Bonji Foods Aficionado Smart Brief: Volume 24
When and How You Should Increase Menu Prices
Hi all, welcome back to the Bonji Food Aficionado Smart Brief! We hope the weekend treated you well and you are ready for a new week full of new opportunities! In the past, we've written newsletters all about the backend price increases that distributors, providers, and restaurants have been facing over the past two years. From the lack of truck drivers to poor harvests, ingredients have been getting pricey or difficult to find in general. Now, in addition to all of the previous factors, the war in Ukraine is also affecting the prices of raw ingredients such as wheat. Today, we want to share some of the top tips we've come across to help restaurant managers know when they should raise their own prices and how to do so without losing support.
Top Three Tips for Raising Your Menu Prices: 1.Know Your Business and Your Competitors Often, restaurants look outwards at their direct competitors to determine their pricing or potential price increases. Although this is a rather good way to know when you should increase your own prices, it can be easy to get lost in translation. When you start to focus solely on price, quality of food, service, etc. can take a major hit. Therefore, we suggest deeply understanding your own restaurant's value proposition, along with having an idea of what your competitors are focused on as well. Maybe they are focused on the best service in town and you want to pitch that same idea, then yes follow along with their price hikes. However, maybe they are the "low-cost" sandwich shop that saw a jump in bread prices, leading to them having to up their sandwiches by a dollar. Does this mean your açaí bowl needs to jump too just because you are neighboring restaurants? No. Have an idea of the competitors' pricing and map the marketplace, but still try your best to never make a decision while only thinking about prices, look within your business first.
2. Add Extras or Improvements When raising prices, customers will immediately wonder why their regular order jumped up. Personally, this seems to happen with Chipotle every few months and it ticks me off. Customers don't usually think about the backend processes that likely caused a price increase, they see more money and think, “this stinks!” Unfortunately, it can be difficult to shed that judgement, but there are a few ways to battle it. When you raise your menu prices, try to add something new to the dish or meal. Customers are far more likely to accept a price increase if they are getting something in return. This could simply be a few more berries, a free drink, or even better quality or service. All in all, don't leave your customers wondering, give them something in return and they won't fret about paying the extra dollar or two that may save your business.
3. Reduce Portions Reducing portions is super common in the restaurant industry when operators need to save a little cash. Instead of raising prices, they will cut down the size of dishes by a few ounces and can truly save tremendous amounts by doing so. Unfortunately, if you have a long-standing restaurant with a loyal customer base, this tactic can backfire a bit. Although we are a tad iffy on this, try to make the reduction is so slight that most customers won't notice. Another way of handling this situation is cutting down both the size and price of a meal proportionally. It's truly a numbers game here, but if played right, you can still save or make more money. Finally, take a look below at the various ways to plate your dishes and portion sizes that can really make a difference in your bottom line.