You order a New York Strip in an upscale restaurant; it weighs about a pound and costs $28. Your companion orders Pasta Primavera for $14.95.
So here comes the big question:
Which is a more profitable menu item for the owner?
You may be surprised at the answer.
Granted, steak costs more than pasta, everybody knows that. But the prices you see on a restaurant menu are misleading. It's not just the cost of the food that determines menu prices. Most experts advise owners to charge triple the price of the food itself (or slightly more) in order to stay in business, because the difference does not all go into the restaurateur's pocket.
That difference is meant to cover operating expenses, including cost of labor, insurance, taxes, rent, electricity and gas. And the restaurateur needs to make a profit as well.
Most successful restaurateurs realize, however, that they can't triple the price of everything, because their customers just won't pay those prices.
They must know the market; they must know their customers and perhaps most importantly, what they are willing to pay.
That strip steak (assuming it's choice grade and purchased trimmed) may well have cost the restaurant $16 a pound. Applying the rule would means the restaurant would charge $48 even without figuring the cost of any potato or vegetable accompaniment.
Let's face it, folks. Very few people in Western New York will spend $48 for an entree.
So the restaurateur has to finagle. He can opt to charge a lot less, say - $28. That gives him only $12 wiggle room to pay his other expenses. Which means he has to make up the difference somewhere.
Maybe he'll charge four times for the pasta entree, which costs him $3.50 for the ingredients.
Our figures are approximate because wholesale prices are dependent on supply and discounts, but one thing is abundantly clear. Less expensive foods like pasta and vegetables in season help subsidize higher-priced foods, like live lobster, shrimp or - strip steak.
"Pasta is a good thing to have on the menu," agrees Don Spasiano, who teaches food service administration and restaurant management at Erie Community College North. This is a principle known as "menu mix," he explains. Menu mix helps explain why a la carte side dishes can be so expensive and why soda pop costs so much at a burger place.
And, it almost goes without saying that a successful restaurateur had better master the concept of menu mix. It also helps if he's smart enough to hire a chef who knows how to cut down on waste.
Want to know another food that could provide a good subsidy for your steak? Hint: It's a big pink fish that gets good press because it's full of the kind of oil that's actually good for you.
It also tastes good.
Salmon was once considered a luxury because it was imported - Norwegian salmon sold for $7 a pound whole, says Mike Massey, warehouse manager of Southtowns/Isenberg, a major restaurant supplier in Western New York and a division of U.S. Food Service. And when the whole fish was cut up, about 65 percent of it was waste.
But now the great majority of restaurants use farmed salmon - it makes for a bigger fish and a steady supply. Last week, a whole farmed salmon was selling for around $3.75 a pound. (An accomplished chef could cut his own fillets and even manage to utilize some of the bones in, for instance, fish stock.)
And even if the chef or restaurateur didn't want to cut his own and chooses to buy salmon fillets all ready to go instead, he'd probably only be paying $5 to $5.40 a pound. (Not all that expensive when you consider last week, Alaskan halibut fillets were selling for $8 and swordfish for $10. Even haddock fillets can run close to $4.40 a pound.)
If the salmon portion served in a restaurant is half a pound, It would cost the restaurateur $2.70. He would exceed the standard rule even if he charges $9 for the salmon.
True, he has to figure in the accompaniments. And they can vary. Chef Mike Andrzejewski points out that luxury ingredients like wild mushrooms sell for $9 a quarter-pound before cooking and can add as much as $2 to food cost. Haricots verts, the skinny French green beans, cost more than ordinary fat string beans. The sauce that Andrzejewski prepares himself costs money, too.
But even if an owner adds another $4, a $13 salmon entree is not seen very often in an upscale restaurant. A price of $18 and up is much more common.
Get it? The salmon helps pay for the steak.
More wrenches can get thrown into the works, though. There is, in the restaurant industry (as well as in supermarket industry) the concept of the loss leader - pricing something practically at cost so that you induce customers to come into your place and, hopefully, buy lots of other food and drinks.
That practice is not as common as it was once was, perhaps. Remember the 10- or 25-cent chicken wing? You don't see it as much as you used to because the price of wings has gone up too far. Don Will of Will Poultry says this former throw-away item may now cost as much as $1 a pound wholesale - figure seven or eight pieces per pound.
That comes out to say, 13 cents per wing without taking into account the fat to fry them in. Or the hot sauce or even the celery or even the not-particularly distinguished blue cheese.
Not too many restaurateurs are willing to actually lose money on food.
So are restaurateurs gouging the public? Sometimes, maybe.
An unscrupulous operator can buy an inferior product like commercial graded beef and charge for choice beef. But that doesn't happen too often in the Western New York market, Spasiano insists.
Why? For one thing, because they can't get away with it. "We are very value-oriented here," he says.
What about the cost of appetizers, which many restaurant goers think is outrageous? Spasiano says that isn't necessarily gouging. Ordering an appetizer may increase the amount of your check but not necessarily the owner's profit, he says.
Many appetizers are made from expensive luxury ingredients like shrimp, oysters or lobsters; making them is labor intensive. They take as much time to make as a full entree.
Besides that, says the ECC professor, the size of appetizer portions served here is pretty enormous. That appetizer you pay $6.95 for is maybe half the size of the same thing served as entree, for which you'd pay $22.95.
That might be a way to beat the system - who knows?