Menu prices are soaring. It’s now costing people more to eat out than ever before. In fact, studies have showed that the cost of eating out is increasing at five times the rate of inflation – and this can be extremely dangerous. After all, when prices are higher, people are less likely to spend the money, and that could be bad news for your restaurant.
What This Means
If it’s costing people more and more to go out to a meal, they are likely not going to go out as often. People usually have limited budgets for eating out. If they used to go out two or three times a month, they may only go out once a month now – or they may choose to go to some of the cheaper restaurants.
This can have a dramatic impact on what your revenue is for the year. People have to choose between the restaurants they go to and you want yours to be at the top of the list. If there are a large number of restaurants within your area, it’s important to set yourself apart from the other restaurants – otherwise you run the risk of becoming obsolete.
Restaurants are always in competition with each other and menu prices are just one of the ways. Price too low and customers aren’t going to think that your restaurant is any good. Price too high and customers are going to go to the competition.
What You Can Do
First things first. Take a good look at the prices on your menu to see what the food cost is on all of them. You may be able to lower prices in some areas and still get a good food cost percentage. It’s also important to compare your restaurant’s prices to some of your competition. Just be sure to make accurate comparisons.
If you’re a sit down burger place, you can’t compare your burgers to what the fast food restaurants offer. Look at what some of the restaurants that are also sit down have to offer. You may be able to get away with higher pricing if you use such things as:
– Quality beef
– Choice of protein
– Premium ingredients
People are going to become more aware of what they are spending money on and what kind of value they are getting. You can raise your prices, but be sure you have some kind of reasoning behind it. Don’t follow a trend just to follow a trend.
It can actually work to your advantage to not raise prices when everyone else in town raises theirs. If you do feel the pressure to raise prices, start to use more deals. These can be coupons, specials, or even online deals with such sites as Groupon or Living Social. This way, you are able to promote your restaurant and issue deals at the same time – which may be what’s going to help you attract more people so that when they do choose to go out to a meal, they are choosing your restaurant.