Businesses tend to overlook the importance of pricing strategy when determining their operations. Nevertheless, pricing strategies are one of the most important ways for organizations to improve their bottom lines. A company's profitability can increase by 25 percent to 60 percent if its pricing strategy is properly managed. However, many companies overlook pricing and miss out on these potential profits.
Is there a restaurant pricing strategy that encourages customers to spend more? Restaurateurs encounter this and try to figure out a successful menu planning strategy & while planning menus and selecting price strategies for their menus that will entice more customers. But this is not an easy task, and most restaurateurs make a few miscalculations when pricing their dishes, which can hurt their business. Listed below are a few strategies we've compiled for you about restaurant menu pricing. Make the most of them to make your business a success!
In this blog let us discuss the major touch points on which the restaurant should focus on driving profits and here are some of the tips and tricks shared on how to plan and design a successful restaurant menu that drives maximum profits and seems enticing and triggers customers to buy. Here are some of the top tips for determining restaurant menu prices.
Before you decide on the price of a dish on our restaurant menu, you must keep your restaurant format in mind. This is one of the most effective restaurants' menu pricing strategies. In addition to the pricing you charge, you will have to consider the following factors such as the costs of raw materials, labor costs, maintenance charges, and regular maintenance. It is ideal to set your menu price based on your food cost, overhead cost, labor cost, and profit projection.
Calculate the Gross Margin value, which is the difference between the menu price and the cost of the dish.
The final GMV will vary from one restaurant to another and a fine dining restaurant has high overhead costs when compared to a casual dine-in restaurant. It is recommended not to come up with the pricing strategy based on the GMV only and it is said to try on various other alternatives and find out the best one that suits your restaurant.
The restaurant can try to charge a bit extra for serving and delighting the customers with unique exotic dishes and this can be used as a strategy to gain more profits for your restaurant. This is the place the restaurants need to play with the psyche of the customers and the premium price tag will make them feel special about the delicacy which is being served and give them the feel of the fine dining experience. The delicacy and the richness of the food might get lost if it is served at a low cost or economical. For example, if your restaurant serves some Thai foods you can tag it as a premium pricing category and charge the customer extra for serving the delicious cuisine. Hence the type of cuisine that is being offered at the restaurant plays an essential role in restaurant menu pricing strategy.
Give your customers the various choices on the menu and the cuisines and it is the best way to optimize your old restaurant menus by adding more unique dishes. Ideally, this can be used as a strategy to revamp your old restaurant menu and include more choices for your customers to choose from. Add dishes that use low-priced basic ingredients and also should not lose their richness. Likewise, many menus can be added and come up with special menus and cuisines.
It is the concept where the customers might tend to buy more and use the concept of complementary buy. For example, if the customer orders Coke there is a high chance that the customer might order French fries too. If you offer your most profitable items next to your most expensive ones, your customers will likely order the cheaper, yet more profitable item. Thus placing normal french fries next to chilly cheese french fries, will end in impulsive buy and customers might choose normal french fries which could be profitable for the restaurant with a high margin.
There will be enough confusion in the restaurant in which the menus are priced, they either price too high or too low and there is always a struggle in coming up with the right pricing strategy. While charging too high will lose potential customers also when charging too less will eat the margin of the restaurant hence it is recommended to charge nominal. Hence, there should be a perfect balance between the price and the quantity and the restaurant should not decide on the price solely based on the quantity alone. Also, the restaurants should consider various other factors involved in preparing and serving the food.
Because customers might expect their signature items in the restaurant and you can have a ‘Chef’s signature items’ and add a few of the signature restaurant menu items to drive profits and name it as the restaurant’s signature dish, also place it on the top of the restaurant menu and highlight with a box which could look especially unique in the eyes of the customers.
The above is the most basic yet avoided strategy by many of the restaurant marketing teams by ignoring the currency signs on the menu card. This makes the customers aware of their spending and they intend to buy less.
Food descriptions need to be included in the restaurant menu and they should be enticing. It is recommended to write an appetizing description and thereby build the right appetite for the dish. Customers will also get to know more about the cuisines and the ingredients used while making the dish.
The restaurant can offer complementary items to increase the sale volume. For example, the customer buying a burger might not want french fries and coke, by giving them in complimentary will tend customers to get the complimentary items too. Also, the small discount on the complimentary items will increase the sale volume and thereby increase the footfall.
Hope the readers would have found these hacks to be very informative and these can be used effectively in the design of restaurant menu pricing. Let us know in the comments how does it help in your business with regards to deriving profits and footfalls.
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