Meet the 11 industry groups jacking up your restaurant bill
Written by Christy Bowman
May 09, 2018 |
If you think your restaurant dollar is spent on farming, transportation between the farm and restaurant, and restaurant staff like cooks and waitresses, you're way off. Those costs don't even add up to 50 cents on every dollar you spend at a restaurant. Instead, take a look at these 11 industry groups who are jacking up your restaurant bill.
The Expected Costs
The first three costs are those you likely expect to pay as part of every dollar you spend at a restaurant:
7.8 cents - Farm Production
Its not surprising that food has a farm production cost. Food needs a place to grow and people to manage that farm. Further, farms incur fertilizer costs, irrigation and the costs to acquire and maintain equipment for planting, harvesting, and storing crops. What is a harder to believe is that for every dollar your spend at a restaurant, only 7.8 cents of that dollar goes to farm production costs.
3.6 cents - Transportation
Getting food from the farm to the restaurant requires transportation. And although transportation costs are usually the "bad guy", in terms of your restaurant bill, transportation only consumes 3.6 cents. This is due to restaurants bulk buying food and helping save on transportation costs.
36.3 cents - Food Services
Having your food prepared and delivered to your table takes effort, and that effort takes money. 36.3 cents of every dollar you spend at a restaurant goes to food services staff like the chef who cooked your meal and the waitress who served it to you.
The Hidden Costs
These next 8 costs are much less obvious and are likely not the reason you are going out to a restaurant.
15.2 cents - Food Processing
Everything you eat at a restaurant has been processed to some degree. Ideally, that processing is minimal, such as with fresh local foods prepared by a chef whose aim is to allow the natural flavor of the food shine. In reality, most foods served at restaurants are a carefully crafted blend of salt, sugar and fat prepared by lab technicians whose aim is to have you reach the "bliss" point and crave a return visit.
2.4 cents - Packaging
Lots of food gets packaged. Even lettuce arrives in a grocery store in a plastic wrapper. We're so used to it, we ignore it. Still, food packaging is probably not the reason you went to a restaurant. The good news: food packaging is the smallest cost you'll pay out of each restaurant dollar on this list.
9.1 cents - Wholesale Trade
Wouldn't it be nice if your restaurant purchased food directly from a farmer? You would get farm fresh ingredients and costs would be minimal because there were no middle men. Sadly, that's not reality. Instead, farmers bulk sell food to wholesalers who in turn parcel out food to retail groups. That process means wholesalers take their cut of your restaurant dollar.
12.4 cents - Retail Trade
Building on the wholesale trade is the retail trade, where intermediaries act between wholesalers and the restaurant you visit. Your local grocery store is part of the retail trade, and restaurants work with grocery stores such as Costco to get their supplies.
3.9 cents Energy
Energy costs are broken out separately from farm or transportation costs. While it is good to know this data, it does show that costs for transportation are paying for drivers and trucks, not the fuel to power them.
3.3 cents - Finance and Insurance
Listed separately are costs that go to the overhead of finance and insurance. Once again, transparency is positive, but if Finance and Insurance is removed from all other categories on this list, it helps go to show how much these individual items cost in isolation.
2.6 cents - Advertising
Advertising is a act of life. Restaurants compete fiercely for customers, and as a result advertising is an unavoidable cost. The good news is that although advertising is pure overhead and almost certainly not something you'd prefer to actually pay for, it does come in as the second least costly entry on this list.
3.5 cents - Other
This line should really make you gasp. With all the other costs involved in jacking up your restaurant bill, its hard to believe 3.5 cents goes to unaccountable destinations.
The Bottom Line
Your restaurant bill is jacked up by 11 different groups, and you probably didn't even think about 8 of them. The actual food prepared and served for you to eat at a restaurant costs less than 50% of what you pay. Now that you know where your restaurant dollar goes, what does that mean for you? Will you change how often you go out to the restaurant?