Setting menu prices can be daunting. Restaurateurs must balance uniqueness of their menu with consumer expectation, competitive comparisons, and food and operational costs.<\/p>\n
\u201cDetermining profitable selling prices in restaurants is a science and an art,\u201d says Paul Sorgule, MS, AAC, founder and former Dean of the Culinary Arts Program at Paul Smith\u2019s College in Paul Smiths, New York. \u201cFrom a strictly mathematical approach, the process is straightforward.\u201d<\/p>\n
But \u201csoft\u201d considerations bring in the artful side of pricing, Sorgule maintains. Those factors include tradition, competition, and what the market will bear. Finding the balance among hard numbers, research, and intuition serves up the sweet spot in pricing a successful menu.<\/p>\n
Here\u2019s how:<\/p>\n
\u201cThe menu has to be profitable,\u201d says Gordon Food Service Commercial Segment Marketing Leader Bob Koch. \u201cExercise analytics and run a menu mix of high profit and favorite items.\u201d<\/p>\n
First, cost out the menu. \u201cYou can\u2019t arrive at pricing until you know what the plate costs,\u201d he says. \u201cBe surgically precise\u2014right down to the lemon wedge.\u201d<\/p>\n
Gordon Food Service Commercial Segment Marketing Specialist Robert McMillion suggests a front-load recipe manager to help determine and track margins and costs. \u201cIt takes a while to load, but once you do that initial groundwork, it\u2019s worth it,\u201d he says.<\/p>\n
Be sure to conduct ongoing incognito portion-control audits. \u201cDeconstruct the sandwich, weigh each component. Plating and portioning might have shifted since you first put it on the menu.\u201d If part of the recipe build comes back to the kitchen untouched, consider removing it. If it\u2019s moving really well, see that as an opportunity to the raise the price.<\/p>\n
The mathematical approach, Sorgule says, is straightforward: Plate cost divided by food-cost percentage equals selling price. However, other factors affect pricing strategies. Yield versus trim is one factor. \u201cConduct frequent yield tests to determine actual useable product and \u2018real\u2019 costs,\u201d Sorgule says.<\/p>\n
Another factor is market fluctuation, driven by the volatility of wholesale costs. \u201cAn effective selling strategy dictates that you build in a cushion when establishing price,\u201d Sorgule says, noting that training is crucial. \u201cAll this effort is wasted unless there is a system in place for accurate portioning and all cooks are trained to follow that system.\u201d<\/p>\n
So the selling price becomes recipe cost + make-up cost + marketing fluctuation, divided by food-cost percentage.<\/p>\n
Start with local independents, Koch suggests. \u201cWho is your competition here?\u201d<\/p>\n
He suggests a close look at chains. \u201cYou can learn things from chains,\u201d he explains. \u201cDon\u2019t mimic their pricing, but studying them will tell you what the market is doing.\u201d<\/p>\n
Chains invest in deep market research and consumer insight data. \u201cTake advantage of that,\u201d he adds.<\/p>\n
Competitive analysis has grown in sophistication in this digital age.
\n\u201cSearch the Web for menus in your ZIP code,\u201d McMillion says.<\/p>\n
As an example, he cites helping a customer specializing in barbecue price a pulled-pork sandwich. \u201cWe searched for barbecue menus in his area and did comparative analysis,\u201d he says. \u201cWe moved the pricing up by $1 because of that study. Every dollar counts.\u201d<\/p>\n
Many diners measure value differently at independents and chains. Uniqueness, craftsmanship, and quality all trump value pricing in this space.<\/p>\n
\u201cYou can\u2019t be all things to all people, and you can\u2019t cave to competitors with lower prices,\u201d Koch says. \u201cOperators have to embrace that what they do, they do really well. They have to be courageous and disciplined enough to charge for it.\u201d<\/p>\n
Special touches help pump up perceived value\u2014from menu cues like hand-crafted, pickled, hand-cut, small-batch and housemade to premium ingredients like caramelized onion or local goat cheese.<\/p>\n
\u201cThese details not only give you points of difference but also allow you to charge more,\u201d McMillion says. \u201cBut it\u2019s important to understand how your guests perceive your operation.\u201d<\/p>\n
Strategic menu design helps draw the eye to your menu\u2019s superstars and workhorses. It can even help sell the puzzles, those dishes that offer high margin potential but just aren\u2019t selling well. Place dishes you want to move almost in the centre of a two-page menu, or toward the upper right quadrant.<\/p>\n
Take care with displaying prices on the menu. \u201cUse language to add value before people look at the price, and make sure the price is printed in subtle fashion on the menu so the server has a chance to pitch how great the item is before guests turns off their desire.\u201d<\/p>\n
McMillion advises against single-digit pricing.<\/p>\n
\u201cData shows customers don\u2019t round up; they round down,\u201d he says. \u201cYou might like how $9 looks on the menu, but $9.95 reads the same to the customer. We call that couch-cushion change, and you don\u2019t want to throw that away.\u201d\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"
Setting menu prices can be daunting. Restaurateurs must balance uniqueness of their menu with consumer expectation, competitive comparisons, and food and operational costs. \u201cDetermining profitable selling prices in restaurants is a science and an art,\u201d says Paul Sorgule, MS, AAC, founder and former Dean of the Culinary Arts Program at Paul Smith\u2019s College in Paul […]<\/p>\n","protected":false},"author":19,"featured_media":4340,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[112,69],"tags":[],"class_list":["post-25723","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-restaurant-bars","category-running-your-business"],"acf":[],"yoast_head":"\n