An upscale steakhouse in Chicago, run by a celebrity chef, has laid bare the razor-thin margins of the high-end dining sector, revealing it makes a profit of just $25 on a hefty $500 dinner bill.
The Stark Reality of Fine Dining Finances
Kindling Downtown Cookout & Cocktails, operated by chef Jonathon Sawyer on the ground floor of Chicago's iconic Willis Tower, opened its doors in 2023. In a candid interview with the Wall Street Journal, Sawyer broke down the punishing economics his business faces. A dinner for a party of four can easily exceed $500, yet the restaurant's take-home profit is minimal.
A typical meal might include a $19 starter, an $68 filet mignon, and drinks. For a single diner, the total easily surpasses $100. With a party of four, plus Chicago's 11% sales tax and a standard 20% tip, the $500 bill is quickly reached. However, Sawyer's breakdown shows that from that sum, $190 covers food and alcohol, $175 goes to labour, and $110 is consumed by rent, insurance, and other fixed costs.
Soaring Costs Squeeze Profit
The primary culprit behind these squeezed margins is the record cost of beef. Average wholesale steak prices have skyrocketed by 67% since before the pandemic. Sawyer disclosed that his steak costs alone have surged 40% in just the past year. This crisis stems from pandemic-era droughts, which dried up grazing pastures, and economic pressures that forced ranchers to shrink their herds, creating a severe supply crunch.
Furthermore, operating costs across the board—from labour to insurance—have ballooned since the pandemic, a trend confirmed by the National Restaurant Association and felt acutely in urban areas like Chicago. While alcohol typically offers higher margins to offset food costs, Sawyer noted a trend of customers drinking less when they dine out.
A Five Percent Margin is the New Normal
While earning just $25 from a $500 check seems astonishingly low, it represents a 5% profit margin, which is squarely in line with the average for the restaurant industry, typically between 3% and 5%. For a high-end steakhouse, the ideal food cost for healthy margins is around 35% of the menu price, but premium cuts can drive that cost to nearly 50%.
This means a $100 steak can cost the restaurant $50 to buy, leaving little room for error. A single mistake in the kitchen can wipe out the profit from an entire table. The detailed breakdown from Kindling serves as a stark reminder that even the most prestigious dining establishments are navigating a cutthroat economic reality in the post-pandemic world.
