Today’s environment is putting tremendous pressure on pricing. Most establishments are seeing a surplus of supply, decreased demand, and changing economics from both business expense policies as well as consumer conservatism. All of these are exasperating the squeeze on margins and profits.
The food and beverage world can take a lesson from the retail world in the form of pricing strategy. We need a pricing structure that signals inclusiveness to all types of buyers but really becomes a gateway to provide and upsell the products they are willing to pay for. This is very different from discounting in that you have a broader range of products to meet their expectations but does not reward undue expectations at your expense. For example, look at your menu and define which categories establish your price point in the consumers mind. Appetizers are the first thing on the menu and if they are all priced about the same as your lower level entrees because of the ingredients you have chosen (for example a lot of appetizers sections are loaded with seafood which pushes the price points up) then the consumer goes on the defensive about what entrees will cost and immediately gives up the notion of an appetizer. Try looking at related items such as salad pricing with an entrée. You can have two prices on the salads one if purchased without an entrée and a lower one when an entrée is purchased. This encourages a combination sale. Same concept could apply with appetizers, soups, nonalcoholic beverages, etc. Lead with a special or combination that has value to plant an impression in their minds on value and they will focus less on the details throughout the menu.
Have a great value on wine by the glass or nonalcoholic beverages for adults or young people to encourage consumption and celebration. You don’t need to make a predetermined margin on all items equally; it’s the overall blend and volume of sales that will create the bottom line you are looking for. Throw some real values in every category so the customer perceives your pricing structure as affordable and value added. The person who wants the big steak or lobster knows what it costs and won’t think of you as expensive.
You need to play with the pricing on your menu to find the sweet spot for your customer base. Most menus can be printed in house these days so fixed pricing is more a statement of laziness. Don’t change it so often that you can’t measure the impact. Sometimes, take items on the menu and let them be the daily specials at a new price and see the impact. Is it price or item driving people’s choices?
Food and beverage outlets need to be conscious of and flexible to the world around them—competitors, guest wants and needs, prices, etc.