How to price menu properly… Long Term.

Your menu is your #1 marketing piece and should be updated to reflect new trends, fresh ideas and be costed and priced properly for adequate profit.  As Paul Saginaw from Zingerman’s says “It is irresponsible to not make a profit.”

  • Food Cost your menu: Amazing how many restaurateurs don’t know their food cost.
    • What does your menu run theoretically with your current pricing and cost of goods? This should be looked at versus your Actual Food Cost with waste, over/under portioning, potential theft, etc.…
    • Focus on Gross Profit on each dish and by category on menu.  You will never take Food Cost percentage and deposit it in the bank.
  • Menu price bench marking:  Look at what other restaurants that you would want to emulate, share you customers with or are just geographically close to you.
    • Look at their menu pricing versus yours and “Pattern” this price difference.
  • Raising prices in an uncertain world:
    • This is Pent up demand coming out of the Covid-19 Pandemic.  People want to get out and enjoy their favorite local spots again.
    • QSR Magazine did a consumer survey: Customers will spend twice as much money per month at restaurants that meet their cleanliness standards.
  • Knowing Inflation is the key.  You can count on 3% inflation each year and potentially more this year with the increased pressure on the supply chain.   
    • with $1M in Top Line Sales with inflation (3.5%) is losing 10k per year.
      • That same restaurant purchases around $300K – 3.5% = $10.5K spend that is not recovered
      • It only takes a raise in menu price by 1% to cover this Inflation increase.
        • ½% twice a year will do the trick!
  • Strategic changes:
    • Changing menu every 6 months you can add variety and give customer value with correct pricing.
    • If you never change menu and do price increase every 3-5 years… your customers will notice increases.  You are putting more attention on pricing the longer you don’t change.

Always provide Hospitality and EARN the money.  Don’t take customers for granted.

                – Someone is spending their most precious asset with you.  Their time… Give them a value!


Leave a Reply

Avatar placeholder