HOW I RESPOND WHEN PEOPLE COMPLAIN ABOUT OUR PRICES
Below is a review we recently received for Beardslee Public House, our Northwest-inspired, family friendly eatery and brewery. I removed the guest’s name as I am not out to shame anyone.
“First of all, I use to love this place. I’m sitting here at Beardslee now disgusted with their current price hike. I have one question for the owner, do you want to alienate your faithful customers that come here 2-3 times a week? Charging 14 dollars for a basic burger and fries is crazy. Especially when you are located right by 2 colleges and TONS of student’s come here to eat. Congratulations, after today I will never come back. Your disregard for your community and clients in an effort to make a buck because you are now popular won’t fly…… I’m 100 percent sure that others will take my stance…. based on your food and beer items that are overpriced. Yes, you just alienated your college based customers.”
I personally wrote back to our guest and my response is below:
I’m sorry you feel this way. I’m also concerned that you attacked me by stating that I had no regard for my community or clients in an effort to make a buck. I have yet to make a buck on the Beardslee Public House, I hope to someday be able to repay myself for all of the expenses to open a restaurant like the Beardslee Public House. But I do have a question for you … what is a fair profit for an owner of an establishment like Beardslee Public House? 15%, 10%, 5%?
In the time that we have been open, we have been able to pay back about $350,000 so far. We just looked at our business pro forma for 2017, and we were projected to make $80,000 on $4,500,000 in sales, that’s less than a 2% margin. Cash flow would have been a negative $150,000-$160,000 just to cover the debt payments of $260,000 a year.
We have approximately 25 people a day working around 6 hours each making minimum wage and tips. That’s 150 a day or 1050 hours a week. In 2017 we were required by law to increase minimum wage to $11.00 an hour up $1.51 over the 2016 set rate, that is approximately $1585.00 in additional wages every week, times 52 weeks that is $82,000+ a year, add on 25% for payroll taxes, medical insurance, FETA, FICA, state industrial insurance and federal and state unemployment insurance and now it is $103,000+. Now add the other employees who want raises because all of the minimum wage employees got raises. Now add on all of the increased costs for food, beverage ingredients, and other increased costs because all businesses are dealing with the same problem, and you can start to see how this adds up.
People don’t realize how difficult it is to make a dollar in the restaurant industry; they just look at the food cost and think they could do it for less.
Take this into consideration … we pay approximately $1,260,000 in product costs. $600,000 a year in rent, $450,000 a year for management wages, managers, brewers, chefs, and none of that goes to ownership. A grand total of approximately $2,025,000 in all wages including the taxes and benefits. $130,000 a year in promotional costs, $50,000 a year for Repair & Maintenance, $150,00 a year in water, sewer, gas and electric costs, $36,000 a year in business insurance, point of sale costs, 3% or around $135,000 a year to the credit card company, janitorial costs of $50,000 a year, cleaning supplies $26,000 a year, dishes and utensils $25,000, we discount or give away food to employees worth over $60,000 a year, this as you can see can add up … and I have not even listed the other 25-30 cost accounts, paper supplies, dues and subscriptions, dish washing machines and supplies, city business taxes, state business licenses, health department licenses, federal alcohol production taxes, light bulbs, point of sale system, management information system costs, software, hardware, menu covers, menu paper, copier, copier paper, office supplies, business cards, delivery van, delivery van gas, and there is so much more that I can’t even think of it all right now.
I do take exception to your comment about disregarding my community. I’m sure you are unaware of the information I’m about to provide you…If you are a student nearby then you probably remember the massive fire which destroyed much of downtown Bothell last year. We were among the first to bring much needed supplies to the first responders, the following Monday we gave all of our after-cost proceeds to the Cozy Corner Café owner, who lost her business that day. Beyond that, we have supported Bothell schools, sports teams and many other community projects. Last year we provided over 800 gift certificates to different charitable organizations throughout our area.
This is not the greedy owner trying to fleece the college student … it is a legitimate business that employs 92 people in the Bothell community, pays its employees well, and pays all of its taxes, values its guests, the guests that value good service and good food. We use USDA Prime for our regular burgers; no one else uses USDA Prime for burgers. We bake our own buns, we make almost everything we do in-house from scratch, that takes time and effort, and we do pay our crewmembers a fair and living wage.
If my goal was to fleece anyone, my restaurants would never survive…it’s my hope that I’m able to provide people a great place to work, a great place to enjoy their friends and family, and a great place that supports its community.
But, There is a cost to doing all of these things and that cost is an additional $1.00 on our burgers and $.50 on a pint of beer. If that is too much to pay, then I’m sorry, and we will miss you. But I think most people will realize that this is a cost of doing business the right way at a high level and will be willing to support a living wage in Washington State by supporting those who chose to do business in this state.
Sincerely,
Chef John Howie
Posted in Chef John Howie Answers, Restaurants and tagged beardslee public house, bothell, prices, reviews
Questions:
<p>1. Prepare an approximate Income Statement for Beardsley Pub from the information above; make suitable assumption as may be necessary and clearly explain them. Comment on the profitability of the business.
2. Do you agree with the owner’s assertion that the cost of doing business is about $1 per burger and $0.5 per pint of beer? Why or why not? What additional information would you like in order to verify the owner’s claim? Explain carefully how you plan to use the additional information.
3. If you are the grieving customer, would you be satisfied with the explanation and accept the current prices? Why or why not?
