by Paula Deen
Lots of people ask how I know exactly how much to charge so that I make a profit. Takes experience, girl, but I do have sort of a formula. When I started The Bag Lady, I’d never worked in a restaurant before and I had no idea how my grandmother managed the costs at River Bend. I did have to teach myself how to charge so I could make a modest profit after taking care of my expenses. Here’s how I did it: if I paid a quarter for something, I knew I had to sell it for a dollar. That’s the normal percentage that most restaurants try for—they like to pay no more for the food than 25 percent of what they charge. Some restaurants pay as low as 21 percent for the food and some go as high as 28 percent. Then there are the restaurateurs who pay as little as they can get away with for food, usually by buying inferior ingredients. These restaurant owners then charge whatever they can get, and give themselves an astronomical profit.
Astronomical is not in my vocabulary. The ideal total formula for me now would be this:
Food costs: no more than one-third of the gross receipts (33⅓ percent)
My costs (overhead expenses like rent, utilities, salaries, insurance, equipment, pots and pans, and repairs): one-third of the gross receipts (33⅓ percent)
Profit: one-third of the gross receipts (33⅓ percent)
My goal has always been to sell my customers a good meal at a fair price. I knew I couldn’t lose if I stuck to that principle, and I think that’s good advice for any restaurant owner. McDonald’s, Sam Walton, and Martha Stewart all knew what they were doing when they were reaching for the masses. I hadn’t been raised in a froufrou world, and, as Michael says, we would rather serve one fork and a nice plate of food than eight forks and eight froufrou bites of food on fancy, shmancy plates. I never want people to leave my restaurant hungry.
It still amazes people to this day that I can serve an all-you-caneat buffet and our food cost generally is still only 26 percent of our gross receipts. Frankly, it’s pretty unheard of. How do we do it?
We make it up in volume. And we are not wasteful. If I’ve got a lot of unserved pot roast, my staff knows how to turn that roast into beef stroganoff, beef stew, or shepherd’s pie for the next meal. That’s what all Southern cooks do. Since I was little I’ve heard that a Southern woman could take her dirty dishwater and make a fine pot of soup—not that I was tempted to test that! And our strict motto is, When in doubt, throw it out. When a customer leaves some untouched food on a plate—out it goes. But if we have a big pan of unserved peas, and I look at them, taste them, smell them, and they are perfect, they’ll show up in some other dish the next day.
You would think that we’d have trouble meeting our goal of a good meal at a good price. At Uncle Bubba’s Oyster House, the restaurant I own with my brother, fish is simply more costly than, say, chicken, but by having a varied menu you can charge a fair market price for the more expensive fish and less for things like, say, hot wings. You might be able to bring your hot wings in at an 18 percent food cost, while with a nice piece of fish, you’re at 33¾ percent. It all balances out. My bottom line? I would rather have people come to my restaurant four times a month than four times a year.
Now let’s say a few words about equipment. Karl warned me that it was going to be my major cost and that I shouldn’t go too cheap. When I started at 311 Congress Street, we ended up replacing most of the equipment within the first year because we cheaped out. We’re talking stoves, heavy mixers, flat cooktops (which are essentially griddles), fryers—just about everything we used to prepare our meals. If you buy cheap equipment, you’re going to spend more money in the long run, I discovered, like when we bought a small thirty-five-pound fryer and found that it couldn’t keep up with the demand for fried food. We had to go out and buy a sixty-five-pound fryer, which meant we could cook twice as much, twice as fast. The aim was to get that food out of the kitchen and onto the plate fast and well-cooked. Another thing: if you buy too cheap and have to buy better equipment later on, you have to figure on restaurant shut-down time too. You can’t just pull an old stove to put a new one in without losing a beat. Sometimes it takes new wiring and a new gas line, or a different configuration of space. For instance, that sixty-five-pound fryer holds more because it’s bigger, but I lost money in the short run because I had to shut down my restaurant for a day or so while I redesigned the kitchen. But it’s a delicate balance: you don’t want to spend too much, either. Rest assured that people who are selling you the equipment are going to ask you to buy everything under the sun. Don’t do it. There are some things you can rent, like ice machines.
Then there’s dishes, silverware, and glassware, as well as serving pieces (if you’re doing things family style) and water pitchers. Are you going to have flowers? You’re going to need something to put them in. Candles? Ditto. You have to figure in the cost to replace broken dishes, because for sure those dishes will break. And how about tablecloths, napkins, and sometimes uniforms? As many restaurant owners do, I have usually required my help to buy their own uniforms at cost: you can be sure they’ll take better care of them.
Insurance is another big cost you have to consider.
While I was running The Lady in the Best Western, I simply could not afford insurance. I would get up and pray every morning, Please, Lord, don’t let ’em choke on those chicken bones. Well, one day my worst fear came true, but it wasn’t no chicken bone that got my customer, it was hot water. I’d recruited my children and their friends so I could save on waiters. Bobby’s girlfriend Sherry (whom I loved) had huge eyes, long lashes, heart-shaped lips, and real boobs like the ones from a plastic surgeon (first time I saw her in a swimsuit I thought, Well, I’m screwed, I can’t compete against that, Bobby belongs to her now), but this sweet girl had never been a waitress before. She was nervous and unsure of herself, and the minute she started waiting on tables she poured scalding coffee on a woman’s lap. The woman was wearing—just my luck—shorts. Sherry ran right into my arms crying, and all I could think was, Please, please, don’t let that shorts-wearing woman sue us. We got her a cold rag and some medicine, and, thank God, she didn’t sue. At that point there wouldn’t have been anything to get. You can’t get blood from a turnip.
Tables and chairs are big items too. When we started The Lady & Sons, I bought all my furniture from a buddy who owned a wonderful antique store. Jerry had picked out his sturdiest chairs and tables, but I’ve got to tell you, the sturdiest wasn’t so sturdy. But the dining room looked so beautiful with all that antique furniture, we went for them. Now we had insurance, so I was ready for anything, and anything happened.
We’d instructed our hosts that when they saw a very, very heavy person, they had to go tell Jamie or Bobby, who would send them to a table with the sturdiest of the antique chairs.
These two women came in for lunch one day, and while they were eating, a tall gentleman came in to speak with them. When he sat down, that freakin’ chair up and collapsed.
I didn’t think he was hurt—except for his pride, of course—but I went running over to ask, “Well, honey, are you all right?” Yes, he nodded. “Well, have you gotten a meal yet?” I asked. No, he answered, he’d just come in to talk to these two women for a moment. Well, you’d better believe, he got his chicken dinner free.
On our first Thanksgiving, a darling older woman just sits in her chair, and it folds like an accordion. Her legs go up in the air, her dress goes over her head, and both she and I are mortified and scared. Here it is, our first Thanksgiving, and it’s ruined within the first five minutes of opening. I was sure she was going to sue us for everything; that’s how humiliated she was that her weight was too much for a restaurant chair. But she didn’t sue us and still comes in, but we finally had to do away with all those beautiful old chairs and replace them with newer, sturdier versions. Our insurance is up-to-date now, but still, y’all try not to get hurt when you come in. We just hate when that happens.
Don’t forget the cost of a liquor license and one for beer and wine. Those licenses are real importan
t to a lot of restaurants, but not to mine. It’s a service I wanted to have for guests who want a drink, but I probably have the lowest-profit bar in town because people know that when they come to my place, it’s not to get riproaring drunk. No, darlin’. They come for the food, baby—and yes, the atmosphere, too. The Lady & Sons specialty is buffet, but a lot of people come in and order from the menu—a fine steak, for example—and those people often do appreciate that we offer a full bar. But okra and gin? A Jack and Coke sound good with collard greens? No, darlin’. Sweet potato pie and the finest chardonnay? I don’t think so.
One of my expense lists is for damage control, or unexpected glitches that cost you money. Listen, a million bad things can happen in a restaurant. You can have your place all set up, your budget planned, and costs for advertising, rent, insurance, staff, and food accounted for. But what happens when equipment breaks down, insurance and advertising costs rise, food costs more than you thought, an untrustworthy employee pilfers your best roast, or you absolutely need to hire another pair of hands? Well, honey, you’ve got to figure on adding some more money for unexpected damage to the cost projection. How? Maybe lower your costs on one side and increase your prices on the other.
Sometimes damage control consists of fixing what you’ve been unforgivably careless about. When we were at the Best Western, for example, I was busier than a one-armed paper hanger on a windy day. I did whatever it took to keep us going: I did the books, I did a good bit of the cooking, I waited tables if I needed to. By this time, my wonderful Dora had come into my life, and she certainly made life better, because she had a real smart head on her shoulders. I knew that she knew about food in the kitchen. Well, because I left so much of that up to her, I’d get careless about other stuff and get so busy, I’d forget to take care of little things. Like paying bills.
Picture this: It’s twelve noon. We’re in the middle of a very busy lunch when Dora comes and finds me and says, “Paula, they’ve turned off the gas. You didn’t pay the gas bill.”
I absolutely panicked; I couldn’t move. But Dora moved. She loaded up all that chicken, then ran across the road to the Holiday Inn and asked if we could finish frying our chicken in their deep fryer. Those angels said yes. We kept our restaurant moving, and I don’t think people ever knew we weren’t cooking with gas in the kitchen.
Sometimes you’ve got to deal with your staff’s mistakes. For example, this nice young man had just started to work in the kitchen and I told him to finish up makin’ my famous potato salad. I had gotten all the potatoes ready and put everything in it except the boiled eggs. I had to leave the restaurant in about thirty minutes for one of my catering jobs (which was payin’ the bills until the new Lady & Sons made a profit), so I tell this young man, “Son, I need for you to just prepare the eggs and put them in the potato salad for me.” I was in a hurry, but just before I left, I go back there and I see this huge bowl of potato salad settin’ on the ledge, waiting to be served to everyone in the dining room. It has got the mayonnaise, it has got the potatoes, it has got all the seasonings in it. But now it is also covered with raw eggs.
I didn’t tell him to boil the eggs.
“Are you freakin’ crazy?” I asked him. “How many times has yo’ momma served you potato salad full of raw eggs?”
Sometimes, I’m sorry to tell you, you need to deal with plain ugly thievery, even by your staff.
In-house pilferage is a problem, and part of the cost of doing business. I’ve had occasions when five hundred dollars of profit or a sixteen-pound standing rib roast just walked out the door with someone I trusted. There are horror stories out there about bartenders, for example. I’ve heard stories that bartenders sometimes bring in their own generic brand of liquor, pour from their own bottles, charge premium restaurant prices, and pocket the difference. The next thing you know, you’re operating in the red.
It can happen with food too. Stealing food is so very easy. All someone has to do is take that roll of fillet, wrap it up in silver foil, put it in the trash, and then come back and pull it out after everybody’s gone. It amazes me to see the energy and imagination some people will use to pull a fast one; if they put that energy and thought into something positive, they could be anything they wanted to be. I had one young man who was passing out duplicate buffet tickets. Say there’s a four-person table and they all order the buffet dinner. The waiter rings up four tickets and gives each diner a numbered ticket to redeem at the buffet. A thieving server will ring up the four tickets and then give copies of the tickets with the same numbers to another table of four who ordered the same thing. So the waiter will collect the money from both tables, only ring up the first table, and take home the money from the second table. When he was caught, he was fired. There’s no second chance for thieves.
You have to learn to shut as many doors of opportunities to steal as you can. You do that with inventory systems, by having a manager watch the tables, and by just keeping an eye on the people you’ve entrusted to do the right thing. You have to “encourage” honesty in many ways, even through very visible surveillance cameras. It’s very important that you try to build your business with people who have character and pride in what they do. Still, you have to accept the fact that a certain amount of thievery is gonna take place and there’s nothing you can do about it; you’ve just got to hold it to a minimum.
Downtime costs you money. Perhaps you’re thinking of starting a restaurant in a space that is now just a hole in the ground or even in a space where a restaurant has previously existed. You’re just going to have to figure into your projection the cost of fixing up that shell restaurant space and the cost of getting your new furniture and fixtures, or your improvements in the existing restaurant.
It’s not just the hard costs for the electricians, the painters, the floor, the heat, and the air-conditioning. You’re still spending money on rent, but you have no money coming in because you’re not open to the public. You’ve got people working for you, so you’ve got salaries to pay before opening day. If you think it’s going to take you four months to get in, you’d better project seven or eight months to get into your space: you’ve just got to plan on the extra expense or you’re going to be opening up that restaurant with no money in your pocket. No money in your pocket means you can’t buy the food that you want and, just as important, you can’t do adequate staff training. If you don’t train properly, that means the kitchen won’t cook the food fast enough and the people in the front of the house can’t serve the food fast enough. Maybe I shouldn’t talk—after all, I didn’t even have money for change when I opened, but I was damn lucky, maybe you won’t be so lucky at first.
Too often, eager new restaurant owners think they can just open the door and their restaurant is going to make them easy money. Remember, the people waiting out there to be fed want to be served in a reasonable period of time. They want good food, and if they don’t get good food and good service, are they going to come back next time? No. Are they going to tell their friends how great you are? No, darlin’.
So you do need what my accountant calls a rehearsal.
Rehearsal nights are dry runs to work out some of the kinks. Close the restaurant to the public and give free meals on one or two nights to a room filled with your best friends and family. You’ll learn more from what goes right and what goes wrong than you’ll lose in meal cost. After the dry runs, you might have your key people sit down and write notes about what went right, and how you can build on that, as well as about what went wrong, and how they think you can fix it.
Waste and spoilage can be a restaurant’s downfall and add to hidden costs. In the beginning, although I’d had some experience at The Lady in the Best Western, we really didn’t know what to anticipate in terms of how much food we needed. Sometimes we’d overorder and would have to send things back. If the food was still good and the container was not broken—it had to be in the exact shape it was in when it came in the day before—and if we had a good relationship with
our food purveyor, often this provider would take the overorder back, but that’s a rare occurrence.
We very seldom overordered. I always felt it was better to be short than lose on overstock. I’ve had days when I’ve been to the grocery store as many as fifteen times because we would run out of things. I remember our first Thanksgiving. I don’t know how many times I got in the car and went to Publix to buy more hams and turkey breasts. I went nuts trying to thaw out those frozen turkey breasts so that we could deep-fry them and serve them quickly. Oh, my God!
Here’s a cliché, and it’s said so often because it’s true: the most important person in your whole restaurant business is that customer. She must come first.
To be a real success in the restaurant business, because it is a service industry, you have got to be willing to humble yourself whether you’re the server, the host, the chef, or the owner. You’ve got to be able to put yourself in a kind of menial position—servant. If you can’t do that, it will be hard for you. But I tell my staff, in order to be good, you can’t think so much of yourself that you’re too good to be a servant for others.
My general manager, Dustin, knows each customer is a VIP, and he greets everyone with a warm smile. The manager sets the tone for the rest of your staff. As people enter, Dustin greets them with a shoulder touch just to let them know he’s happy they’re there.
So, honey, I think it’s clear that you can’t afford to have any insensitive managers and servers or chefs with short emotional fuses. You can’t have a bully or a hot-tempered person in your kitchen preparing that food. Then your servers are too frightened to go into the kitchen and stand up for the customer. You have to be strong, and if the servers are scared of that bully chef back there, they’ll be willing to serve your guests something inferior rather than face the chef and say, “This is not right.” Restaurant owners can’t be bullies, either. Your staff must have respect for the way you want things done, but they can’t be terrified of you; they have to know that underneath the firmness, you care about them.