Understanding where restaurants make their money

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Alex Mayyasi reveals where restaurants make their money:

The best profit margins in the restaurant industry come from drinks. Beverages offer 80% profit margins or more in a business where 4% or lower margins are common. That’s why they represent, on average, 30% of restaurants’ revenues.

Dunkin Donuts recently relabelled itself a “beverages company,” acknowledging that revenue-wise, it is actually in the coffee business. Without admitting it, many restaurants are an overpriced drinks company in disguise. While restaurants could use profits from drinks to subsidize great food, you need to be on the lookout for restaurants that lavish their time and money on bartenders, unique drink menus, and a venue that makes you feel okay about spending $12 for a cocktail.

Peter Schorsch is the President of Extensive Enterprises and is the publisher of some of Florida’s most influential new media websites, including SaintPetersBlog.com, FloridaPolitics.com, ContextFlorida.com, and Sunburn, the morning read of what’s hot in Florida politics. SaintPetersBlog has for three years running been ranked by the Washington Post as the best state-based blog in Florida. In addition to his publishing efforts, Peter is a political consultant to several of the state’s largest governmental affairs and public relations firms. Peter lives in St. Petersburg with his wife, Michelle, and their daughter, Ella.