To begin a discussion of costs in restaurants and other food service locations, it helps to understand the relative size of different cost categories in the food service industry. The following fi gures come from the 2007 US Census Bureau’s Business Expenditure Survey for the business category of food service establishments. Thus, sit-down restaurants, fast food restaurants, pizza delivery businesses, bars, and cafeterias are all lumped in together even though they would have some differences between them in the different categories. Still, the data is informative and sets a good stage for understanding where most of your foodaway-from-home dollars go. Of the average dollar of expenses in the food service industry, 52 percent went to labor costs, 4 percent to materials and supplies, 5 percent to utilities, 3 percent to repairs and maintenance, 4 percent to advertising, 8 percent to lease and rental payments, 2 percent to taxes and fees, and 4 percent to depreciation. The Other category, which for food service is where

the ingredient and food product costs are recorded, was 14.5 percent. On average, only about one-seventh of food service expenses go to purchases of food or beverages. Labor costs almost four times as much as the food! Food cost typically runs much more than 14 percent, but beverage costs are very low compared to the price of beverages, so when all restaurants (which sell beverages along with food) and bars (which sell mostly beverages) are combined, the percentage of expenses that food costs represent is quite low.