For a start-up restaurant owner, pricing the delectable set of menu items is a challenge. Focusing on excellent service and food backed up with a strategical menu pricing is a leading edge. While others get away with unreasonable pricing, developing an ethical pricing strategy can help avoid drawbacks.
Here are some ideas on how you can build your menu pricing strategy:
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Figure Out What Makes Your Restaurant Unique
Having a general concept for your restaurant business is necessary in order to stand out from the rest. Deciding the concept involves considering your customer base. It is difficult to tell exactly what type of restaurant will resonate with your prospective customers and making sure that there is a demand for what you want to offer. Therefore, you have to observe the strengths of your competitors and set your own competitive advantage. Developing your menu should also coincide with your concept. For example, if your concept is Harry Potter inspired cafe then developing a whimsical menu is a great match. Aside from that, the ambiance of your restaurant gives an overall impact of what you want to convey to your customers.
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Crunch your numbers
Here are some costs you need to consider in order to help you decide how to price your menu items appropriately:
- Direct Costs
This cost includes the cost of ingredients that made up the menu item as well as the food wastes.
- Overhead Costs
These are the cost you spend in order to push through with your business operations such as rent, utilities, payroll, and others.
- Preparation Costs
Preparation costs are the costs of business operations during wild price swing of ingredients, excessive labor requirement, and seasonal costs.
- Indirect Costs
These are the costs not directly associated with the menu items but still have an impact on the pricing strategy. There are certain costs spent in promoting the business and these costs are recovered over the span of business operations. Therefore, adjusting the prices of the menu items is a way to recover these costs.
- Menu Pricing Ranges
Your price range is the lowest price you can charge your menu items but still break-even sales and provides no profit or loss.
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Choose the Most Appropriate Price in Your Range
Appropriate pricing strategy is a secret key to success. Pricing your menu items has no certain rule or formula to get it done. It involves the consideration of certain factors such as how much your competitor is charging, understanding the relationship between quality and price as well as identifying your prospective customers. Be clear when setting up prices. The goal of appropriately setting up prices is to generate profit that is enough to recover costs and still have money left over as return on your investment or to build your business equity over time.
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Seasonal Menu Pricing Strategies
Business owners manage seasonality in many different ways. Showcasing a fresh flavor of seasonal food items excite customers. It is also a way to refresh the menu once in a while. Seasonal menu pricing strategies affect your bottom line positively because in season produce costs less especially when supplied by a major distributor. Therefore, charging a different price to menu items during a different season is the most common and effective way of adjusting to seasonality.
Need help in coming up with a sound menu pricing strategy as well as help in getting powerful financial insights, help in achieving diligent tax compliance, and help in achieving a healthy cash flow, contact us today at admin@fas-accountingsolutions.com or 832-437-0385.
