Restaurant Menu Pricing Strategies That Work for Independent Operators

When it comes to restaurant menu pricing strategies, what approach do you take in your independent restaurant? Do you just look at what your competitors are charging? Do you think about what you think people would be willing to pay for an item? Or do you just ask your chef or kitchen manager to look at an item and give you a menu price because they should generally know? I want you to stop using your gut as your primary restaurant menu pricing strategy. To help you, I'm about to share with you restaurant menu pricing strategies that work for independent operators. Click the video below or keep scrolling to read the tips.

What I'm about to share with you will change how you price your menu forever. That's the good news. The bad news? It takes work. 

Let me start off telling you that every pricing strategy I described at the top of this article are all incredibly damaging to your restaurant's potential profitability because they all depend on what I call “dumbass luck.” Think about it. Your kitchen manager or chef puts today's special in the pass, you ask him how much you should charge, and they look at the dish with a pregnant pause and they blurt out $12.95. Ninety-nine out of 100 times no one says anything. We just go with $12.95. Maybe that one time you ask, “How did you come up with that?” They answer, “I generally know what the protein cost, I generally know how much this side costs, etc.” 

Do you know what I say to that? Then you generally aren't making money. We are in an industry of pennies. Everything matters. You need to know what a recipe costs down to the penny.

Here's the process you must follow if you want to price your menu correctly, giving your customers what they want and still be able to make the money you deserve.

Number one, you need to implement recipe costing cards. What are recipe costing cards? They literally map out every ingredient, how many ounces of it and what the cost is. Then when you total it up use divided by sales, we know how much money we're going to make on an item both by food cost percentage and by taking the cost of the recipe subtracted from the menu price. We know how much money we're making.

By the way, what pays your bills? Cash or profits? Cash. So sometimes a higher food cost is OK because we're going to have a higher cash contribution, which lowers our labor cost.

Number two, you have to have a POS system and pay attention to your product mix. With recipe costing cards and the product mix report, which is how many items you sold during a period of time of each one of the items. By doing a little arithmetic, I can tell you what your ideal food cost is. If your kitchen ran perfectly, no waste, no theft, no spoilage, perfect restaurant – which does not exist, it’s a goal – this tells you what your food cost is right now.

Number three, with your ideal food cost all laid out, you can implement menu engineering strategies such as raising prices, dropping items, adding items, merchandizing items to change the mix, changing ingredients, and/or changing portion sizes. All of this gives you the power of profitability at your fingertips because you have all the right information to truly menu engineer.

If you really want to price your menu properly, you need to start working on recipe costing cards today because they're critical. Put them into a spreadsheet to sort that information out and then make changes to see results. When you can do this, you're on your way to pricing properly instead of using menu pricing strategies that aren’t based on real numbers. You will see exactly where you need to put things on the menu and make the right decisions to ultimately make the money you deserve.

If you would like to learn how to own a restaurant that doesn't depend on you to be successful, watch this free video course that teaches you three key principles to running a successful restaurant.

Be sure to visit my YouTube channel for more helpful restaurant management video tips. 

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