How much money did The Bear sandwich shop actually make?

Hulu’s Emmy-award winning culinary drama, The Bear, has captivated audiences with its gritty portrayal of life in the food and drink industry.

Set in “The Original Beef of Chicagoland,” the show centres on Carmy, a young and talented chef who inherits his late brother Mikey’s sandwich bar, complete with a found family of screaming chefs and straining t-shirts.

But beneath the chaotic surface lies a fascinating, if fictional, business. For all the food lovers and finance nerds out there, we at Startups decided to dig deeper and produce a real-life cash flow forecast for The Beef.

Read on for a complete cost breakdown of Chicago’s most famous kitchen, and find out if Carmy would even make it out of the first episode.

How much would it cost to run The Beef?

Let’s begin with The Beef’s operating expenses. These are the costs a business incurs during its regular day-to-day operations. They are essential for keeping a company running and generating revenue, and cover everything from salaries to water bills.

Salaries

Easily the least believable aspect of The Bear is its long cast list. For what is supposed to be a lowly sandwich shop, Mikey employs enough staff members to finish a ream of payroll.

Episode one introduces us to a Head Chef, a manager, a sous-chef, two line cooks, one runner, and two dishwashers. There’s even an in-house bread baker; a premium that few cheap eateries entertain and the show itself acknowledges is weird.

Of course, it’s unclear if Carmy even takes a salary. Many business owners choose not to pay themselves so as not to eat into their company’s profits.

Assuming that every worker is being paid no more than the Chicago minimum wage of $15 (£11.82) per hour, and that they all work a lower estimate of 40 hours per week, Carmy would still be spending around $5,400 (£4,255.60) per week just to pay his employees.

Rent

Now the good news. There’s likely not much in the way of outstanding debt here. Mikey had bought the Original Beef building, so he would not owe anything to a landlord or building provider. US businesses also escape the UK’s expensive business rate charges.

Jimmy mentions that the lot is worth about $2 million, suggesting Mikey had a good amount of equity. There is the matter of Jimmy’s $300,000 loan to Mikey, as revealed later in the season, but let’s keep this article spoiler-free.

With no mention of a mortgage, Carmy catches a lucky break here for what can often be a brick-and-mortar business’ biggest expense.

Marketing

We can ignore this one, as The Beef almost entirely markets itself through local advertising methods like word-of-mouth.

This is a great way to build strong relationships and we can see it does a lot to turn its patrons into eager customer advocates – although it can make it more difficult to expand or diversify products. As Syd points out, few people are buying a sandwich for dinner.

Utilities

Gas, water, and electricity bills are a huge expense for restaurants. Kitchen equipment like ovens, freezers, and dishwashers are extortionate to run (another reason why The Beef should have fired its pot washers).

On average, a restaurant can spend anywhere from $4,000 to $20,000 per month on energy costs. That’s a lot of steak sandwiches.

Luckily The Original Beef is a small space. Judging by the interior decor and fluorescent lighting, Mikey also didn’t bother wasting money much on heating and maintenance fees (it’s never particularly clear if Fak gets paid for his upkeep efforts).

We’ll put The Beef’s utility bills at $3,000 per week – smack in the middle of the range.

Cost of Goods sold

Cost of goods sold (COGS) are the direct costs associated with production, such as materials and labour. Unlike operating costs, restaurants need to pay these regardless of whether any products or services are sold.

The Beef is service-based, so its COGS should be lower than its operating expenses. But the shop’s pricing strategy is also non-existent. Beneath cheap and cheerful branding, it invests heavily in high-quality sirloin steaks, marking its costs up considerably.

Full-service restaurants tend to spend roughly 30% of a meal’s display price on its ingredients. The Beef sells its steak sarnies for an astonishingly low $8 (£6.31), so we’ll be exceedingly generous and assume it costs $2.40 (£1.90) to make one roll.

Reportedly, Mr. Beef, the restaurant that The Beef was based on, sold 300 sandwiches per day. That means before the much-vaunted menu change, Carmy would be spending around $6,048 (£4,776) per week on ingredients, accounting for an average of 20% food waste.

• The Beef total expenses = $14,448 (£11,385) per week

The Beef’s Bottom Line

Now it’s time to work out how much The Beef would have made in terms of revenue and profits.

Restaurants typically don’t generate income beyond sales of food and beverages. There are some potential alternative income streams they can explore, such as merchandise sales or loyalty programs, but Mikey didn’t bother with these.

As a result, The Beef’s only income appears to be through the sale of its sandwiches. The soda fridge looks fully stocked throughout every episode, and it’s unclear whether Marcus ever manages to sell his freshly-baked cakes.

Assuming The Beef only sells 300 rolls per day again for $8 each, that would mean the shop generates $16,800 (£13,272) in sales revenue per week from its sandwiches.

Profit margin

To work out The Beef’s take home pay, we need to figure out its profit margin. In simple terms, this is the money a company keeps as profit after accounting for all its expenses.

We know that The Beef’s total sales are $16,800 per week. Take away its $14,448 operating expenses and COGS, and you’re left with a gross profit of $2,352 (£1,853) a week.

Net profit

Finally, we come to The Beef’s ultimate bottom line: net profit. This figure takes into account all costs, including taxes, to reveal the final percentage of revenue kept as profit.

Every organisation based across the pond, regardless of size, is taxed at the US corporation tax rate of 21%, rather than the UK’s 25%. That would give The Beef a net profit of $1,858 (£1,464) after tax.

So, based on our calculations, and taking into account operating expenses, cost of goods sold, and revenue figures, Carmy inherits a business making just under $2k per week.

But what does this mean in terms of business performance? To explain, we need to look at The Beef’s net profit margin. This is a ratio that measures the percentage of profit a company generates from its total revenue. It’s calculated like this:

• (Revenue – Expenses) / Revenue x 100 = Net Profit Margin

Using this formula, The Beef scores a net profit margin of 11%, which essentially means for every $1 of profit it generates, the company takes $0.11 of profit.

An NYU report on US margins revealed the average net profit margin is 7.71% across different industries. The Beef’s balance sheets are clearly doing better than a lot of hospitality firms in the current climate.

Could The Beef have stayed in business?

At first glance, it may look as though The Beef could have kept its doors open (even while employing half of Chicago in its kitchen). But that’s before we dive a bit deeper into the city’s specific tax laws.

Chicago has the second highest meal tax rate in the US after Minneapolis. The total sales tax for restaurants in the city is currently 10.75% (inclusive of the 6.25% tax on all food sales, as well as state and municipal Retailers’ Occupation Taxes), all of which swallow a significant chunk of sandwich sales revenue.

In fact, Carmy’s cursed inheritance felt doomed to fail as a sandwich shop. As we see on the show, a disaster is never more than an episode away, whether that’s the power cutting out, an expensive appliance needing replacing, or the discovery of black mould in the ceiling.

Any of these would require deep pockets from a rainy day fund, and that’s where a thin profit margin comes back to haunt.

In today’s cost of living crisis, hospitality firms are struggling to survive decreased consumer spending. One off-day where no sandwiches were sold would have been enough to scuttle The Beef’s sinking ship – even if it had raised its prices.

Leaving the land of TV, however, there’s good news for the real-life Carmy. The owner of Mr. Beef has since revealed he’s now selling 800 sandwiches a day thanks to the popularity of the show. Now that’s some tasty returns.