The Lessons of Restaurant Impossible: Food Cost

Though the Food Network’s Restaurant Impossible exists about as far from everyday reality as any other so-called reality TV, the lessons passed from host Robert Irvine to failing restaurateurs and finally to us, the viewers, remain valuable. Simple truth is — it’s a hard economic time to be in the restaurant business. As such, any decent lesson’s worth learning.

The first two repeated truisms Robert Irvine passes along in every episode are Have a Little Business Sense and Be Genuine, although the show never necessarily puts them this way. Both are important, though in different ways, and because being genuine better come naturally (or, you know, it isn’t genuine), it makes sense to talk about business in greater detail:

A basic tenet of food service management is keeping food cost down and pricing menu items competitively.

Let’s face it, most of us weren’t business majors. We’re not necessarily well-versed in economics or in business statistics; most of what happens in a small business on a day-to-day basis comes down to basic common sense — yet it’s amazing how frequently this seems to be lacking, if Restaurant Impossible sheds any kind of true light on the industry. The latest episode I watched — probably a rerun, as it came during an evening TV marathon — featured a restaurant run by a 22 year old woman whose father had bought the place and put it in her hands. She had experience in food service, she insisted — she’d been a waitress. And yet the restaurant was failing, as it had to have been to be on the program, and this was largely due to her lack of financial acumen.

Most restaurant managers aren’t at the level of this young lady, who hadn’t the slightest idea what any of her restaurant’s dinner entrees cost — and couldn’t even identify them by sight. Nor do I suspect most businesses employ people who show up to work hours and hours after opening and leave all food orders and reservation taking to their overworked head chef. Still, though, I know a lot of people aren’t too comfortable with the simple economics of business, which is where this lesson becomes valuable. Though most readers will be familiar with this lesson, I promise I’m not trying to condescend to anybody — reminders help the best of us, more often than not. Early in the episode-in-question, it came out that the young woman did not know what her food cost was — nor had she even heard of the term. Food cost, as I’m sure you know, refers to the total percentage of a restaurant’s sales spent on food products, which should be around 28-30%. Each item also has a food cost, which is what’s used to price the dish on the menu in such a way that the restaurant can be profitable. Food cost is important — it’s a simple, easy to calculate, figure that is central to the money-in, money-out foundation of any business.

So, Restaurant Impossible Real-World Lesson #1: To make money, you have to know what you’re spending. If your food cost isn’t kept low enough to price your menu competitively, or if your prices are too low to recoup your overhead, your business isn’t going to run successfully.

I’ll return Wednesday with another lesson or two.

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