Restaurant Owner Shows Us Exactly How Much Dishes Are Marked Up

Business Insider

The average American household spends $2,620 annually eating out, compared to $3,838 eating at home. Consumers do it because eating out is fun, even though everyone knows that eating out is much more expensive.

To get a better sense of how much of a markup goes on at restaurants, we interviewed the owner of a nice Italian restaurant in Northern California.

"Our whole objective was to make good food at prices where people feel they didn't have to take a mortgage to come here and eat ... but if you want, you could buy a bottle of wine for $950 and you can eat the most expensive dishes and spend much more," said the owner, who preferred to remain anonymous.

Remember, the markup covers the cost of preparation and running a restaurant, as well as payment for the owner and employees.

Here are some pictures  of real dishes at the restaurant along with the raw price and menu price:

Spaghetti with tomato sauce

Raw price: $6.00

Menu price: $14.00

This one is pretty dang easy to cook at home. Still, the pasta you'll get at this restaurant has a superior homemade sauce, with fresh tomatoes, which can cost a lot in the winter.


Risotto with seafood 

Raw price: $16.00

Menu price: $24.00

A more expensive and more complicated meal, with a lower percent markup.


 

Broccolini

Raw price: $3.00

Menu price: $8.00

 

Potatoes

Raw price: $2.50

Menu price: $8.00

Potatoes are one of the only vegetables that grow year-round so their prices vary little.


 

Bottle of wine

Retail price: $19.50

Menu price: $29.00

Wine is easy to markup because people will always pay for it to go with their meal.  But markups do depend on the discount the restaurant owner gets from the vendor.


 

Gelato

Raw price: $3.00

Menu price: $8.00

Gelato is bought in packs of five pounds at this restaurant, costing them $37.50 per purchase. 


 

Cappuccino

Raw price: $1.50

Menu price: $4.00


 

Tea

Retail price: $1.00

Menu Price: $4.00

Tea is one of the cheapest things you can buy at the grocery store. But this is one of the highest markups on most menus. The brands used at this restaurant are Novus and Mighty Leaf.

 

At least the bread, which costs the restaurant $2.50 per pound, is provided free for diners.

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