Are you being overcharged at restaurants?

I love to cook. Pretty regularly I make a dish I’m confident could be in a restaurant, a fact I have no qualms telling everyone who will listen. My over-confidence aside, I often wonder how restaurants decide what to charge for a meal. I love a dinner out, but I can’t seem to make sense of pricing sometimes. And being the generally curious guy I am, I called up my friend Erin Till, the Director of Operations for the Neal Brown Hospitality Group (Indy locals know them as Pizzology and Libertine). Erin’s in the know, so I asked her to be on the radio show to talk me through the process restaurants go through to price a plate. Very interesting! Check it out here.

Courtesy of WIBC

I gave Erin a recipe to work with in her explanation. We’ve got a lamb shank, some cream, broth, and herbs to season it. Throw in some vegetables, and you have a beautiful meal. I know about how much I could buy these ingredients for in a store, but what would this plate cost at a restaurant?

According to Erin, the pricing of a plate comes down to the cost of the food items on the plate plus the cost of the labor to prepare it, serve it, and clean it up. Of course, to get the cost of each of these is a little more complicated. Every food item is weighed and then the cost is broken down by how many portions the full item will provide. Yes, even herbs and a light sprinkle of parmesan. Insane. To figure up the cost of overhead, Erin says there is an industry standard for fine dining restaurants. Generally, it’s to multiply the cost of the plate by 3. Casual dining and corporate-owned restaurants may use a different amount based on their overhead.

Let’s break it down. If the lamb on the plate costs $8 per serving and the rest of the ingredients are about $4, the food on the plate costs a total of $12. If it’s a fine dining restaurant, and they use the industry standard of multiplying by 3, the dish would cost about $36.

Here’s the thing, I could definitely prepare a lamb shank and vegetables for a decent price at home any night of the week, but when I go to a restaurant my ingredients are selected for quality, the food is prepared by a chef, it’s served by a knowledgable wait staff, and everything is cleaned up for me. Eating out was already worth the cost for me because of these reasons, but now seeing how much thought goes into pricing each and every item on a menu I feel even more confident a nice dining experience is worth the cost (on occasion, obviously).

 

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