Answer to Question #266446 in Marketing for ann

Question

Explain why fine dining establishments must have very high markups over the cost of

their foods. Is it possible to be a low-priced fine dining establishment?

Answer 1

Food prices are based on creating gross margin. That gross margin needs to then cover all the overheads, including staff. In fine dining this costs or mark-ups aren't very inflated. There is a formulation for food cost that all restaurants pretty much adhere to. High end restaurants normally use very expensive ingredients in the preparation of these dishes, not just the dish itself. The cost of the dish and what you pay for the dish is usually in line. Some so called fancy places try to get away w sub-par ingredients, but foodies are sophisticated and they are usually found to be the fraud they are.

No it is not possible for fine dining establishments to be a low-priced. This is because one might have a relatively low priced FAMILY DINING place such as Olive Garden, but fine dining has very high costs and very high risks to investors. In addition, ever since this Covid-19 mess that closed countless independent restaurants, getting new investors is about impossible, too.