We talked yesterday about how to determine the types of items that should be on your menu. Today, we’re going to look a little more closely at how to price your menu and make the items competitive with the restaurants around you.
Pricing Your Menu
If the perceived value is less than the price that you’re charging, then you’re probably not going to get many takers. On the other hand, if you’ve got a good deal, the item might fly out of the kitchen.
Before you can price, you have to know how much the item costs:
- How much do the ingredients cost?
How many ounces of Wagyu beef are in that filet? What are you planning on using as garnish for the food that you’ve got? The cost of the ingredients plays a big part in the cost of the dish, but they’re not the only things to take into consideration.
- Do you need any special equipment to make the dish?
There are some dishes which just demand certain types of equipment. If you’re making flash chilled pastries, for example, you probably want to have a blast chiller on hand. If you’re offering spaghetti, would it be easier to have a dedicated pasta cooker to free up some of your stove space?
- How much does it cost to run your restaurant?
How much are you paying for your location and your servers? How about the utilities that you’ve got?
- How much is the competition charging for the same items?
There are SO many factors which set your restaurant apart from the rest of them that this might not be a consideration. However, there are always going to be a few things that overlap somewhere. If, though, you’re looking at your kid’s portion of the menu and have fries, how does it compare to the guys down the street?
- What is your restaurant concept?
The pricing that you’ve got for your restaurant in many ways reflects your restaurant’s image. If you are a formal dining establishment with classic food, you’re expected to have prices that range on the high end. If you’re presenting yourself as fast casual, you’re expected to charge a little bit less for the same types of items.
After you’ve gotten an idea about how much the potential menu items cost, it’s time to get around to actually pricing the items on your menu. If you’ve chosen appropriate menu covers, changing the prices on them should be as easy as making another printout rather than taking them to the printer. The point here is that as you evaluate the menu items for salability, it should be an easy matter to change the prices.
What are some methods used to price items?
- Find the true cost of making the item and multiply by 3
This is the simple method of pricing your menu. Pick a number that looks good that’s about three times the cost of the menu item. If it sounds reasonable to you, it’s worth giving a shot, right?
- Look at your competitor’s pricing and reduce it slightly
The deal seekers will be attracted to you, and hopefully you can wow them into picking up some of the more profitable items on your menu. This is a tricky game to play, and it should only be a pricing method if you’re sure that you’re offering the same types of items.
- Hiring consultants / asking friends in the business
If you’ve been in the restaurant business for any length of time, there’s a high likelihood that you’ve got friends already in the business who have priced menus. There’s nothing written in the rules against asking them what they would pay for certain dishes. In the process, you might find that there are other items that you can put on it, too!
Be aware of what people are willing to pay. Sometimes, the customers just aren’t going to follow you where you’re leading them. Remember that they want the value for their money, and if they’re not receiving it, they’re not going to purchase the item. In other words, there comes a point where the customers don’t care if the potatoes for those $10 French fries were sourced from this one farm in Idaho. They’re still $10 French fries and they might taste the same to them.
Pricing the menu doesn’t have to be incredibly difficult. There are certain techniques that you can use to easily and effectively price those menu items. On Monday, we’re going to delve a little more into pricing menu items as well as talk about designing your menu to accentuate your most profitable items.
Thanks go to Daniel Kulinski on Flickr for the Creative Commons use of the picture.