WHERE YOUR $30.95 GOES AT KATZ'S, LINE BY LINE, FROM THE BRISKET TO WHAT'S LEFT

A pastrami on rye at Katz's Delicatessen, on the corner of Houston and Ludlow, costs $30.95 on the deli's in-store menu. The corned beef is $29.95 and the combo is $32.95. In February, Food Republic had the pastrami at $28.95, the same price The Takeout printed in January 2025. Before that, by the account of two creators La Nación quoted last year, it ran $25 to $27. So the sandwich is up $2 since February, about 7 percent over a price it held for more than a year.

Everybody has a theory about that $2, and most of them are about greed or rent. We built the receipt instead. The price is public. The cost model is ours. Every number below $30.95 is our estimate, built from public beef prices and published industry ratios. We don't have Katz's invoices, lease or payroll, and nothing here pretends we do.

Beef is the obvious place to look, and this time the obvious answer holds up. The Bureau of Labor Statistics average price for a pound of ground beef hit $6.92 in August, the highest on record, and sat at $6.79 in September, up 7.4 percent in a year. In January 2025, when the sandwich was already $28.95, the same pound cost $5.55. Steaks were $12.80 a pound in May, up 16 percent in a year.

The reason is cattle. The national herd is at a 75-year low, down 8.6 percent since 2020, according to the American Farm Bureau Federation, which doesn't expect the numbers to come back before 2028. The USDA's Economic Research Service, in its October 23 outlook, expects beef and veal prices to finish 2026 up 8.7 percent.

Brisket, the cut Katz's pastrami comes from, took a harder hit this fall. The USDA's weekly grocery report had whole brisket averaging $11.05 a pound in the last week of September, against $5.29 the week before. A barbecue owner in Springfield, Missouri, told KY3 his wholesale price for top-quality brisket went from under $6 a pound to about $8.

Katz's doesn't publish a portion size. Food Republic says a sandwich is likely approaching a pound of meat. We used three-quarters of a pound of finished pastrami, which keeps the model on the low side. The menu says the meat is hand carved to your specifications, and The Takeout lays out the process: three weeks in brine, three days of smoke, three hours of cooking.

Brisket loses a lot on the way to the board, through trimming, curing, smoking and cooking. We assumed about 55 percent of the raw weight survives. That's our assumption, not a Katz's figure, and it's the softest number in the model.

Three-quarters of a pound finished means about 1.36 pounds raw. At $6 to $8 a pound wholesale, that's $8.18 to $10.91 of beef. Our middle case, at $7, is $9.55. That one line is 31 percent of your $30.95 before anyone touches the rye. Restaurant365, the restaurant accounting software company, calls 28 to 32 percent a good food cost for a full-service place, and that's for the whole plate. At Katz's, by our math, the beef alone uses it up.

Add the rye, the mustard and the pickles that come with every sandwich, which we put at about 95 cents, and food comes to about $10.50, or 34 percent of the price.

Nobody slices this by machine. The carvers stand at the counter and cut each sandwich to order, which is the show, and it's also the payroll. Restaurant365's benchmarks put a good hourly labor cost at 25 to 29 percent of sales for fast-casual places and 30 to 34 percent for full service. Katz's is both: you can stand in line at the counter or sit down for a waiter. We used 31 percent, which is $9.60 on a $30.95 sandwich, inside a band of $8.70 to $10.20.

The space is the line New Yorkers blame first, and on this receipt it's the smallest. The National Restaurant Association's latest operations survey put the median occupancy cost for city restaurants at 6 percent of sales in 2024. On your sandwich that's about $1.86.

Here's what the public record shows about the building. City property records list the lot at 205 East Houston under a 1988 deed to a company called 201 East Houston Street Co. In 2015 that company, with its address listed as 205 East Houston Street, sold the lot's development rights to MB-REEC Houston Property Owner LLC. A year earlier, Jake Dell told The Lo-Down that Katz's had a deal in place to sell its air rights. The records don't name the people behind the company, so we don't state Katz's rent or say whether it pays any. We charge the space at the median anyway, because a corner on Houston costs money even when no landlord sends a bill: property taxes, insurance, the roof, and the rent the space would otherwise earn.

Then everything else: the gas and power to keep meat hot from morning to night, paper and wrap, cleaning, repairs, insurance, the office and the accountant. In the New York area, energy prices rose 21.5 percent in the year to September, the BLS says. We put this line at 19 percent of the price, about $5.90. With the bread and pickles folded in, the everything-else line on the slides comes to about $6.85, inside a band of $6.20 to $7.70.

Now add it up. Meat, $9.55. Labor, $9.60. Space, $1.86. Everything else, $6.85. That's $27.86. Out of $30.95, the line that's left is about $3.09, roughly 10 percent, before income taxes, before loan payments and before any money goes back into the place. Restaurant365 calls 7 to 10 percent a good net margin for quick-service restaurants and 5 to 8 percent good for full service.

Run our bands the bad way, with the top of the beef range and the top of the labor range, and the last line hits zero. Run them the good way and it's about $6.35. The honest answer is a band: nothing to about $6, with $3 in the middle.

Three dollars works at Katz's for a reason most delis can't match, which is volume. The Takeout puts the pastrami at about 15,000 pounds a week. A thin line adds up when the line out the door doesn't stop.

Here's the part the comments miss. From January 2025 to September 2026, the BLS ground beef price went from $5.55 to $6.79, up about 22 percent. The sandwich went from $28.95 to $30.95, up 6.9 percent. If the brisket under your rye moved anywhere near the way ground beef did, the meat in one sandwich costs about $1.75 more to buy now than it did in early 2025. The price went up $2. By our model, almost the whole raise is the beef, and that's before the power bill.

Zoom out and it holds. Restaurant prices in the New York area rose 3.6 percent in the year to September, the BLS says, while prices overall rose 4.5 percent and groceries rose 2.1 percent. Restaurants as a group have raised prices slower than the rest of the city's bills, and Katz's, spread over the last 21 months, sits right about at that pace.

So the ruling is fair. $30.95 is a lot of money for lunch, and it's a lot because about a third of it is beef at a record price, about a third is the people who carve it, and most of the rest is bread, gas, paper and the corner. The deli's own slice is about $3, and in a bad month it's nothing. If you want the sandwich cheaper, the thing to argue with is the cattle herd, and the herd won't be back before 2028.

SOURCING

Every figure below the menu price is a New York Eats Here estimate built from public industry ratios, not Katz's data. Photos via Pexels.