Why Steaks Tend To Be So Expensive At Restaurants

Steaks are often one of the priciest items on restaurant menus, with some even reaching the triple-digit range in places like New York or Las Vegas. And while steaks are considered premium cuts of beef, many customers might wonder exactly why they have to pay so much to enjoy them at restaurants.

Several factors drive up the cost of steak dishes, primarily revolving around the quality of the meat and the effort that goes into preparing it. It all starts with the type of steak on the menu. Some of the most popular cuts of steak served at restaurants are filet mignon, ribeye, New York strip, and T-bone.

Filet mignon is known as the most tender cut of beef available and the average cow yields just over one pound of it, making it one of the more expensive options at the butcher. New York strips and ribeyes are equally sought after for their rich flavor, which drives up the cost. With their large size and distinct shapes, T-bones and porterhouses aren't cheap either. Restaurants pay a lot of money to acquire these cuts and usually choose the best quality available to improve their customers' experience.

According to the U.S. Department of Agriculture, restaurants and hotels typically serve prime beef, which comes from young, well-fed cattle. Prime beef has more marbling, which improves flavor, tenderness and texture. Just 2% of beef is rated USDA prime, making it the most exclusive –- and expensive –- on the market.

Some high end restaurants also dry-age their steaks, which enhances flavor but adds additional costs. Others might pay an expert to butcher meat in-house. On top of all that, restaurants need to cover the salaries of the skilled chefs who cook the perfect steaks, as well as the waitstaff, kitchen crew, and other employees. Then there's overhead costs, like rent, utilities, dining room furnishings, and so on.

Steaks can actually be low-profit items for restaurants. The typical food cost goal in the hospitality industry is about 28%, meaning that for every dollar a restaurant makes, it should spend about 28 cents on ingredients to make a profit. High grade steaks, however, can push food costs over 40%. Many restaurant owners don't feel like they can pass that price –- or the rising cost of meat –- onto customers.

Instead, they often rely on lower cost items like drinks, appetizers, and vegetarian dishes to make up the difference. So, next time you read a menu, you might want to consider that $20 pizza more carefully than a $40 steak.