Ultimate Guide to Restaurant Markups


Dessert Markups

If you regret overindulging in that chocolate cake, well, at least the wallet in your back pocket is looking less bulky. Desserts are marked up like anything else. The profit markup range averages between 15 and 35 percent in restaurants [source: Pizam]. It can even go as high as 70 percent [source: Lassen].

You can always expect to pay more if a restaurant has a pastry chef in the kitchen because that means the restaurant has higher labor costs to cover. If on the other hand, the restaurant's desserts come from a supplier, that's a tipoff that you're probably paying excessively. The supplier sells the desserts in bulk, often without setting portion size. By being able to set portion size, the restaurant has one more way of buying low and selling high.

Dessert presentation can be a sneaky way to drive up the price as well. It all goes back to perceived value. If the food is beautifully presented -- say, set on a large white plate adorned with an artful drizzle of chocolate sauce -- you probably feel as though you're getting something special, even though the plating has cost the restaurant mere pennies in ingredients and labor.

In general, how do you know when something is likely to have a high markup?

  • It's listed first on the menu.
  • There's some sort of spectacle associated with it (think items prepared tableside and appetizers that arrive in flames).
  • It contains alcohol.
  • It makes you feel like you're treating yourself.

[source: Bockelman]

Do restaurant markups mean you can't treat yourself every now and then? That's between you, your pocketbook and your waistline.

To learn more, visit the links below.

Related HowStuffWorks Articles

Sources

  • Bockelman, Christine. "Ten Things Your Restaurant Won't Tell You." Smart Money. March 29, 2007. (Accessed 3/30/09) http://finance.yahoo.com/family-home/article/102713/10-Things-Your-Restaurant-Will-Not-Tell-You
  • Canada Business. "Starting a restaurant." May 5, 2008. (Accessed 3/29/09) http://www.canadabusiness.ca/servlet/ContentServer?cid=1110887385543&pagename=CBSC_FE%2Fdisplay&>
  • Dubner, Stephen C. "What's Up with Restaurant Wine Prices?" Freakonomics Blog. New York Times. June 15, 2007. (Accessed 3/29/09) http://freakonomics.blogs.nytimes.com/2007/06/15/question-of-the-day-whats-up-with-restaurant-wine-prices/
  • Food Service Director magazine. "Avg. Markup on the Rise for Pizza and Pasta." All Business.1999. (Accessed 3/30/09) http://www.allbusiness.com/retail-trade/eating-drinking-places/4177098-1.html
  • Gibbons, Vera. "Five Leading Retail Rip-Offs." CBS News. March 30, 2009. (Accessed 3/309/09) http://www.cbsnews.com/stories/2009/03/30/earlyshow/living/ConsumerWatch/main4902625.shtml
  • Gil, Richard. "Why Does Popcorn Cost So Much at the Movies?" PhysOrg. February 22, 2008. (Accessed 3/30/09) http://www.physorg.com/news122917253.html
  • Lasser, Mary. "After-Dinner Flare." Food Service Director magazine, accessed through All Business. December 15, 2000. (Accessed 3/30/09) http://www.allbusiness.com/retail-trade/eating-drinking-places/4177828-1.html
  • Marvin, Bill. "The Easiest Way to Cut Your Food Cost 10%." The Restaurant Doctor. RestaurantOwner.com. 2009. (Accessed 3/30/09) http://www.restaurantowner.com/public/211.cfm
  • Mayerowitz, Scott. "Coming to a Theater Near You: Pricier Popcorn." ABC News. May 27, 2008. (Accessed 3/30/09) http://abcnews.go.com/Business/Economy/story?id=4920444
  • More Business. "Ethnic Food Restaurant Business Plan." 2007. (Accessed 3/30/09) http://www.morebusiness.com/ethnic-food-business-plan
  • Mullis, Stuart. "Running a Restaurant: Computing Food Cost." All Experts. September 3, 2006. (Accessed 3/30/09) http://en.allexperts.com/q/Running-Restaurant-2285/computing-food-cost.htm
  • Pavesic, David. "How to Win the Menu Pricing Game." Restaurant Resource Group. (Accessed 3/30/09) http://rrgconsulting.com/restaurant_menu_pricing.htm
  • Pizam, Abraham. "Menu Psychology." International Encyclopedia of Hospitality Management. Butterworth-Heinemann. 2005. (Accessed through Google Books 3/30/09) http://books.google.com/books?id=yXRrIbuAE8IC&pg=PA430&lpg=PA430&dq=dessert+price+markup&source=bl&ots=4loCJo-_3z&sig=e-mVRE0HYMNnarabnDlsTJS-kPk&hl=en&ei=jODQScjkEs3vnQfU3PHQDA&sa=X&oi=book_result&resnum=9&ct=result
  • Sherman, Amy. "Demystifying Wine Markups." Cooking with Amy. December 7, 2006. (Accessed 3/30/09) http://cookingwithamy.blogspot.com/2006/12/demystifying-wine-markup.html
  • USA Today. "Restaurants may change menus, hike prices in 2009." October 13, 2008. (Accessed 3/30/09) http://www.usatoday.com/news/nation/2008-10-13-restaurant-prices_N.htm
  • Walker, John R. The Restaurant. Wiley & Sons. 2007. (Accessed through Google Books, 3/30/09) http://books.google.com/books?id=Vng3e6zBCwcC&pg=PA213&lpg=PA213&dq=dessert+price+markup+restaurant&source= bl&ots=2C_O-MURRy&sig=x8XUoh2zsduWw7AupgcyV1pZkYI&hl=en& ei=aOfQSa6tI9nfnQeCsdDICQ&sa=X&oi=book_result&resnum=1&ct=result#PPA212,M1

More to Explore