Setting the prices of a restaurant menu is a more complex process than it seems, and it goes much further than just charging what we want for our products. This factor, although few know it, can be a determining point to obtain great benefits in the operation of your restaurant. In this article, we will tell you how to set restaurant prices, what factors to take into account and how you can give your business that boost you need once and for all.
What is a pricing strategy?
A pricing strategy is a process by which we determine the cost of a product or service. Its main purpose is to calculate or evaluate the economic compensation of a company or business.
In the case of a restaurant, a pricing strategy requires perfect knowledge of a greater number of elements, such as the price of ingredients, the salary of waiters and cooks, maintenance, and business income, among other factors.
To achieve this, it is important to start from the main foundation: cover the costs of the dish or preparation and provide a profit margin to the restaurant owners. It seems simple, right?
However, you should know that you cannot leave out details such as a possible increase in food costs, since you will not be able to suddenly raise menu prices for your customers.
Tips for setting prices in a restaurant
Just as important as preparing a restaurant menu is a process of determining fair, reasonable prices that are consistent with your business. To do this, you should keep these tips in mind:
Analyze your company
To start setting prices, it is necessary to carry out a complete analysis of your restaurant. You must take into account the image of your business, the usefulness of the service, the quality of your dishes or products, and the perception and experience of your customers in each preparation.
Look at your competitors
Knowing the status, prices and the perception of your public about your competition will be very useful. This will also help you find out what your guests want and how much they are willing to pay to get it.
Take into consideration the costs
Analyzing or discovering every last detail of each dish will help you determine exactly the cost of the preparation. With this information, you will be able to evaluate what you need and avoid falling into buying more or losing supplies.
Make a summary of expenses
Although it is not the only method, you can take this formula to establish the prices of your restaurant:
- 28% to 30% of the plate to raw material
- 33% of the dish to staff (cooks and waiters)
- 17% of the plate to general expenses
- 5% of the plate to rent
- 15% of the plate to benefits
Remember that this formula is not suitable for everything, and some dishes can cover 60% of the raw material and 40% of other expenses.
Know your market
You cannot design a pricing strategy without thinking about the market. To do this, you must rely on surveys, trivia or direct questions to your audience. Remember that the price of a dish must match the quality, presentation, and preparation time, among other factors.
Types of pricing strategy
As we mentioned before, setting the price of a dish is not a simple or easy task to perform. For this, we must master several factors:
- brand perception
- Seasonality or temporality
Remember that pricing is mainly looking for:
- Maximize profits
- Create ROI
- Improve market share
- financial survival
- Avoid the competition
To achieve all this and much more, there are different pricing strategies that can be adapted to your restaurant. Get to know them all and choose the best one for you!
As its name suggests, this variant consists of determining prices based on those of the competition. You can choose to set similar prices or set a slightly lower price in case you are looking for immediate liquidity. On the other hand, you can charge higher prices if you want your business to convey a sense of exclusivity and status.
Fixation on demand
This pricing depends on the demand for your food or dishes. To carry out this method, you must consider various factors such as the environment of your business, the experience of the guests, the offer of your restaurant and originality.
Fixation by intuition
In this strategy, the owner of the business or restaurant is placed in the role of the consumer in order to set a price. Although this method can be influenced by various aspects, it can be mixed with another strategy as a complement or starting point.
This strategy is ideal if you are starting your own business. It consists of setting the price lower than the competition since it seeks to enter the market and gain recognition. But beware! If you then try to adjust your prices, you could lose customers as fast as you gained them.
The psychological method starts from the perception and emotions that the consumer has about the price of a product or service. To do this, it has as a reference the inclusion of open prices instead of closed ones. For example, it presents a price of 129.99 instead of 130. This makes the consumer associate the price closer to 120 than to 130.
Fixation for increased cost
The cost-plus fixation strategy consists of adding a fixed percentage of profit to the cost of the dish or preparation. It is also known as markup, since it is usually used by owners to determine how much they want to earn, leaving out the cost of production.
Fixation by package
This type is very common in restaurants and food businesses. The strategy is to offer two or more products at a single price. This method helps to add value to the offers and achieves customer loyalty.
Opening a restaurant in the USA, Mexico or any other part of the world has become a practice that more and more entrepreneurs decide to carry out. But what ensures success?
Take into consideration factors such as the place, the preparation, the times and the prices if you want to be a little closer to achieving your goals.
The most important thing in these cases is to have adequate preparation to face any obstacle and get ahead without major inconveniences.