6 ms·

Well, considering I can order food and pay practically the same delivery fee/tip that I have to pay for waiter tip + I don't have to pay the ridiculous "alcohol

by mrep 8y ago

Well, considering I can order food and pay practically the same delivery fee/tip that I have to pay for waiter tip + I don't have to pay the ridiculous "alcohol and fountain beverage" since I can drink that at my home that I already purchased: BooHoo. Maybee it is time they reduced their ridiculous "alcohol and fountain beverage" margins.

toomuchtodo 8y ago
Those beverage margins are what makes the razor thin food margins tolerable for the business (average restaurant margins are 2-6 percent). If you can’t turn a profit, no point wasting your time being in business (or accepting tech delivery platform orders). It behooves you for the restaurateurs you enjoy patroning to have healthy financials and not be squeezed, otherwise they can’t continue as a business.
- vorpalhex 8y ago
  Food margins are on average consistently > 66% if not more for many types of restaurants. Delivery services usually pass on costs to consumers (delivery fee + tip) which means they are only removing consumers buying alcohol - but that assumes if delivery were not available that I would go to the restaurant which is false. Delivery is not an alternative to going to a restaurant, it's an alternative to cooking at home.
  - rahimnathwani 8y ago
    You're right that food margins are typically 66%. But this considers only the cost of ingredients. So you'd rather sell a bottle of wine for $15 (that cost $5) than sell a meal for $15 (whose ingredients cost $5). On your final point, I suspect that delivery via Doordash or similar can take margin that a restaurant's own delivery service (via phoning in) would have made, and that Doordash has inserted itself as an intermediary (with a margin) where none was present before. The pie might be bigger but I'm not sure whether Doordash is capturing less than or more than 100% of the increase.
    - berbec 8y ago
      I owned two QSR franchises (Domino's pizza) for many years and our food cost hovered around 33%. Labor cost was about 22% leaving 45% for fixed cost. Once we got the business going (tripled sales after I took over), our profit was 10% on a good week. That meant a slump in sales, leading to overstating and food being just a bit higher than average and we lost money. It's really hard.
      - rahimnathwani 8y ago
        Yup, I've heard the restaurant business is hard. I would rather try to run a super-marathon than a restaurant.
- rahimnathwani 8y ago
  Your comment uses the word 'margin' in two different senses, which makes it hard to evaluate its claims. When you talk about 'beverage margins' or 'food margins', you must be talking about 'gross margin', i.e. [selling price, less direct costs of good sold] / [selling price] When you talk about 'restaurant margins' and mention 2-6%, you must be talking about net profit margin (i.e. profit as a percentage of revenue). It seems like you're comparing gross margin on beverages, with net margin for a restaurant overall. Not apples to apples. The markup on food (based on ingredients only) and wine is similar (3x). It costs virtually nothing to store wine or to prepare it for sale. But the process to take ingredients and make a meal takes a lot of labour and machines.
  - deleted 8y ago
    [deleted]
  - compcoffee 8y ago
    >It seems like you're comparing gross margin on beverages, with net margin for a restaurant overall. Not apples to apples. Oh brother. The high gross margins on beverages positively contribute to the net margins. The point is that most restaurants aren't crushing it, margins are thin, and a middle-man taking a cut doesn't help. on
    - rahimnathwani 8y ago
      "The point is that most restaurants aren't crushing it, margins are thin, and a middle-man taking a cut doesn't help." Yes, I agree with you. See my other comment: https://news.ycombinator.com/item?id=17780385 https://news.ycombinator.com/item?id=17780385
  - cwilkes 8y ago
    “It costs nothing to store wine”. Well except the amount paid for it and having it sit around not doing anything.
  - SmellyGeekBoy 8y ago
    > It costs virtually nothing to store wine or to prepare it for sale. Well, except the cost of the space. Oh, and the refrigeration. Oh, and employing a sommelier (if it's a higher end restaurant). Other than that, virtually nothing.
- nitwit005 8y ago
  It's not the customer's fault restaurants decided "lets make all the cash off drinks" was a brilliant business model. It wouldn't be the first time an industry shot itself in the foot with strange pricing strategies.
  - sonnyblarney 8y ago
    Yes it is. Customers are opting to go where the food is cheaper, and the drinks are more expensive. That's why it is that way. Restaurants would love to have higher margins on food.
    - nitwit005 8y ago
      Not exactly. There's some minority of customers fooled by that pricing, and that minority is driving that pricing scheme. The restaurants chose to diverge from the underlying pricing, knowing that there was a risk that people would catch on, or the underlying economics would change. I'd note that some have given up on it because it stopped working. McDonnalds just charges $1 for any drink, because the customers came to understand it was overpriced, and learned to work around their pricing shenanigans.
      - sonnyblarney 8y ago
        "There's some minority of customers fooled by that pricing, and that minority is driving that pricing scheme." Nobody is fooled by the prices of things, they see it. And a minority wouldn't change pricing schemes. We look at the food list, then the drink list and that's that.
        nitwit005 8y ago
        The goal of the pricing scheme is to deceive people into thinking they can get their meal cheaply, as the main meal is cheap, and what's advertised. It's 100% about tricking a minority of customers. That's the entire idea.
- Fnoord 8y ago
  If the margins are on drinks you can be reasonably sure the food is salty instead of healthy.
branchless 8y ago
Guess what their main cost is? Your main cost: rent Tax land, not labour.
nashequilibrium 8y ago
I wonder how much time the avg person spends at home now vs the 90s, I'm sure its way more now.
- acct1771 8y ago
  Well, why not? I can meet everyone on Tinder, and experience my friends/the town on Facebook just the same! </SARCASM>
  - Spivak 8y ago
    /anecdata My friends and I seem to go out a lot less. It's more fun to 'tailgate' at home with takeout and a nice TV. Going out to the bars is a lot less appealing than hitting up the liquor store. It's so much more fun to get wine drunk and order random stuff on Amazon than it ever was to go to the mall. Going to the nice grocery stores and cooking for each other has pretty much replaced fine dining. We used to hit up the barcade pretty frequently but retropi has got us covered. A lot of spontaneous hangouts take place on Discord where we're not even playing games. Why would we want to go to a movie theater and pay like $28/person when I can make boatloads of fresh popcorn, grab some bulk candy, and make extra plump weenies with our nice TV and surround sound? Video game nights have replaced things like bowling. It's not that we're being less social, it's just that stuff at home-ish is a lot more worthwhile than the typical canned activities. Plus, doing something in the same room as other groups od strangers wasn't really being all that social anyway.
    - acct1771 8y ago
      People used to do that with different groups of people every week. Now, we can't afford the time/money to socialize, and if you get to a particular position in life (usually after University), you're stuck in a rut.
- krrrh 8y ago
  Tyler Cowen goes into this in his book The Conplacent Class. Some interesting data he works into the theory: home interiors have gotten better while exterior architecture has gotten worse and is valued less, fewer teenagers are getting driver’s licenses, lots of recent tech innovation has made staying at home more attractive (on-demand streaming, flat panel TVs, internet in general, food delivery and Amazon).

by mrep 8y ago

toomuchtodo 8y ago

Those beverage margins are what makes the razor thin food margins tolerable for the business (average restaurant margins are 2-6 percent). If you can’t turn a profit, no point wasting your time being in business (or accepting tech delivery platform orders). It behooves you for the restaurateurs you enjoy patroning to have healthy financials and not be squeezed, otherwise they can’t continue as a business.

vorpalhex 8y ago
Food margins are on average consistently > 66% if not more for many types of restaurants. Delivery services usually pass on costs to consumers (delivery fee + tip) which means they are only removing consumers buying alcohol - but that assumes if delivery were not available that I would go to the restaurant which is false. Delivery is not an alternative to going to a restaurant, it's an alternative to cooking at home.
- rahimnathwani 8y ago
  You're right that food margins are typically 66%. But this considers only the cost of ingredients. So you'd rather sell a bottle of wine for $15 (that cost $5) than sell a meal for $15 (whose ingredients cost $5). On your final point, I suspect that delivery via Doordash or similar can take margin that a restaurant's own delivery service (via phoning in) would have made, and that Doordash has inserted itself as an intermediary (with a margin) where none was present before. The pie might be bigger but I'm not sure whether Doordash is capturing less than or more than 100% of the increase.
  - berbec 8y ago
    I owned two QSR franchises (Domino's pizza) for many years and our food cost hovered around 33%. Labor cost was about 22% leaving 45% for fixed cost. Once we got the business going (tripled sales after I took over), our profit was 10% on a good week. That meant a slump in sales, leading to overstating and food being just a bit higher than average and we lost money. It's really hard.
    - rahimnathwani 8y ago
      Yup, I've heard the restaurant business is hard. I would rather try to run a super-marathon than a restaurant.
rahimnathwani 8y ago
Your comment uses the word 'margin' in two different senses, which makes it hard to evaluate its claims. When you talk about 'beverage margins' or 'food margins', you must be talking about 'gross margin', i.e. [selling price, less direct costs of good sold] / [selling price] When you talk about 'restaurant margins' and mention 2-6%, you must be talking about net profit margin (i.e. profit as a percentage of revenue). It seems like you're comparing gross margin on beverages, with net margin for a restaurant overall. Not apples to apples. The markup on food (based on ingredients only) and wine is similar (3x). It costs virtually nothing to store wine or to prepare it for sale. But the process to take ingredients and make a meal takes a lot of labour and machines.
- deleted 8y ago
  [deleted]
- compcoffee 8y ago
  >It seems like you're comparing gross margin on beverages, with net margin for a restaurant overall. Not apples to apples. Oh brother. The high gross margins on beverages positively contribute to the net margins. The point is that most restaurants aren't crushing it, margins are thin, and a middle-man taking a cut doesn't help. on
  - rahimnathwani 8y ago
    "The point is that most restaurants aren't crushing it, margins are thin, and a middle-man taking a cut doesn't help." Yes, I agree with you. See my other comment: https://news.ycombinator.com/item?id=17780385 https://news.ycombinator.com/item?id=17780385
- cwilkes 8y ago
  “It costs nothing to store wine”. Well except the amount paid for it and having it sit around not doing anything.
- SmellyGeekBoy 8y ago
  > It costs virtually nothing to store wine or to prepare it for sale. Well, except the cost of the space. Oh, and the refrigeration. Oh, and employing a sommelier (if it's a higher end restaurant). Other than that, virtually nothing.
nitwit005 8y ago
It's not the customer's fault restaurants decided "lets make all the cash off drinks" was a brilliant business model. It wouldn't be the first time an industry shot itself in the foot with strange pricing strategies.
- sonnyblarney 8y ago
  Yes it is. Customers are opting to go where the food is cheaper, and the drinks are more expensive. That's why it is that way. Restaurants would love to have higher margins on food.
  - nitwit005 8y ago
    Not exactly. There's some minority of customers fooled by that pricing, and that minority is driving that pricing scheme. The restaurants chose to diverge from the underlying pricing, knowing that there was a risk that people would catch on, or the underlying economics would change. I'd note that some have given up on it because it stopped working. McDonnalds just charges $1 for any drink, because the customers came to understand it was overpriced, and learned to work around their pricing shenanigans.
    - sonnyblarney 8y ago
      "There's some minority of customers fooled by that pricing, and that minority is driving that pricing scheme." Nobody is fooled by the prices of things, they see it. And a minority wouldn't change pricing schemes. We look at the food list, then the drink list and that's that.
      - nitwit005 8y ago
        The goal of the pricing scheme is to deceive people into thinking they can get their meal cheaply, as the main meal is cheap, and what's advertised. It's 100% about tricking a minority of customers. That's the entire idea.
Fnoord 8y ago
If the margins are on drinks you can be reasonably sure the food is salty instead of healthy.

branchless 8y ago

Guess what their main cost is? Your main cost: rent Tax land, not labour.

nashequilibrium 8y ago

I wonder how much time the avg person spends at home now vs the 90s, I'm sure its way more now.

acct1771 8y ago
Well, why not? I can meet everyone on Tinder, and experience my friends/the town on Facebook just the same! </SARCASM>
- Spivak 8y ago
  /anecdata My friends and I seem to go out a lot less. It's more fun to 'tailgate' at home with takeout and a nice TV. Going out to the bars is a lot less appealing than hitting up the liquor store. It's so much more fun to get wine drunk and order random stuff on Amazon than it ever was to go to the mall. Going to the nice grocery stores and cooking for each other has pretty much replaced fine dining. We used to hit up the barcade pretty frequently but retropi has got us covered. A lot of spontaneous hangouts take place on Discord where we're not even playing games. Why would we want to go to a movie theater and pay like $28/person when I can make boatloads of fresh popcorn, grab some bulk candy, and make extra plump weenies with our nice TV and surround sound? Video game nights have replaced things like bowling. It's not that we're being less social, it's just that stuff at home-ish is a lot more worthwhile than the typical canned activities. Plus, doing something in the same room as other groups od strangers wasn't really being all that social anyway.
  - acct1771 8y ago
    People used to do that with different groups of people every week. Now, we can't afford the time/money to socialize, and if you get to a particular position in life (usually after University), you're stuck in a rut.
krrrh 8y ago
Tyler Cowen goes into this in his book The Conplacent Class. Some interesting data he works into the theory: home interiors have gotten better while exterior architecture has gotten worse and is valued less, fewer teenagers are getting driver’s licenses, lots of recent tech innovation has made staying at home more attractive (on-demand streaming, flat panel TVs, internet in general, food delivery and Amazon).