That Cuban in the picture looks amazing. Fried plantains FTW.

The consumer is hurting in the wallet as well. We are more concerned about more bang for the buck than we are for the restaurants profits. If the food is not good or the service is bad, most people wouldn't eat there if it were free.

Yeah right the ingredients cost $4. It costs Pizza Hut like a buck twenty five to make a large pizza, regardless of toppings (w/ the exception of extra cheese). No way one of T.G.I. Friday's failburgers costs $4 in ingredients alone.

I did the Friday's thing. My g/f and I got a salad and a sandwich and two waters. I left a 20% tip. My bill (with tip) was under 15 bucks. At the time, we were one of maybe ten tables in the entire restaurant and the only table our server had. It was around 7:00pm on a weeknight.

I wouldn't pay 'full price' for anything from Friday's. It's mostly frozen crap sold for top dollar prices. I can get similar stuff at local places that is either the same price and much higher quality OR the same quality and much less.

I kind of wondered while the promotion was going on about how they were covering costs, especially with the Steak Sandwich. I mean, I wouldn't have gone to Friday's without it, and I won't be back anytime soon, so did they really make anything off my visit?

The only thing I can assume the marketing people though is that it would get groups of folks in who would A) buy overpriced/too little booze bar drinks or appetizers B) have people in the party too picky to get either a salad or a sandwich.

I'm not sure how often that happened.

On another note, my g/f works at Wendy's and has told me that the "Double Stacker" on the dollar menu costs the company more then the .99 cents they sell it for. It's honestly the only thing I get when I go there. A couple of those fill me up the same way as the 5 dollar double does.

The real gag here is that Friday's is selling the product to Franchise owners at a considerable markup; so the food probably costs even less, but distributed to franchises for about $4. The brand only wants to move as many units as possible, not necessarily allow franchises to make profits.

I was tempted by that Applebee's 2 for $20 promotion, but not so tempted that I ever got around to going.

We do hit up restaurants we get coupons for in that "LocalSaver" thingie that comes once a month. But those are more often local places, not chains.

@Radi0logy:

Yes a slab of meat off of a dead cow cost more than a it costs to make a pizza you fool.

@sicknick: "I kind of wondered while the promotion was going on about how they were covering costs, especially with the Steak Sandwich. I mean, I wouldn't have gone to Friday's without it, and I won't be back anytime soon, so did they really make anything off my visit?"

I, on the other hand, have tried many new restaurants when I got a coupon (usually 2 entrees for the price of one with two drinks ordered or something like that), and when the food is decent for the price and the service is good, we generally go back. More local places than national chains, but the coupons do get us out to places we haven't been before, and if we like them we tend to go back.

I expect the dividing line between success and failure on a lot of these promotions is the service -- sometimes you show up for a promotion or with a coupon and the waitstaff is awful to you, pre-emptively assuming you'll undertip or whatever. We don't go back to those places, so it's a self-fulfilling prophecy.

Screw the chains BUY LOCAL!

@Radi0logy:

I agree, a slab of meat does cost more. Papa Murphys most expensive pizza costs around 3.25 to make including labor and ingredients. It sells at regular price for 13.99. Often you can get a 2$ off coupon and its only 11.99. Thats over a 10$ profit on 1 pizza. Keep in mind that cheaper pizzas still have a hell of a markup, just not as much as that one. If places wanted to get you into eat, they could, but it would really get you thinking after the ressession why you were paying so much before for what you had deeply discounted now.

@pinkelephantsintheroom:

Not true. Denny's has horrible service and mediocre food, and when they offered a free breakfast with a retail value of only $2.99, they had lines out the door, and wait times of hours long. Boggles my mind how people will wait 2 hours to save a couple of dollars.

@Eyebrows McGee (now with more baby!): my wife and I do the 2 for $20 thing at applebee's. It's more than we can eat, generally, so we end up taking some home. Yes, it might not be as cheap as the store, but it's cheaper than most other places, and not too far off the store.

@Megladon:

Pizza has probably the highest markup value of any restaurant menu item, save perhaps soda and desserts. What pisses me off however is when I ordered multiple toppings on a pizza. I have no problem paying $1.50 or so per item, but don't cut each item's quantity by the number of items I order, and still charge me the same amount. For example, if I order a large pizza with pepperoni, and they would normally put, let's say, 30 slices of pepperoni on it, if I order pepperoni and sausage, they will usually put like 15-20 slices of pepperoni, a little sausage, and charge me the $3. That's bullshit.

I live in south FL. and that is not a cuban. That is nothing but shiny american junk food. A true cuban has Ham, Roast Pork white cheese, mustard and pickle. Thats it nothing else the then place on a grill and press it flat. They are great. they are usally server with black beans.

@sicknick: I love those Double Stackers, but I have a hard time believing they cost more than 99 cents. A bun, two beef patties, an onion, ketchup, mustard.. it surely can't cost that much for a large company (who probably buys beef patties by the hundred-thousand) like Wendy's?

T.G.I. Friday's is a restaurant?
Really who eats at these sorts of places when there are oodles of better local options which aren't basically an upscale McDonalds/Burger King like these markup kings are.

Why does ordering water make you a thrifty diner? I always hate that assumption. How about start assuming that I don't like to chug down a gallon of High Fructose Corn Syrup when I eat?

Ingredients of $4 on a $12 food item is not outrageous and is within industry norms.

In my experience a franchise take-out pizza place will spend about 30% of sales on ingredients and 25% on labor - then add in overhead, utilities, rent, advertising (5%), and royalties.

The general rule in food business is this: You make 60% or more profit on food items. Period. I used to work as a manager in a restaurant chain.

@kewlfocus:

I enjoy drinking water too. That said, we're passing up more than HFCs. There's also usually unsweetened tea, milk, coffee, juice, lemonade and beer.

@bige311: IF there is a good local store to begin with.

@Cocoa Vanilla:

I remember when I left Burger King back in 01 that the cost of a Whopper was just under $0.30, without cheese. The cost for that was something like 10-20 cents per slice. Considering the average cost of goods doubles every 10 years or so, it's still under a dollar to make one, and they sell them for what, $2.50 on average?

Most fast food places are still going to make a killing on the profit. It's just not going to be as large as they are used to with everyone else's pockets hurting.

@IfThenElvis: You beat me to it; it's not just the cost of the ingredients.

Still, I think people need to worry less about what their meal is costing the restaurant and just choose the place that gives them the best overall experience (good food, ambience, decent service short distance from home, etc). If the experience isn't that good, you might as well buy your favorite meal stuff at the supermarket, cook it at home, and save the difference.

@Megladon: There's more to costs than ingredient cost alone. None of this includes employee salary, rent, utility bills, etc.

@savdavid: 60% profit? Perhaps you used the wrong word. After you add in labor, rent, utilities, advertising etc... you are lucky to get about 10% profit.
At 60% profit you wouldn't have 90% of new restaurants failing within the first year.

@bige311:
"Screw the chains BUY LOCAL!"

Why? Their profit margins are about the same, they both employ locals, and in most cases the franchisees are locals.

@IfThenElvis: It's around 60% on the gross, not net - i.e. after food costs, before everything else.

The last time I worked fast food the GM cost the store 2% for labor all the time. Of course, he had a 50+ hour workweek. Then add other labor costs, expenses for power et cetera and franchise fees. You can make money, but our owner made around $100k on sales of almost $1.8 million. Of course, he owned like 12 stores.

@Coles_Law:

Thank your Coles_Law

@IfThenElvis: Shh. You're questioning the unspoken premise of Consumerist, which is that selling for over cost is "gouging," or something.

@Eyebrows McGee (now with more baby!):

The applebees 2 for 20 deal FTW! Before they had that, I barely ever there. Now, after work me and my g/f (we work at the same place) often stop there for dinner 1-2 nights a week.

@Major-General:
"our owner made around $100k on sales of almost $1.8 million."

That's only 5% profit & in my experience about typical for a hard working owner who runs multiple franchise outlets.

@Coles_Law: @Coles_Law: The article states that it is this much money for ingredients alone.

@bige311: He's not saying that the steak sandwich should cost the same as a $1.25, YOU fool, he's using it as a comparison that the cost, in general, of producing food in the chain restaurant industry is often pennies-on-the-dollar of what they charge for it.

Go easy on the jumping to insults.

@jblack: I stopped drinking soda about five years ago. For awhile, I'd get tea when I went to restaurants. Then, I realized I was paying $1.40-$2.40 for water(free) that had leaves(cheap) soaked in it. No thanks, I'll drink my tea at home.

Also, some places moved to nasty machine tea, such as IHOP. Disgusting tasting crap.

@IfThenElvis: Because this is Consumerist, and too many people around here truly believe that any business that is not a "mom 'n pop" establishment is automatically evil. There is no place on this site for your logic and sound reasoning!

But seriously, I never understood the "buy local or die" mentality. It's astounding how many folks around here will blindly proclaim that any and all local establishment is inherently healthier, tastier, cheaper, etc., etc. In my experience, that's certainly not true.

@kewlfocus: I have many family members in the food service industry, and I know what that disappointed look means from my server, but I drink water with my meals at home... so why would I not do the same thing when I'm out? It doesn't mean that I'm cheap, and they usually figure that out when they get their tip... as long as they're not DBs about that trivial detail.

I loved when my Subway had almost all the subs for the "$5 Footlong" deal - now it's just a limited selection (boo!) and I have to go back to paying full price for a turkey sub.... nice while it lasted...

The post that "thrifty eaters" don't buy anything else is so true. I used to work many years ago at a Chi-Chi's (sad but true) and we used to have this special deal where kids could eat for a buck on Sundays. So every Sunday, all the families that were overbred would show up dragging all their kids. Then they would eat a dozen free baskets of chips and salsa, order nothing but water, and leave about a 5% tip. And they were also the ones that would complain the most about everything. Fifteen years later, I remember that experience anytime I'm tempted to drastically drop prices to build market share in my business that is completely unrelated to Mexican food. Cheap products attract lousy customers.

@slickdealer:

I guess this explains how pizza places can let a large pizza sit in the "by the slice" cabinet until it's dessicated, having sold only one or two slices at 3 or 4 bucks a piece.

It's the airport vending machine pricing model. Why sell four at a profit of 25 cents each when you can sell one for a buck profit?

@IfThenElvis:

For the sit-down chain restaurant type of stuff, the food is usually better at...at least ONE local place.

Also if your goal is to support the local economy, there's no franchise fees going out of town.

@kewlfocus:

But you aren't ordering the bottled water!

(The easiest answer to that, to only offer bottled water...or only charge as though it is bottled water...would just cause me to not go to that restaurant ever again.)

Call it markup, maybe margin...not profit.

@SMSDHubbard:

If they did something interesting and difficult to do right, like super-dark, darker-than-coffee tea, that might be worth it.

I think there is an unwritten human rule that when many items are offered at the same price, people will go for the one they believe is the most expensive.

For example, a local restaurant has a Monday night deal that any dinner on the menu costs $9.99. The most expensive item on the menu is normally a flat-iron steak that costs $14.99. On Monday nights when you walk around the restaurant most people seem to be eating said steak, whereas any other night people are eating burgers or salad.

@supercereal: They also help maintain a local character, rather than every place being a copy of everywhere else.

I use to wait tables at a chain restaurant. Monday nights would be 99 cent Margaritas while the rest of the week they would be sold for $5.00. Food was trucked in frozen and prepackaged and everything was measured out precisely. People were paying lots of money for basically tv dinners.

@slickdealer: That's why you find a good, local pizza joint that doesn't pull that crap, and stick with 'em. And tip the driver decently (especially if it's usually the same driver most of the time).

@Cocoa Vanilla: Beef is not cheap, no matter what quantity you buy it in. Cows don't get any cheaper to raise just because you buy beef in bulk.

@azntg: There always is, you just have to find it. Ask around, word is powerful.