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(frFR) Fixer les prix de vos menus : une question de stratégie
Setting the right price for each dish on your menu is crucial to the success of your business. Too low, and you risk losing profits. Too high, and you risk losing customers!
Factors you need to consider: the costs you need to cover, the profit margin you want to achieve, your competitors and what they charge, and of course, your customers and what they’re prepared to pay.
To help you plot a course through all these factors, we’ll talk you through several calculation methods as well as key pricing strategies. To help you strike the perfect balance and the right price. Right for you, to safeguard your profitability. And right for your customers, to keep them satisfied and coming back for more!
Pricing methods and strategies for your restaurant: grab your calculator!
Before anything else, it’s essential you know all the costs involved in preparing and serving every dish (for more info check our article on food calculating) on your menu. Then it’s a matter of determining the profit margin you need to reach to make it all worthwhile. The typical profit margin for restaurants is around 28% to 35% of the price of each dish. So to make a profit of €5, for example, you can count on a sale price of around €16.50.
The multiplier coefficient method
Another simple method you can apply is the so-called multiplier coefficient. The formula is simple: multiply the (total) cost of each dish by a certain coefficient that covers both your target profit margin and VAT.
For the average restaurant, that coefficient lies between 4 and 4.5. So in the case of a dish that costs €5 to make, the ideal price would be between €20 and €22.50. Sounds intuitive, right? The only problem with this method, however, is that it doesn’t take your competitive environment or the market into account.
Omnes’ Principles
In addition to cost and profit margin, there are a bunch of factors you need to consider to pricing your dishes accurately. And for that, Omnes’ Principles are a handy way to refine your calculation – and/or adapt your menu – in order to boost both sales and profits.
FIRST PRINCIPLE
your range opening. This represents the difference between the highest and lowest-priced dishes within a category on your menu (e.g. meat dishes, seafood, desserts, etc.). If you divide the price of the most expensive item by that of the least expensive, you should arrive at a ratio of between 2.5 and 3.0. In other words, your most expensive dish should never be more than 3 times the price of your least expensive dish.
For example: imagine the most expensive seafood dish on your menu costs €35, and the least expensive is priced at €12. In this case, your range opening would be 35/12 = 2.91. This example is within the ideal margin to ensure balance and to make sure your prices have a favorable effect on your customers.
second principle:
price dispersion. How well balanced is your menu? To find out, divide the prices within a specific category into 3 equal brackets: the most expensive third at the top, the least expensive third at the bottom, leaving one third in the average or median bracket in the middle. To ensure a balanced menu, you should have the same number of dishes in the middle bracket as in the top and bottom brackets combined.
For example: still staying within the seafood category, we have 3 dishes in the top price bracket of €28 to €35, 6 dishes in the median bracket between €20 and €27 and 3 dishes in the lower bracket of €12 to €19. You should keep in mind that the average customer will usually order from the average bracket. Which is why most of your dishes should fall within this price range.
Third principle:
customer reactions. The next step is to find out how well your price spread corresponds with what your customers order. Simply calculate the average (total revenue divided by the number of dishes sold) price of all dishes ordered within that category. Divide that by the average price of all dishes on your menu in that category (total of all prices in the category divided by the number of dishes in that category).
forth promotion
promotion. Finally, this principle covers the strategy of promoting a certain dish or menu by offering it at an attractive price. Like a dish of the day or a weekly/monthly menu. The idea is not to offer a discounted product but to attract attention and boost popularity, so you can capitalize on economies of scale. Ideally, the promoted dish should still fall within the average price bracket of its category.
You should arrive at a demand: supply ratio of between 0.9 and 1.0. If it’s greater than 1, your prices are too low for your customers. If it’s less than 1, your prices are too high. Of course, adjusting this ratio requires more than just playing around with prices. You review the entire category of your menu.
The competitive environment: keep an eye on your surrounds!
Chances are, you’re not the only restaurant on the block. Do a survey of your competitors in the surrounding area. It will give you a good indication of what customers are prepared to pay. Depending on the type of restaurant experience you offer, you can adapt your strategy in various ways:
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lower your prices: especially if your establishment is more suited to fast food or take-aways
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align your prices with your competitors, if you’d consider your restaurant to be in the same category with the same target customers
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raise your prices if you offer added value compared to the competition (e.g. a more attractive décor, haute cuisine, original dishes that are hard to find in the immediate vicinity, etc.).
Price psychology: capture their attention!
Taking all these elements into account in your calculations will help you finetune the prices on your menu. But the prices themselves are not the end of the story! There are price psychology insights you can apply to boost your bottom line. Your menu is like the shop window of your restaurant. So, it’s worth putting just as much thought into the design and composition.
When it comes to displaying prices, keep simply principles in mind:
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- The charm price principle: use the decimal point to give the impression of lower prices. For example: €12.90 looks more attractive than €13, since our brains read from left to right and focus on the whole number 12 rather than the figures after the decimal point.
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Presentation matters: think about how you arrange prices on the actual page. Putting them all in one column underneath one another might look neat and tidy. But it also invites your customers to compare prices, rather than your dishes. Or in the worst case, to simply look for the cheapest dish on the menu.
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Keep it simple: favor a simplified and easy-to-read menu with max. 6 to 7 dishes per category. It’s harder for our brains to process more than a certain amount of data. If the list is too long, the chances are your customers will just look at the prices, which are easier to process than the descriptions of each dish.
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Drop the currency sign €: according to a study by Cornell University, the currency symbol reminds customers of the notion of money and that they will have to pay for what they eat. Which puts them in a frame of mind to limit what they spend.
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Show off your best: draw attention to your more profitable items, especially your signature dishes that reinforce the image of your restaurant. Bear in mind that our brains typically scan a menu in a Z pattern. So put your dish of the day or house specialty in the top-left corner. And highlight it even more with a pictogram, frame or image.
Conclusion :
Accurate calculations are a key part of any price strategy. But it doesn’t end there. There are factors you should consider to finetune your prices and your menu according to your surrounds. The image you want to project, your competitors… and above all your customers. After all, keeping them happy is the key to the success of any business, and your prices are a big part of that. The more return customers you have, the greater your profits will be. What we call a win-win scenario!
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