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.
In the restaurant business, the word “sustainable” is applied almost exclusively to the sourcing of meat and fish. The attention to ingredients, however admirable, belies the importance of financial stability. In order for any restaurant to make a difference, it has to actually stay open. “It’s not that interesting to talk about sustainable ingredients if the business is not sustainable,” says Brian Bornemann, chef and co-owner of Crudo e Nudo in Los Angeles, where he and partner Leena Culhane have implemented a modern solution to the biggest problem facing restaurants today: labor.
Their Santa Monica restaurant traffics in crudo — elegantly dressed, raw slices of striped bass sprinkled with za’atar, halibut in Arbequina olive oil or kanpachi dressed with calamansi vinegar — made with sustainable fish harvested and cleaned in the ikejime method, which is costly, time-consuming, and requires skilled labor. And the way they are able to do this, while making money, is by throwing out the traditional hospitality structure and asking diners to reimagine how a restaurant works.
When he was ready to own his own business, Bornemann, who has run all kinds of operations — from a three-cook kitchen in Italy, to a giant luxury hotel in Los Angeles (the Viale Dei Romani in the Kimpton La Peer Hotel) — found that the industry standard was untenable. Under the classic model, management (the chef and front-of-house general manager) works 80 hours a week, doing the labor of what should be three people. Restaurants trying to pay employees as little as possible meant that cooks were always looking for the next job where they could make a couple dollars more, while managers-chefs spent their time correcting the work of hourly employees, or running wage theft scams to trick cooks into working unpaid hours. It didn’t make sense to Bornemann. It’s expensive, manipulative, and results in the burnout that, over the last two years, has driven a huge portion of workers from the industry.
“I wanted to create a better way to sell food and wine for money that allowed everybody to be tipped, for everybody to get a good wage.”
Crudo e Nudo started as a pop-up in 2020 and launched in its own space the following year. Using a limited-service model, diners order at the front counter. Food is brought to the table, usually by the cook who prepared it. Staff follows up by clearing plates or bringing another glass of wine.
For the guest, the only difference is the act of standing up to order and pay (though they can also open a tab, leave their card, and settle up at the table with a payment terminal). Maybe more significant is the bigger ask for diners to let go of the expectation that hospitality means subservience — that a traditional restaurant server, bowing and scraping and crumbing the table, is essential to the experience of dining. Customers may now be used to counter-service when it comes to fast-casual dining, but for high-end fish and good wine? It was a gamble.
For the restaurant, the difference and benefits are exponential. Without the reliance on rigidly defined worker roles (i.e. cook, server, host, dishwasher), all staff are cross-trained. Sometimes they cook and sometimes they host. They have to be able to talk about wine sometimes or do dishes at others. Everyone must be proficient in sukibiki, the Japanese method of scaling fish with a knife. That’s a lot to ask of workers. But it pays off for both parties. Unlike a traditional restaurant, where servers and cooks — who are supposed to be a team — are at war with each other over their share of wages, tips, and respect, this model compensates everyone with a good wage and an equal share of the tips.
The business gets a workforce that can be cross-purposed for maximum efficiency. That means that when anyone is sick, anyone else can fill in for them. Scheduling is not a perpetual headache. Without the front of house versus back of house schism, staff are motivated to work together instead of against each other. This creates jobs that people want to stay in, to grow along with the company. As evidence, Bornemann and Culhane have just opened a second restaurant, Isla, with about three times the space. It’ll be more of an izakaya compared to the sashimi bar vibe of Crudo. If they were turning over staff like every other restaurant, this growth would be impossible.
“Labor has become the key to success, especially in LA and other big cities where the cost of living is high. Because if you want to attract talent, you have to pay them well for what they’re doing. And you should be.”
Here’s how the model plays out in a plate of rockfish with mandarin oil, Urfa biber, chive, and house bottarga.
Menu price: $22
Total cost to restaurant: $12.68
Profit: $9.32 (42.36 percent)
Food costs: $5.31
Vermillion rockfish: $4.14 (3.5 oz at $22.11/pound)
Mandarin oil: $1.12
Urfa biber chile: $0.01
White soya sauce: $0.02
House bottarga: $0
If there’s a lowest common denominator to seafood sustainability, it means treating shrimp like a luxury by serving closed-containment shrimp, red stripe Argentina shrimp, or some other $19/pound ethically sourced shrimp instead of the $9/pound slave-caught shrimp sold in most supermarkets. Crudo e Nudo raises the bar a little higher.
Most fish, after they’re hauled from the water, die through asphyxiation while flopping around the boat. In the process they produce cortisol, adrenaline, and lactic acid, a big component of what makes fish get fishy. Typically, a wholesaler descales the fish with a scraper, which encourages bacterial growth through micro-abrasions. The scales are washed away under tap water.
Crudo e Nudo only uses Ikejime fish. In this Japanese system, as soon as fish come out of the water, they are quickly killed by a spike through the brain. Blood is pushed out to prevent it from traveling through the capillaries to the flesh, where it can potentially breed bacteria. Then a hand tool like a tire spoke is run down the spine, separating its nervous system from the body. This prevents signaling of death and a tightening up of the muscle tissue.
The restaurant only buys whole fish that have not been scaled. They are hand-scaled in the kitchen with knives, in a method known as sukibiki. And the fish never touch tap water.
“If you’re able to do all those things and you know how long the fish has been out of the water, you can then age the fish as you would a dried steak,” Bornemann says. “And you can hang it for weeks and lose moisture and have it get better with time.”
The vermillion rockfish has a large population off the California coast. As long as they’re hook-and-line caught by commercial fishers, they are by definition sustainable. “They are the epitome of what we want to highlight,” says Bornemann, who deals directly with a single fisherman, Eric Hodge, for this species. “Directly out of the water, from Eric, driven down in a car. No middleman. Served in a way that feels elevated.”
Sometimes they’ll save livers for toast, roe sacks for bottarga, or bones for fumet (fish stock). But once fish are cleaned, the yield is about 45 percent. That means that the rockfish, which have an “as purchased” (AP) cost of $9.95/pound, once the other 55 percent is removed, have an edible product (EP) cost of $22.11/pound. That adds up to $4.14 for each 3.5-oz portion.
A half ounce glug of mandarin oil (harvested on a farm in Santa Lucia, where mandarin peels are combined with olives as they’re pressed, infusing essential mandarin oil into the product) adds a lot to the food cost. But the mild Urfa biber chile, white soya sauce, and scallions are only a few pennies. And as the fish roe is part of the 55 percent not counted as edible product, other than the labor cost of curing it into a grateable bottarga, it’s effectively free (bottarga would cost $69/pound otherwise).
Labor costs: $6.16
Between mastering skills like hand-scaling and fish butchery as well as cross training in front-of-house work, staff members at Crudo e Nudo must be flexible enough to work a variety of positions throughout the day, without the need for salaried manager oversight, or traditional hosts, busser, or server roles.
It’s only possible by compensating people fairly. Staff are paid between $16 to $21 per hour, with 78 percent of health/vision/dental covered, and with everyone getting an equal share of tips. Following two to eight weeks of training, the proficiency of new hires is voted on by their peers. Once approved, every staff member (including floor managers, who are paid hourly) get the same one-point portion of tips for each hour worked.
“The pooled labor model encourages the entire team to work as a whole, symbiotic partnership between players,” says Culhane. This camaraderie and labor cost can only happen because everyone is getting an equal cut of the tips. “Even if individuals excel in a particular aspect of the job or have extensive training in one area (such as fish butchery or experience as a sommelier) everyone is expected to learn from each other, support each other, and rise to the opportunity we have, which is our communal investment in a new model of restaurants.” Based on the last two years, Bornemann thinks this model attracts talent. It also means the labor costs for this dish hover around 28 percent, which is right on the mark for the 30% many restaurants aim for.
Fixed costs: $1.21
The real secret sauce at Crudo e Nudo is deriving big revenue from a tiny footprint. “We have a high guest average,” says Bornemann. “So we’re able to do $2 million in sales out of a 590-square-foot box, where occupancy and other fixed costs are low because we want to pour money into the product and into our people.”
Profit or loss
“Usually you take the cost of ingredients and multiply it by three,” says Bornemann of the typical “menu price should be triple the cost of food” formula. “But we buy a crab for $45. We can’t sell it for double that price. We sell an uni taco for $9. I think we’re losing money on that. But we don’t sell French fries, a classic money-making item. So with the high margin of the crudo, this is our way of being able to offer something special like the uni, at an attractive price, because we are making the profit somewhere else on the menu.”
No one is arguing that all restaurants have to do away with full service. The industry is a big tent, with room for as many kinds of restaurants as there are customers. It’s just that this model makes financial sense to both owners and workers. Bornemann and Culhane are proud of what they have created. And they believe their model will be successfully scaled up at Isla, which has 80 seats. But that will likely be the limit of how large this limited-service model can grow.
“You need talented, motivated and cross-trainable employees to be able to do it well. It is easier to do on a smaller scale.”
And while the occasional diner needs the system explained, most come to Crudo e Nudo because they want something different.
“For the most part we have intentionally set up ourselves in a way that we don’t need to bend to make everybody happy. In order to get guests behind something new and progressive, it helps to have that be tied into a menu mix or an experience. It asks a little more from people. It asks them to reach a little bit — to intentionally be part of something different. So we get a lot of people that show up not because they’re looking for just anywhere to get lunch, but because they want to be part of something nontraditional.”
Corey Mintz, a food reporter focusing on labor in restaurants, is the author of The Next Supper: The End of Restaurants as We Knew Them, and What Comes Next (Public Affairs 2021).