn’t always a wise idea.
- Third, the greatest value is determined by your favorite aspect of the pizza: if you enjoy crust, purchasing a large pizza may not be the best decision. Because there is less crust per square inch as the pizza gets larger.
- Finally, as my friend, a business major, pointed out, the price comparison assumes that the ingredients on the pizza are virtually all of what you’re paying for as a consumer. However, you must additionally pay for labor, power to cook the pizza, preparation of the components prior to cooking, and so on. When you take out the cost of the ingredients, the pizza maker is probably paying about the same for a large pizza as he does for a little one. As a result, the difference in price between a small and a large may not be as substantial as the example shows.
Do you have any further ideas on large vs. tiny pizzas? I’d love to hear them in the comments section below.
Do you want to have some pizza math fun and figure out square inches, etc.? Take a look at this simple circle calculator.