Menu pricing is not at all an easy task for any food entrepreneur when setting up their new restaurants. There are numerous factors that determine menu prices, such as food cost, staff salary or even the economy. The hardest challenge is to build a set of prices that balance those factors to maximize profits.
Below are 6 useful tips that you can apply to make the menu pricing process much more effective.
Consider Food Cost And Portion Control
Food cost refers to the expenses needed to prepare a certain dish. It is recommended that the menu price equals at least 130-135% of the actual food cost. If you want to keep your prices on the menu low, one option is to reduce food costs. Substitute cheap but healthy and tasty ingredients for expensive ones. For example, instead of wrapping steak with bacon, use veggie wrap.
In the event that you want to keep your menu fancy, your menu prices should increase. Keep in mind that higher prices do not mean higher profits. On understanding your business’s goals as well as the food cost, choose menu prices which give you the most benefit.
In addition, successful restaurants practice very good portion control strategy. They have a firm handle on serving sizes and their chefs know exactly how much to put on a plate. A good portion control system not only helps them to reduce food waste but also effectively prevents problems like employee theft and waste.
Vary The Price Ranges
When you incorporate different price levels into your menu, you attract a wider customer base. Diners with a lower budget would be happy to go to an upscale restaurant if they can enjoy a pricey dish along with several other ones with more reasonable prices.
Use “Charm Prices”
Let’s talk about embracing the power of the number “9”. This menu pricing tactic is widely utilized not only by restaurants but also by a countless number of retailers, especially supermarkets. The idea behind it is basically a psychological trick. When customers see a price such as $0.99 (or 99 cents), their minds automatically analyze the number as closer to 0 than to 1. Therefore, they feel like they get a good deal out of buying that product.
There is no exception in the restaurant industry. Guests coming to your eatery not only expect to enjoy good meals but also hope to get them at a good price. Seeing the “Charm Prices” on your menu displayed this way actually tempt them to order more since they are less concerned about the prices.
Take Out The Dollar Signs
The dollar sign ($) is the visualization of money. This small sign can greatly affect the guest’s decision-making process. When you put $ in your menu, guests will pay attention more to the prices of the dishes than their descriptions.
Place The Prices After The Descriptions
If possible, avoid making a column of prices (as can be seen in the image above). Just like the dollar sign, a column of prices will make the burden of cost stand out more. Guests will be more likely to compare prices as well if they are arranged in a line or column. Some restaurants like The KAfe pay attention to this little detail and resolve the problem by putting the price in or after the description.
Prix Fixe Menu
Prix Fixe refers to a complete meal offered at a fixed price. This type of menu pricing is often found at fine dining restaurants. Those who plan to celebrate big parties usually opt for prix fixe menu in order to have control over the total meal cost. In fact, prix fixe not only benefits the customers but also the restaurants themselves. During busy occasions such as Valentine’s Day or New Year Eve, sets of menus with fixed prices allow the cooks to better prepare the dishes and keep the restaurant running as smoothly as on a normal working day.
Moreover, prix fixe menus set at low prices can also be served daily or weekly, in the form of convenient lunch/dinner varieties. These types of pre-selected menus are appealing to busy people who just need to grab a quick, tasty meal to fill them up during a hectic day. Offering cheap prix fixe meals is a promotion that brings in business during the slow time of the week.