Now that you’ve decided to open up your restaurant, you’ll have to determine pricing for all the delicious items you’ll sell to patrons. The right menu pricing strategy is essential for attracting customers and establishing a reliable client base. It may be helpful to have a restaurant consulting specialist and bar consultant on your side when you’re setting prices for your foods and beverages since your prices have a direct effect on your profits. Here are some helpful tips that will teach you what to avoid when establishing the best menu prices for your eatery.
Pricing Based On Competition
If you see that a restaurant similar to yours lowers their prices and still makes a profit, you may be tempted to either reduce your prices. Or, you may consider increasing your prices to make patrons feel as if they are receiving a more exquisite dining experience.
If you’re not sure what your foods or beverages are worth, you can’t price your items simply based on the prices of your competition. Randomly pricing your menu items doesn’t help you predict how much of a profit you’ll make. In fact, this pricing method could slow business growth and reduce your profits in the long run.
Consider your food and beverage costs when pricing your menu items. You have to make sure you’re staying within your budget and making financial choices that will keep you from going in the red. If you lower your prices, you may not be able to keep up with operational costs. If you raise your prices because of the competition, customers may not look at your business favorably and will spread the word that your menu is overpriced.
Think about your demographic and changes in the economy when pricing your menu. Cost is one of the main factors people consider when going out to eat. Offering food and beverages that are fairly priced and in keeping with your bottom line is best.
Not Informing Staff About Marketing Efforts
Often, potential customers will see an online promotion from your restaurant and visit your eatery to take advantage of the promotion. However, if your marketing efforts don’t match the customer’s expectations, they may not patronize your restaurant again.
A poor connection between marketing and the customer experience can lead to less-than-stellar reports at the end of the month. Your management staff should have an ROI or return on investment method to understand if their efforts are effective when it comes to factors like the cost of goods sold and the menu mix.
Keep in mind that higher guest check averages don’t automatically mean more profits unless the items are sold more than alternative menu items. This is the menu mix method. You’ll have to analyze the cost of goods sold and menu mix items to market or suggest selling menu items that bring in more money for your restaurant.
It’s common for restaurant owners not to know which menu items make the most significant contribution to profits. When you know your costs, you can effectively address any low-profit concerns you have.
Blind Selling On Social Media
Your social media accounts are a wonderful platform for promoting your restaurant. When you post pictures of your location and showcase your entrees and desserts, you’ll appeal to both local patrons and those who may be visiting your city. Marketing planning is essential when you have a social media presence, since you’ll be displaying your business to the masses.
It’s not secret that social media has become inundated with restaurant businesses. Your eatery is not likely to benefit this type of marketing if you don’t plan correctly.
Avoid blind marketing, which includes posting low-quality photos and not communicating with your staff about online promotions. You should also avoid posting your most popular menu items without regard for presentation or giving the kitchen staff time to properly prepare the meal.
Don’t over-promote low profit items on your menu, since this may not contribute much to your profits. Make sure you know which items deliver high revenue so you won’t inaccurately estimate guest check averages. When you sell blindly, your profits could go down as a result of disgruntled guests or miscommunication with your staff members. Verify that all menu prices are correct before you advertise online and inform everyone on your team about the promotions so everyone is on the same page when communicating with guests.
Inadequate Front House Training
Listing all the ingredients you need for your menu and make sure you know how much each ingredient costs. When you can track your spending, you’ll know which steps to take when it comes to your marketing efforts.
Price all the items on your menu and concentrate on the menu offerings that generate the most profit. Provide your front-of-house staff with this information so they can properly promote the menu items.
You’ll feel much more at ease when you know your marketing efforts are being carried out by an informed staff. When everyone is on the same page, you’re more likely to get positive results. Your staff will also feel more confident interacting with customers when they have the proper information.
One you know all the costs for your menu items and you’re aware of all your restaurant expenses, you should place your higher-priced items on the menu where they will be more noticeable. Train your team to sell these items in a way that doesn’t put pressure on your guests.
Selling Menu Items According to Food Cost
You should sell your food based on contribution margin and not food cost. Be sure to create an itemized food and beverage report of your whole menu pricing so you know which recipe is the most profitable. Every day your business is open will hopefully result in sales. Each day of sales will result in separate menu sales mix. Remember, the menu items that contribute more to your profits are the items you should focus on and promote. Just because an item costs more doesn’t mean that more people are ordering it.
Your service team should know which items improve profits so they can promote these items to guests.
Using a balanced system for pricing menu items and utilizing social media in a clear and organized way can bring about success for your restaurant. Knowing how to promote the meals that bring in the most profit and placing these items prominently on the menu will create more interest in the products that make your restaurant stand out.