Restaurant profits are rare to medium
It's Saturday night and your favourite city restaurant is packed. Diners are tucking into grilled porterhouse or fettuccine marinara and ordering plenty of wine. It's good times all round.
Or is it? For the restaurant owner who you might assume is making a killing, business has never been harder. At best, he is probably just scraping by.
Have another look at that dining room on Tuesday night and it may be near-empty.
Even when tables are full, profits are being squeezed by rising costs. And there is no way he can charge more for that fettuccine when diners want to spend less.
''Even restaurants that are having record years for turnover have seen a significant reduction in their profits,'' said Sally Neville, the chief executive of Restaurant and Catering SA. ''The ones that are doing well are those that have responded to their customers' demands to go out and spend a little bit less.'' With the average industry profit up to this year only 4 per cent, if it dropped ''there is nowhere to go'', she said.
At Auge, the highly rated Italian restaurant in Grote St, owner Terry Soukoulis is seeing all this at first hand. He agreed to open his books to The Advertiser to reveal a true picture of the restaurant business - and perhaps alter the thinking of diners who question whether they are getting value for money on the plate.
- For popular dish gnochetti con frutti di mare, or gnocchi with seafood, only $3 of the $34 price is profit. The ingredients cost $11.80, with the prawns and snapper top of the bill, but the rest is eaten up by costs including wages, rent, power and cleaning.
The increase in energy prices is a real double whammy, not only increasing the bill at Auge but also the costs of many of its suppliers and services.
''When I started in the industry 20 years ago, main course prices were $18 to $19. Now they are between $30 and $40. But my annual electricity bill has gone from $6000 to $20,000 - that's nearly quadrupled in 10 years.''
Mr Soukoulis said diners needed to change their mindset and think beyond the price of ingredients in a dish.
Wages and superannuation take the biggest chunk of money and pay levels and penalty rates are an issue across the industry.
On a busy night, Auge employs 16 staff - 10 front of house and six in the kitchen. And Mr Soukoulis often works a 15-hour day.
''Where are we headed when someone who is 20 years old is being paid $40 an hour to serve you eggs and bacon on a Sunday that costs $15?'' he said.
Seafood Gnocchi - price $34
- FOOD COST: $11.80
- GST: $3.10
- RENT: $2.80
- WAGES/SUPER: $9.75
- POWER: 83c
- OTHER: $1.12
- LINEN, CLEANING, REPAIRS: $1.60
- PROFIT: $3
Breaking Down Food Costs
Ingredient Cost per serve
GNOCCHI
Desiree potatoes 16c
Parmigiano Reggiano $1.50
Flour 10c
Free range eggs 25c
SAUCE
Cream 40c
Saffron 50c
Celery 30c
Onion 20c
SEAFOOD
King Prawns $2.64
Snapper $2.15
Mussels $1.33
Cockles $1.52
FLAVOURINGS
Chilli 15c
Garlic 20c
Basil 5c
Parsley 5c
Extra Virgin Olive Oil 30c
TOTAL $11.80
AUGE'S EXPENSES
Average monthly (major items)
Food $21,200
Wages/ superannuation $47,000
Rent $10,000
Council rates $2870
Legal/accounting $1200
Bank fees $3080
Other fees $2300
Phones/internet $1200
Marketing $2150
Linen $2300
Crockery/cutlery/glassware $1500
Hire of plant and equipment $4100
Electricity $2200
Gas $1400
Water $750
Rubbish $400
Source: The Advertiser, 21 July 2012
