| Menu pricing is one of the most important | | | | * Ideally you should be able to determine a |
| decisions for any restauranteur. It may look easy, | | | | consistent overall food cost which, when |
| but the fact is that you cannot price it simply by | | | | combined with proper pricing, will positively impact |
| your intuition. It requires consideration, observation | | | | on your profitability. |
| and asking certain questions. For instance, do you | | | | * It's also important to remember there are other |
| remember your last visit to a market or a mall as | | | | costs of operating a restaurant that need to be |
| a buyer? How many goods had an acceptable | | | | taken into account to determine optimal pricing |
| price enticing enough to motivate you to make a | | | | for menu items. These include the cost of labor, |
| purchase? In reality, pricing must be an amount | | | | rent and debt. |
| that someone else is ready to pay for your | | | | Tips on Pricing Alcoholic Beverages |
| service or product. | | | | Now, let's see how to price the alcoholic |
| Creating a restaurant menu is tricky business. Not | | | | beverages on the menu: |
| only does it involve selecting attractive and | | | | * Beverage costs are generated in the mid-20% |
| popular dishes, but also pricing them competitively. | | | | range of beverage sales. As for food, these can |
| Pricing is important not only to make the business | | | | be higher or lower. Fine dining establishments may |
| profitable, but also to offer good value to | | | | run up to 40%. On the other hand, restaurants |
| customers to win them over. | | | | serving draft beer may run as low as a 15% |
| Tips on Pricing the Food Items | | | | beverage cost. So, it's important to find out the |
| Let's see how to price the food items on the | | | | industry averages by comparing your cost |
| menu: | | | | percentage to restaurants with similar menus and |
| * Generally, successful restaurants keep the food | | | | service levels. |
| costs in the range of 27 to 32% of food sales. | | | | * Beverage costs, like food costs, must be |
| These percentages can be higher or lower | | | | constantly monitored, by comparing with previous |
| depending upon the type of restaurant. However, | | | | performance, with other restaurants and the |
| to be more accurate, it's best to compare your | | | | industry averages. This will help you to |
| cost percentage with restaurants having similar | | | | competitively price the items and increase |
| menus and services. | | | | profitability of your total operation. |
| * While calculating the cost of food, all ingredients | | | | * Although you'll need to cater for normal taxes, |
| must be included. Work out the cost of each | | | | you must be clear about additional taxes in your |
| recipe for each menu item and don't forget to | | | | local jurisdiction, as they may impact beverage |
| include things, like spices and garnishes in the cost. | | | | pricing. In Philadelphia, for instance, there is an |
| * Your recipe costs for items and sales prices will | | | | additional beverage tax of 10%. |
| determine whether your food cost is in line with | | | | If you take the above factors into account while |
| the industry averages. This will also help in | | | | pricing the items on your menu, you'll certainly |
| monitoring your performance and analyzing | | | | succeed in running a profitable restaurant. |
| problems and trends. | | | | |