In the face of rising costs and economic uncertainty, restaurant operators employ innovative pricing strategies to stay afloat. This topic was the focus of a panel at Nation’s Restaurant News’ CREATE Roadshow event, where industry experts shared their insights on managing pricing effectively in today’s challenging environment.
Testing Different Cuts of Meat at Various Price Points
One key strategy discussed was using different cuts of meat to offer various prices. Steve Simon from Fifth Group Restaurants emphasized the importance of variety in menu offerings. By featuring a high-end pork dish priced at $38 alongside a more affordable $21 pork dish, restaurants can appeal to a broader customer base. This approach caters to varying customer budgets and allows the restaurant to test consumer responses to different price points and cooking techniques.
Balancing Price Increases with Decreases
Katy Young from Yumbii highlighted the delicate balance required when adjusting menu prices. Rather than uniformly raising prices, which can alienate customers, Young suggested lowering prices on high-margin items to offset increases elsewhere on the menu. This tactic helps maintain customer satisfaction by ensuring that price hikes on some items are perceived as reasonable when balanced with price reductions on others.
Promoting Combo Meals for Value Perception
Combo meals emerged as a popular strategy among the panelists. Both Yumbii and Smalls Sliders have successfully offered combo meals that deliver better value to customers. In a time when discretionary spending is tight, these meal deals make customers feel they are getting more for their money. Combo meals can include a main dish, side, and drink at a bundled price, providing a sense of value crucial for attracting and retaining customers.
The Importance of Value in Today’s Market
Lauren Fernandez of Full Course emphasized that value is paramount in today’s market. With consumers facing tighter budgets and limited credit, restaurants must be strategic about pricing. While the desire to dine out remains strong, there is a clear price threshold that consumers are unwilling to cross. Understanding and respecting this threshold is vital for maintaining customer loyalty.
Creative Menu Design and Product Selection
Menu design plays a significant role in strategic pricing. Steve Simon from Fifth Group Restaurants explained that changing menus regularly allows restaurants to be creative and responsive to market conditions. By incorporating seasonal and low-cost items, restaurants can offer fresh and appealing options without compromising quality. This approach also enables the strategic inclusion of more expensive proteins, which can be positioned as premium offerings.
Practical Communication and Staff Training
Communication is critical when implementing pricing changes. Katy Young from Yumbii stressed the importance of educating staff and customers about the reasons behind price adjustments. When staff understand the rationale, they can effectively communicate this to customers, helping to maintain trust and satisfaction. Transparent communication ensures that customers know the value they are receiving, even if some prices have increased.
Maximizing Efficiencies Through Cost Management
Michael Alberici from Smalls Sliders discussed the importance of understanding and managing prime costs, which include the cost of goods sold (COGS) and labor. Rather than simply passing increased costs onto consumers, Alberici advocated for maximizing operational efficiencies. This approach involves optimizing labor schedules, reducing waste, and negotiating better prices with suppliers. By focusing on cost management, restaurants can maintain profitability without alienating customers with frequent price hikes.
Conclusion
The consensus among the panelists at the CREATE Roadshow event was clear: strategic pricing, effective communication, and a focus on value are essential for navigating the current economic challenges in the restaurant industry. By testing different price points, balancing price increases with decreases, promoting combo meals, and being creative with menu design, restaurants can appeal to a broader customer base and maintain loyalty. Moreover, transparent communication and staff training are crucial for ensuring that customers understand and accept pricing changes. Finally, maximizing efficiencies through cost management allows restaurants to remain competitive and profitable without overburdening their customers.
Combining these strategies will enable restaurant operators to survive and thrive in these trying times.
Florida Food Handler Certificates
Avoid fines by ordering your Florida Department of Business and Professional Regulation-approved Food Worker Program certificates today. They’re available for just $4 each. Program #5552749.
Place your order online here. For additional information, you can call (561) 703-7196.
***Please note that the insightful and engaging content provided on our platform is crafted by our dedicated Marketing Department’s content writing team. While Ken Kuscher is the esteemed figure and expert within our industry, the articles and blog posts available are not personally authored by Ken.
