Restaurant Foods That Are Ripping You Off

Oct. 23, 2011 — -- If you thought you bagged a bargain by skipping the $29 burgundy-braised short ribs and opting for the $18 baked ziti with mushrooms, marinara sauce and chicken, you'd be wrong. With food costs only accounting for about 18 percent of the menu price, the pasta dish is where the restaurant is making the most profit. Believe it or not, the beef is actually the better deal, since it costs nearly half the menu price to source and prepare it.

If price alone isn't the best indicator of value on a menu, what criteria should we use to ensure the most bang for our buck?

"Choose labor-intensive, time-consuming, complex dishes, that call for hard-to-find ingredients," suggests New York-based restaurant consultant, Clark Wolf. "If you can whip it up yourself in 20 minutes with stuff from your kitchen cupboard—do that," he says.

In Pictures: Restaurant Foods That Are Ripping You Off

Wolf has a point. Avoid the ubiquitous, low-cost chicken breast dish. Dishes comprising of everyday, bulk ingredients like pasta or rice are cheap to prepare and as simple for the restaurant chef to put together as it is for the home cook. For this same reason, restaurants love brunch when they turn out highly-profitable, egg-centric meals, and bread, flour and dairy-based dishes, such as French toast, waffles and, pancakes.

Then there's making the most of specialized equipment—and relationships—that eateries have. Steakhouses, for example, Clark adds, not only have dry-aging cabinets to hang meat to develop flavor and add value, but the best ones have built links with suppliers that deliver the most prime cuts that aren't available in retail.

Just as a diner should mull over these factors when selecting a meal, the restaurateur also considers them, and several others, when pricing his menu.

"Food cost, what nearby restaurants are charging for similar dishes, and perceived value – what customers are willing to pay for certain foods, are all taken into account," says Linda Lipsky who runs a Pennsylvania-based hospitality operations consulting firm.

While the average raw food cost for fine-dining restaurants is 38 to 42 percent of the menu as a whole, there is no standard mark-up across the board for appetizers, entrees, and desserts. There is also significant fluctuation within these categories. If $1.50 worth of chicken and $1.50 worth of shrimp features in two distinct appetizers, the shrimp dish will be more expensive because customers perceive the crustacean to be of higher value, and so will shell out more for it. However, with a range of quality available, chefs can use a cheaper variety of shrimp unbeknownst to the diner who continues to pay a premium, says Lipsky.

Other than to avoid out low-quality shellfish, there's another reason why diners should pay more attention to their appetizer order. According to Jody Pennette, founder of CB5 Restaurant Group, in the last 15 years restaurants have raised the price of appetizers disproportionately to the increase in food costs.

"This has gone under the radar because people form their perceptions of value by looking at the price of entrees," Pennette explains. "Restaurants keep mains as competitive as they can, knowing they have leeway in other parts of the menu."