Thursday, November 7, 2013

The Business: The 'True Cost' of Integrity.

I get a lot of complaints that my food is too expensive. To be quite honest, I've never once overcharged what I felt was unreasonable. I think a fallacy they make more than often, is that people compare prices of what they had somewhere else to what I am charging.  I get complaints all the time about my Ramen! The problem is a lot of people have their opinions completely out of perspective... to put it nicely... when they say the price of my Ramen is a rip off... they don't know what the hell they're talking about!

Putting price into perspective:

There's a universal guideline that all restaurant business owners and chefs follow.  Food costs should never be greater than a third of your total sales.  Even the cost of a food item itself should be around that range on average. Why one third? Well as a general practice, food costs are about one third of total sales, labor costs / employee costs are another third, and operational costs which include rent and utilities is the last third.  What ever is left from the equation is the profit.

Total sales - Food Cost - Labor Costs - Operational Costs = Profit

Ideally 10% of total sales is where one makes money.  That may not sound like much but the honest truth is that in actuality in my experience, most restaurants, if they're lucky, fluctuate in the 5 to 6 %. Even the largest most successful business struggle with this.  Every restaurant costs vary.  Restaurants with low priced items, have a low food cost, low labor cost, and an equally low operations cost, but to really make any profit they need a huge customer turn over rate.   High end restaurants, use far more expensive ingredients, have a higher labor cost, and the rent on a prime location is ridiculous.
Most cases labor costs far exceed 30% or even small business get destroyed due to outrageous rent. Rent can kill a business. 

What the food costs::

Chefs create wonderful food that is often interpreted as overpriced.  Looking back at the 'profit equation' I see everything I eat as food cost. When food is in front of me, I know how much money a restaurant is making just through the simple knowledge of the ingredients and where and whom they are coming from. Knowledge is everything.

I'm paying over 30%-34% food cost for my Ramens and that's at 13-15 dollars.  At lunch I am giving the same portions at 9 - 11 bucks at the same exact cost.  My labor costs are where they should be, and yet our costs to run our operations is significantly high. What this equates too... a small margin of profit and a lot of people that still complain.

Know what you're paying for:

The sows I use are all raised here in Texas. The farmers I work with are all good people that I trust. These are the kind of men and women, that know the value of a good hand shake. It's an old school kind of thought, I know, but that is how I was raised... How can I still trust them so much? It's because the quality of their goods show in the final product and that speaks volumes about their honesty and the foods integrity. That's why 'I' pay the price and why many chefs pay for the foods they produce.

I've worked with farmers who've given me sub par ingredients claiming that it is the best product.  In the end it's all crap.  Flavorless.  Poorly raised sows make for a bland broth, tons of impurities forced to be skimmed out, too many alterations in recipes in order to make it better. Yes it does require skills to make something out of low quality products... but we have to put so many seasonings and aromatics which mask the true flavor and in the end you create something that is lost in translation.  It's like putting mushroom gravy all over your perfectly cooked A6 Kobe steak! (A6 = highest grade)

There are restaurants out there with incredibly low food costs yet are overly priced.  Many times I see it as people being subjective about the value of their meal, which varies from the talent of the kitchen or even just the hype of their reputation. This is where people like to begin subjectively 'comparing' prices. Those who've ever studied logic know that this is the weakest argument.  If you think my food is overly priced... please go ahead and buy your $500 ticket to New York or California, pull up to a Ramenya that uses instant mixes and water flavored broth, and pay your bill of $24 a bowl. Then come back and see what I am doing for much less.

What it really costs:

The problem is a customer really has no clue what they are eating sometimes. That is why you must do some research or even ask the chef about what they're using.  We're like doctors to a patient, or teachers to a student, I'll tell you anything you should know about what we are making. I am just trying to help differentiate and pin point exactly what you should be tasting. Just like flavor nodes in a good wine.

A Chef can never sacrifice the integrity of their food. If I were to cut corners and give you something else and claim that it's the best, I would be lying and cheating to you and to myself.  Lying becomes bad habit, and bad habits create poor character. This character shows in every aspect in a business and eventually becomes poisonous.  I believe the food that comes from my kitchen is great, but it isn't the best. That is why I continue to strive to find better solutions and better ingredients to make the food.  I do my best to keep all of it affordable, without ever sacrificing integrity.  This is what I called "the Ramen Experiment".

The next time you go out and eat, take a moment and look at what you are getting.  I'll give you one example of a restaurant to look at. Maggianos. My family loves eating there and I've gone there a number of times in my life. I know for a fact that they are making a killing off their pastas. Generic brands of pastas are very low in cost, if they had hand made their own pasta even far less in cost. 13 bucks for about a pound of pasta noodles and 2 cups of sauce. I'd bet money just the combination of those two would make up less than 2.00- 3.00 dollars tops.  What I would probably guess is that their real cost would be the rent.  Best location in town, right beside the Galleria.

It's a funny game I play often in my head and one that I implore everyone to do always.  Keep it all in perspective, then you can decide if you believe that I am or any restaurant is truly ripping you off or not... in the end you'll find that most of us are just trying to survive.

some people I trust.
GH Urbanfarm