Ultimate Guide to Restaurant Markups

Breakfast Markups at Restaurants

Most restaurants aim to keep their prime cost -- the combined cost of food and labor -- under 55 percent to 65 percent of total sales [sources: Mullis, Walker]. That doesn't mean the chefs and owners are back in the kitchen rolling around on piles of dough [hey, we couldn't resist], though. Taxes, rent, insurance, utilities and other overhead costs eat up the remainder of sales. A typical independent restaurant might see a profit equal to about 5 percent of total sales [sources: Bockelman, Marvin].

How much you're paying for a morning egg depends greatly on where you're getting it. Is it a fast-food place or a chain? Is it a counter that sells the sort of food you can eat during your commute? Or are you having a nice sit-down brunch? That little word "nice" means a lot. Depending on the locale or circumstance, we might not balk at shelling out $15 for a restaurant breakfast of two eggs, bacon, an English muffin and juice, even though it's likely triple what a fast food place charges for a meal that consists of essentially the same ingredients. Restaurant owners are alert to our perceptions and desires. In general, the price is lower for a meal that "feels" like groceries, and higher for a meal that is itself an experience [source: Pavesic].

The wholesale prices of some breakfast foods are low, simply because of the ingredients involved. It doesn't cost the restaurant much to whip up a big bowl of pancake, waffle or crepe batter, and actually making those dishes takes little labor. Many breakfasts contain potatoes, which have been a famously cheap staple for centuries.

We may soon see a spike in the prices of other breakfast items, though. The retail costs of breakfast cereals have been a source of consumer outrage for years, but wholesale grain prices have been skyrocketing lately, and they're probably going to take your restaurant's bowl of name-brand cornflakes with them. That probably means that the prices of other dishes in that part of the menu, such as the generic oatmeal or granola, will also go up. That's because, if you see a $3 bowl of oatmeal next to a $4 bowl of Raisin Bran, you'll probably assume that the oatmeal is worse [source: Pizam].

Do buddies who breakfast pay more than ladies who lunch? Find out on the next page.