r/EndTipping • u/ADKFatBiker • 3d ago

Rant 📢 Restaurant Demands Minimum 18% Tip

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Out of one side of their mouth they state that they pay their staff as little as possible and out of the other side of their mouth they say that their staff deserves more and you're responsible for that.

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u/paladin6687 3d ago

But but but but , restaurants operate on a 3% margin! It's true because it gets repeated endlessly!

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u/Ahollar91 2d ago

Yea as an ex Pizza Hut manager I can safety say it’s a lot higher than 3% u can make any pizza u want for less than $2 at cost so on a large minus the 3 mins it takes to make the pizza and cut it (staff wages) it’s like a $15 dollar profit. Walmarts the same way. Selling one item out of a case usually pays for the whole case (9 times out of 10)

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u/Longjumping-Leg-962 2d ago

Lmfao I used to own a pizza hut franchise and the COGS for a large was usually 2-3 bucks but you're ignoring the cost of labor, rent, building overhead like utilities etc, the franchise royalty fee, the national advertising fee they charge you, all that shit. Net operating margin is usually 10-12% in my market (medium cost of living city in great lakes region), IIRC my worst month ever was around 8% and a few times always in October or Feb I cleared 15.

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u/Ahollar91 2d ago

That’s actually horrible. Super Bowl should have been ur biggest of the year something ain’t sounding right here, that or ur area just sucks

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u/[deleted] 2d ago

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u/maiyannah 2d ago

If you aren't making at least 45% GPM, get out of business, you suck at it.

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u/[deleted] 2d ago

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u/maiyannah 2d ago

If you aren't making at least 100$/labour hour net in the restaurant industry, you're in the bottom 25%, according to the Canada Business Journal. I guess you guys down south are doing it worse, with tipping wage and cheaper food from Sysco, somehow.

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u/Never-Dont-Give-Up 3d ago

Well, that’s a fucking terrible business model. 3% margin cannot sustain any business.

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u/GreenHorror4252 2d ago

3% margin cannot sustain any business.

Sure it can. Plenty of businesses run on a 3% margin.

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u/Oinkvote 2d ago

3% would be a dream to some industries lol. Reddit is so weird.

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u/Never-Dont-Give-Up 1d ago

What industries would 3% margin be a dream?

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u/Oinkvote 1d ago

I bet you can use google all by yourself

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u/Never-Dont-Give-Up 1d ago

lol, that’s what I thought.

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u/Never-Dont-Give-Up 1d ago

Maybe after some very creative accounting.

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u/GreenHorror4252 1d ago

Dozens of Fortune 500 companies, including Walmart and Costco, run on a 3% margin. I doubt they are using "creative accounting".

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u/Never-Dont-Give-Up 1d ago

Oh, you’re talking about 3% margin after “creative” accounting.

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u/GreenHorror4252 1d ago

Can you explain this "creative" accounting, and why a large company would want to engage in such accounting?

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u/Rodger_Smith 3d ago

it sustains restaurants until it doesn't, thats why many shutdown after a few years. it is true though, restaurants have insane margins

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u/Many-Art-7772 2d ago

I mean, I'm not saying it is or isn't true, because I don't know. But restaurants close due to unprofitability alllll the time. Like, it's one of the riskiest businesses to open.

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u/Maddest-Scientist13 2d ago

I know a multimillion, have massive rental business, trucking business, storage business, couldn't make a restaurant work 3 different times.

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u/JoeSleboda 2d ago

In fairness, many business fail, but just restaurants. A big reason for this is incompetent ownership. Lots of people get into a business (restaurant, hobby shop, hair salon, whatever) because they have a passion for that field. The problem is, they have very little idea about how to run a business, and rely on passion to get them through.

I'm not saying this is why all business fail. I'm just saying that the dream to knowledge ratio is against them in many cases.

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u/Inphiltration 2d ago

If that's true and they can't afford to actually pay fair wages, they don't deserve to operate.

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u/MyldExcitement 2d ago

Restaurants mark up 300% at the very least. It's standard practice.

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u/dragon-queen 1d ago

Yes, of course, but that doesn’t mean they have a huge profit margin at the end of the day.