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How a New York restaurant loses money on a $ 14 sandwich

We often assume that we understand restaurant economics because we know what a chicken breast costs in the supermarket. „I could make this dish at home for $ 5,” says the chorus. Could we? Here, Eater examines all the costs in a popular restaurant dish to see what’s in it and how much profit it comes out of.

Like many restaurants, New York’s Dirt Candy was a different business before the pandemic. It served with 35 employees just a tasting menu (plus half a dozen à la carte dishes at the bar), guests comfortably eat fennel tagine, seaweed caviar with crème fraiche or beet yakitori. „The food [at] Dirt Candy is unsuitable for delivery, ”said owner Amanda Cohen in Spring 2020, unsure when it could open again. „We should have come up with a new menu.”

That’s exactly what she did. Since July 2020, Cohen and a much smaller crew of six have been making complicated soups (fava bean bouillabaisse), salads (grapefruit and watercress), and sandwiches to take away and deliver, and have opened a restricted dine-in service on a street terrace. After staff are fully vaccinated, Dirt Candy is slated to reopen for lunch and dinner on May 20th. Starting May 21, the takeaway / delivery menu will only be available during the day. Here’s what it costs to make the $ 14 spinach croque monsieur: a piece of country bread with spinach bechamel; thinly sliced ​​celeriac that has been smoked and marinated in olive oil; shredded Gruyere; sauteed spinach; more spinach bechamel; grainy mustard; another slice of bread smothered with a third layer of spinach bechamel; Spinach puree; and more crushed Gruyere, all popped in the oven until the cheese bubbles and browns, and topped with an egg with the sunny side up. It was a popular item on Dirt Candy’s pandemic menu, but it also requires a lot of hidden work.

Menu price: $ 14

Total restaurant cost: $ 14.80
Profit (pickup): – $ 0.80 (loss)
Profit (delivery): – $ 2.92 to – $ 2.48 (loss)
Profit (alfresco dining): $ 0.90 (profit)

Grocery cost: $ 3.45

Bread: $ 0.48
Bechamel: $ 0.27
Gruyere: $ 0.71
Celeriac: $ 0.34
Spinach (sauteed): $ 0.30
Spinach puree: $ 0.03
Grainy Mustard: $ 0.05
Fried egg: $ 0.14
Butter: $ 0.03
Cornichon: $ 0.01
Packing: USD 1.10

Overall, the company accounts for an average of 20.7 percent of food costs. By storing bread (“Pain D’Avignon makes it much better than I ever could”) and using expensive cheese sparingly, the ingredients for this dish remain a little more than 16 percent. Until we include packaging, a current takeaway and delivery requirement that restaurants depend on. Choosing an oval container made from biodegradable and compostable sugar cane pulp increases food costs by up to 24 percent.

However, the cost of preparing a meal in a restaurant goes beyond the food itself. There’s also the people to pay to cook and serve, to own and maintain the equipment to enable them, and also the space in which to do anything in the first place. The price on the menu reflects the cost of running the store. here is how.

Labor cost: $ 7

Since moving in 2015, Dirt Candy has been one of the few full-service American restaurants that operates without a tip. It is expensive to pay employees a liveable wage instead of allowing tips to subsidize their income. Comparable restaurants usually operate at around 30 percent labor costs. Dirt candy is closer to 50 percent. Because of this, workers’ wages account for half of what customers spend on the court.

Fixed cost: $ 4.34

As revenue has declined, fixed costs (rent, insurance, bank charges, POS, garbage, dishwasher, security, shredders, hood cleaning, phone, etc.) as a percentage of sales have effectively doubled from 15 percent to 31 percent. The rent of 14,500 USD has not decreased. Now there are new costs, like heating a terrace. Dirt Candy’s electric bill increased from $ 2,000 in February 2020 to $ 6,000 in February 2021.

Third-party shipping and take-out charges

Despite all this, the croque monsieur is almost profitable up to delivery contracts from third parties. Companies charge different customers different tariffs. For Grubhub / Seamless it is 13.05 percent plus 30 cents. That’s $ 2.12 on an order over $ 14. Instead of using Grubhub’s couriers for orders coming in through the p, Dirt uses Candy Relay for delivery. Relay charges $ 5.50 per order forwarded to the customer.

For DoorDash / Caviar, it’s 20 percent for delivery, which is $ 2.80. For pickup orders, DoorDash charges 12 percent, which is $ 1.68.

When you order through ChowNow, which has a flat fee of $ 149 / month, there is no commission, so the restaurant generates more revenue. Like Grubhub, ChowNow uses Relay for delivery, charging the customer a fee of $ 5.50.

Profit or loss

These numbers show that Dirt Candy is currently operating at a loss in selling food. The math of the croque monsieur plays a role on the dirt candy pandemic menu, with the exception of cocktails that generate profit. Last year, Dirt Candy was subsidized between the Forgivable Paycheck Protection Program and Disaster Damage Injury Grants at about 27 percent of projected revenue for a healthy year. With help, it works effectively at a loss until economic and security conditions allow Cohen to do the kind of business she wants again.

Until then, Dirt Candy will only lose 80 cents for the croque monsieur if you call your order and collect it yourself. Placed through Grubhub, it costs $ 2.92 for the restaurant and $ 2.48 with DoorDash.

„I think about closing at least once a week,” says Cohen, who supports the restaurant with side appearances and works to make it to the other side of this disaster. “I don’t think the Dirt Candy story is over. I don’t think we’ve done all we can. We’re getting better every year and I’m always excited to see what will happen next. „

What’s next is coming soon: When Cohen reopens the indoor dining restaurant on May 20, she is raising prices to better compensate the staff she believes failed last year. This is clear progress on a topic that has long been debated among restaurateurs. They have argued that in order to pay everyone well, menu prices need to rise to levels that can put off customers. Cohen charged this increase with an additional $ 30 for the tasting menu. She will be one of the first American restaurant owners to find out if diners are willing to pay the real value of a meal for which workers are adequately compensated.

„If you had paid attention to the food media in 2020, you would have walked away thinking it was the year of the worker,” says Cohen. “This year we have described restaurant staff and delivery staff as essential. We have called them heroes over and over again. We said we had her back. Right now we need to put all of these words into action. „

Corey Mintz, a food reporter focused on working in restaurants, is the author of the upcoming book The next dinner: the end of restaurants as we knew them and what’s next (Public Affairs 2021)