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Joe Bastianich Claims Restaurant Makes 20% Profit

post #1 of 23
Thread Starter 

In Joe Bastianich's book he claims one of his restaurant makes 20% profit. I am a chef/owner and I've never heard of such a thing. Also he claims his rent is 6% of gross. In NYC?

 

For unique restaurants isn't profit more like 4 or 5% after everyone but the owner gets paid?

post #2 of 23

He could be meaning different things than you think. Profit  and Profit Margin aren't the same thing for example. Profit margin is just net sales divided by costs. Profit might be consumed in various methods to lower taxable income, plowed back into the business in the manner of amazon.com that shows little to no Profit to shareholders on its income statements, but certainly turns a profit on its sales. 

 

I don't personally respect what I've seen of Joe Bastianich and don't trust him as far as I can spit a rat. (This is not a well informed opinion, granted, just based off of what I've seen of him on TV.)

Palace of the Brine -- "I hear the droning in the shrine of the sea monkeys." Saltair
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Palace of the Brine -- "I hear the droning in the shrine of the sea monkeys." Saltair
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post #3 of 23

Here’s the Restaurant Math (Profits) according to Joe Bastianich:

30% goes to Labor Costs

30% goes to Food & Wine Costs

20% is Miscellaneous (including rent, linens, insurance, bug spray and other items)

20% is your profit

 

I don't concur with his 20% miscellaneous for a variety of reasons.

Wisdom comes with age, but sometimes age comes alone.
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Wisdom comes with age, but sometimes age comes alone.
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post #4 of 23
Drop the zero and it seems more in line with most places I've worked. Then again, best case scenario? Babbo might be able to do it. He says the bought it, so no lease. And its a lot of pasta, right? So theoretically, it might be possible for someone...
post #5 of 23


Chef Layne  !

You are correct this guy is delusional ,  He forgot    Permits and Licenses/Taxes/

Garbage removal, Uniform Rental and Cleaning/ Gas? Electric/ Equipment breakdown and replacement./Alarm rental. Couple all of this with NY City rents /Workmans Comp and Unemployment insurance                                20%net        IMPOSSIBLE

Chef EdB
Over 50 years in food service business 35 as Ex Chef. Specializing in Volume upscale Catering both on and off premise .(former Exec. Chef in the largest on premise caterer in US  with 17 Million Dollars per year annual volume). 
      Well versed in all facets of Continental Cuisine...

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Chef EdB
Over 50 years in food service business 35 as Ex Chef. Specializing in Volume upscale Catering both on and off premise .(former Exec. Chef in the largest on premise caterer in US  with 17 Million Dollars per year annual volume). 
      Well versed in all facets of Continental Cuisine...

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post #6 of 23

Even with lots of pasta, he is still talking reasonable food cost of 30%.

Wisdom comes with age, but sometimes age comes alone.
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Wisdom comes with age, but sometimes age comes alone.
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post #7 of 23

Joe's an old school Italian guy living in the right place at the right time.  I wouldn't doubt it.  :) 

post #8 of 23
Thread Starter 

What do you all think net profit (NOT profit margin) should be in a small plates place with 70 seats: rent at $5000 (seaside town) and paying myself as chef/owner 50k/yr

 

3%? 4%? 5%? (after paying myself, mind you)

post #9 of 23

What sales?

Wisdom comes with age, but sometimes age comes alone.
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Wisdom comes with age, but sometimes age comes alone.
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post #10 of 23
Thread Starter 
Quote:
Originally Posted by cheflayne View Post

What sales?
post #11 of 23
Thread Starter 
Let's forecast 600000
post #12 of 23

close to zero

Wisdom comes with age, but sometimes age comes alone.
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Wisdom comes with age, but sometimes age comes alone.
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post #13 of 23
Thread Starter 
Why, because rent is at 10%?
post #14 of 23
post #15 of 23
Quote:
Originally Posted by MaxS View Post

Why, because rent is at 10%?


That and your labor will probably run a little higher than 30%.

Wisdom comes with age, but sometimes age comes alone.
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Wisdom comes with age, but sometimes age comes alone.
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post #16 of 23
Thread Starter 
So don't bother opening a restaurant that grosses less than 700k unless rent is super cheap?
post #17 of 23

The restaurant that I work for has a 20-25% profit.  We run a very lean crew that works extremely hard.  I don't know where in the ballpark 125 grand on a slow week is; that's last week's gross sales.

post #18 of 23
Thread Starter 
6 million a year in sales?
post #19 of 23
I worked at a place that did 7 million and ran about 2% profit. It was the seasonality that killed it...
post #20 of 23

2% profit is not bad really, especially in places with checks over $25 per, that segment according to he NRA shows an average profit of 1.8% While seasonality will definitely effect profit, it will not really effect the percentage of profit.

Wisdom comes with age, but sometimes age comes alone.
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Wisdom comes with age, but sometimes age comes alone.
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post #21 of 23
Thread Starter 
Does it not seem idiotic to run a stressful and risk-filled business that grosses 1 million dollars, yet only yields $18,000 ? That's 1.8% of $1,000,000
post #22 of 23

There are reasons that I have been cured of restaurant ownership. ROI, both financial and emotional, being a definite contributing factor as to why I am a former owner, not a present one, and content  to maintain that status.

Wisdom comes with age, but sometimes age comes alone.
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Wisdom comes with age, but sometimes age comes alone.
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post #23 of 23

he also talks in the book about how the owner of the building tried to evict them because the former owner gave them a special friend price on the rent with a 35 year lease. think what your profits would be if the rent you paid was considered cheep 15 years ago. in todays market with the amount of inflation since then that would be huge savings. if they didn't have the low rent price it may be different but they are saving a ton of money  

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