Posts Tagged ‘prices’

Striking a Balance Between Inflated Food Costs and Menu Prices

May 15, 2012

Wholesale food prices rose by 8% in 2011, the highest rate of increase in a very long time.  Fortunately, that rate will slow this year with a projected 4% increase.  This is still high when compared to previous numbers, forcing owners to get creative when striving to maintain profit margins.  Add to these projections the fact that customers are being squeezed financially in other areas, and it is critically important to be able to ‘justify’ your higher prices.

 

Higher Prices Accepted at Restaurants

 

It helps that inflation rates at the grocery store have been higher than those at restaurants. Customers are intimately aware of the increases at the checkout counter, and aren’t surprised to see similar changes when looking at the menu.  Furthermore, they are willing to pay more for the implied value that comes when eating out.

 

It all comes down to the perceived worth of the service provided.  As long as operators deliver good value and communicate that value to their customers, a reasonable increase in price is acceptable.  Many restaurants are addressing the rise in prices proactively by letting their audience know in advance of the changes in the menu.

 

Strategies to get Patrons to Accept the Price Adjustments

 

Restaurateurs have several strategies they can employ to help their patrons manage their checks.  Adjusting the menu so that profitable items which haven’t seen much of a price increase are promoted, offering smaller portions at a lower price point, including a prix fixe menu and stressing the experience all help the customer feel that they received value.

 

While there isn’t much an owner can do to reduce the costs of supplies, improving décor and service helps to validate a check that is slightly higher.  Dining out provides customers with more than just a meal; it is a complete experience.  Your visitors should come away with the feeling that they got what they paid for.