I pay Rs 30 for a plate of Idli and I need to know why?

We all have some idea as to how to cook, if not, we atleast have an idea as to how much a home cooked meal would cost. The ultimate question is, why do restaurants charge more, wherein the same meals prepared at home costs just quarter the price?! Well, here are a few parameters that determine the price of a product at MIS!

The following is a detailed chart which explains the average costing breakdown for the products we sell at MIS. (Note: a plate includes accompaniments to the dish, such as sambar and chutney)

Screen Shot 2018-01-28 at 2.32.59 PM

Food costing: this is the most important aspect of the product, through which customers rate ‘value for money’. The food costing includes the ingredients and raw materials contained in the finished product. Apart from this, the food costing also includes logistical costs such as transport etc.
Labour: the manpower cost involves not just salary, but also compliances, accomodation (rental and utilities), food and other miscellaneous costs such as uniforms, recruitment and training costs.
Overheads: the overheads is generally a wide topic, in order to keep it short and sweet here are a few highlights.
  • Premises rent: our restaurants are situated in prime locations, which come at quite a price.
  • Utilities: unlike utility costs at our homes, there is an additional cost for commercial electricity, water and gas consumed. As for water, there is a whole new set of challenges altogether in terms of availability. Due to problems with water, our restaurants heavily rely on ‘water lorries’ which are saviours for many establishments here in Bangalore.
  • Warehouse: we require a warehouse to store all the ingredients, raw materials and consumables (packaging, etc), this said space also comes with rent.
  • Logistics and supply chain: logistical costs involve the cost of transporting goods in-between warehouse and the different branches.
  • Corporate office: just a fancy name for a place where the administrative staffs work out of to ensure all the above mentioned systems work effectively.

Goods & Services Tax (GST): Restaurants now are eligible to charge 5% GST and are not eligible to claim Input credit. Our price includes 5% of GST that is collected from our customers.

Profits: Here is where we make some money.. but wait the above points are completely for an ideal scenario and does not include miscellaneous expenses such as wastage, maintenance & repairs, service aspects, pest control, bandhs, licensing fees and other unexpected expenses..!! Hence an industry average for a vegetarian QSR stands out between 15-18% on ideal situations.

So there you go… if you have ever wondered why there is a price on the menu.. these would be some of the key points where a restaurant would justify.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s