A new independent daytime restaurant has opened near where I live this week.  I was walking past when I paused to peer through the windows and check out their menu. 

The decor is very bright and clean albeit a bit on the basic side as is the furniture.  No surprises on the menu, all the usual suspects you would expect to find like Lasagne, Various Pies, Fish and Chips etc.  When I looked at the prices though I was surprised at how low they are.  For example an eight item English Breakfast costs just £4. 

I figure the ingredients at today’s prices must add up to £2.00 then add the cost of cooking oil, gas, condiments and sauces, washing-up liquid and hot water afterwards must bring it to £2:40.  Then add wages for everyone involved and a little bit for wastage and you are probably over £3.  Now consider that 20% of the price goes to the VAT man.  If they are making 35 pence profit I will be amazed.

I happen to know that they are paying £50k per annum rent for the premises.  So by my calculations, if 35 pence is the typical profit they will need to turn almost 400 covers per day to pay the rent.   The most people I have seen in there so far at one time is about twenty at lunchtime.

I have the greatest sympathy for whoever owns this place.  Maybe it's a couple who have sunk their savings or perhaps the equity from their home into this business.  Whoever it is though they seem to have an unrealistic idea of the profit potential of the place or are just too carried away about the whole idea of it to give the notion of failure any serious thought.  I sincerely hope that they succeed and do well, but I just don't see how anyone except a big operator with buying power and other profitable revenue streams can make those numbers work.