Bar owner reveals why BLT sandwiches now cost $16
A restaurant owner has explained how raging inflation means he has to charge $16 for a BLT sandwich - yet makes under $2 on each.
The rent is $20,000 a month,' he said. 'My utilities are $6,000 a month. My labor in December was $60,000 so I have $86,000 of base cost per month on the day I open the doors,' said Will.
Selling sandwiches at $16, he said he would still need to sell more than 94,000 a year to generate a revenue of around $1.5 million and break even. That figure covers all the costs plus ingredients.
'If I do $1,499,000, in sales, I lose $1,000. We don't start making profit until we get above that breakeven point,' he said.
Of course, he doesn't just sell BLTs at the two Central City Tavern upscale sports bars in Georgia. But he used the example of the popular sandwich - which has typical costs and profit margins for food and drink - to give an insight into the restaurant business.
He said his situation would be similar to restaurants across the US, where $16 is now a typical price.
After ingredients, wages are the biggest portion of the BLT at $4.61. Rent is $1.54 and other costs - such as cleaning, maintenance, cost of music and TV, accounting - total $2.48. Electricity, gas and water is $0.46.
Out of his $1.92 profit, he would still have to pay tax.
Will operates with a food cost percentage of about 32 percent - standard for the industry. That is the cost of all the ingredients used to prepare a single dish as a percentage of its retail price - $5 divided by $16 in this case.
He said his Central City Tavern in Alpharetta was operating at a food cost percentage of as low as 26 percent last year but ingredient costs rose.
And expensive rent, labor and utilities drove the food cost percentage up further. Compared to three years ago, Will said labor alone is up 30 percent.
'Labor is the big killer. Since Covid, our labor costs have gone through the roof,' he said.
The cost of utilities - things like electricity, gas and water - is also up 30 percent, but since they make up a much smaller proportion of the restaurant's total expenses they have not had a major impact on the bottom line, Will said.
Rent has increased by 3 percent each year since 2019, as determined by a rental agreement signed before the Covid-19 pandemic.
'It's just a constant battle to figure out where you can price things and how much profit you can make and still stay in business,' said Will.
'If a typical restaurant's running 10 percent profit and your food cost goes up 3 percent and your labor goes up 3 percent and your rent goes up 2 percent, suddenly there's no money left.'
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