Why Would An LA Restaurant Keep Selling A Dish That Loses Money?


We often presume to understand restaurant economics because we know what a chicken breast costs at the supermarket. “I could make this dish at home for $5,” goes the refrain. Could we? Here, Eater looks at all the costs in a popular restaurant dish to see what goes into it, and how much profit comes out.

Uyên Lê has profitable items on her menu at Bé Ù, like her banh mi. But there are two key reasons why she has so far been willing to lose money in order to keep the $10.50 caramelized pork with eggs (thit heo kho) on the menu.

The first is that the founding principle of her not-quite-year-old restaurant is to provide jobs with livable wages: Lê is committed to starting all staff at $18/hour (minimum wage in Los Angeles is $14.25/hr and livable wage in Los Angeles is $16.25/hr). However, that puts her labor costs at higher than the average, and underestimating her fixed costs — like equipment, maintenance — affect that too.

“You know the WAG method? I’ve done a lot of market and retail analysis in my former life,” says Lê, who has a master’s degree in city planning and worked at the UCLA Labor Center and an electrician’s union. “You look at the size of retail operation in the geographic market, the square footage and services, the amount of revenue generated per square foot. You have to plug in all these numbers, but you have to make assumptions in order to have some level of analysis. The WAG method is the Wild Ass Guess method and it’s kind of where I am right now.” Even though she wants to keep the menu affordable, Lê will soon need to balance her high fixed and labor costs with the prices she charges. “We’re trying to key it in a little bit more.”

But the main reason Lê’s willing to take a $3 hit on every dish sold is far more personal: Lê is devoted to executing the cherished family dish and making it available to a restaurant audience. Her version starts with the simple act of hard boiling and peeling eggs. They are then placed in a large stock pot with pork belly on top (to keep the eggs submerged and prevent them from drying out). The braising liquid, adapted from her mother’s recipe, calls for seasoning with fish sauce, sweetness from Coco Rico coconut soda, brown and amber color notes from caramel and annatto oil, plus water, which simmers uncovered for over four hours. The reduced liquid is thick — not as sticky as French jus, and not as viscous as a Jamaican oxtail gravy — and the gooey pork belly is served along with the egg and the sauce over rice with scallions and pickled mustard greens. “Every Vietnamese family has a recipe for this,” says Lê, but as ubiquitous as thit heo kho may be in home kitchens, Lê couldn’t find it at restaurants.

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Written by Nicole


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