Menu Pricing: 3 Strategies for your Restaurant

a solid menu pricing strategy can make
or break your restaurant in this video
I'll be sharing three menu pricing
strategies to help drive your profit and
lower your food costs hi everyone
Asher Carnes Karnes consulting my
mission is to help real people
accomplish their restaurant goals in
today's video I'll be sharing three menu
pricing strategies to help lower your
food costs and drive your profit let's
get started
but first I want to talk about food
costs just real quick a little refresher
course most restaurants run between 25
and 35 percent food costs just keep that
in your head as we're going over the
examples the first menu pricing strategy
I want to discuss is called cost plus
cost plus is one of the easiest menu
pricing strategies it works like this
let's say you've got a cheeseburger on
your menu and it costs two dollars and
50 cents for all the components to make
that burger now that's your cost you're
going to now add in a mark-up cost plus
markup now seeing as most restaurants
run between 25 and 35 percent food costs
that markup is either going to be times
3 or times 4 if you're running a 25%
food costs that means that your burger
on your menu is gonna cost you $10 to 50
plus your markup cost plus now cost plus
has some advantages all right it's
really easy to do you just multiply
things a little bit it is also great
because it guarantees that you're gonna
make a profit through your markup now
one of the big drawbacks of Cost Plus is
it doesn't actually look at anything
else going on around your restaurant
you're in a little bubble so the the
prices that you come up with at the end
after your calculations those prices
might not be supported by the market
you're in second menu pricing strategy I
want to discuss is market - market - is
a much more dynamic way of pricing your
menu than cost plus that's because it
looks at the market it's not just in the
bubble you're going to look at
different restaurants in your area and
find out what they're charging for their
product again let's use the example of a
cheeseburger let's say everybody in town
is charging on average $10.50 for a
cheeseburger now in market - you can
take a little bit of an advantage here
and say all right I'm gonna undercut
them a bit I'm gonna charge $10 I want
to run a 25% food cost
so what does that leave me with two
dollars and fifty cents now you can use
two dollars and 50 cents to find all the
ingredients for that cheeseburger
remember when you're doing this focus on
your customer experience find the
highest-quality ingredients you can make
the best burger you can out of that two
dollars and fifty cents your customers
will notice if you're not the third menu
pricing strategy that I want to discuss
is a loss leader loss leaders are a
fantastic way to drive your business the
way a loss leader works is you find a
product that people are really
interested in and excited about and
price it really low that brings people
in the door if you do it right it brings
people in the door and then they
purchase other things that you are able
to mark up a little bit higher we've all
seen this happen before happy hours are
a great example of this type of thing
you bring people in the door during your
happy hour show off your restaurant
oftentimes people will stay maybe
they'll get a cheap drink and then
they'll buy appetizers there's a lot of
opportunities here using loss leaders my
favorite example of this is a restaurant
I used to go to their loss leader
strategy was to only mark up their wine
bottles by 10 dollars keep in mind most
restaurants will either double or triple
the price on their wines so this was an
incredible opportunity for people who
enjoyed wine to come in and get
extraordinary bottles for very very
cheap now what did this result in every
table in that restaurant every night was
packed people drinking wine but more
importantly people eating food
appetizers entrees desserts people were
trying dessert wines it was an
incredible strategy and
worked here's a bonus what I typically
recommend is using a combination of all
of these pricing strategies cost plus
for your basics market - for your
signatures and loss leaders to drive
that business home if you can combine
all of these pricing strategies I think
you've got a winning combination that
was it
three solid menu pricing strategies to
help lower your food costs and drive
your business question of the day what
menu pricing strategies are you using
right now in your restaurant let me know

[brainwashingdetergent]

Thanks! I’ve been using cost plus on my staples, loss leader on my beverages intuitively, I didn’t know about market minus. I run a seasonal food truck btw.

[marounloutfi]

i also prefer to think about the seasonal items that gives fresh appearance with low food cost that might help and thank you for the informations very helpful.

[ubavec]

Its really interesting.
In my restaurant we go on the menu like that: ex;
We buy wine 50 eur and we sell it 100 eur so this we say that we go 100% earning.
Is that right? What group of menu strategies is this.

Thank you so much

[anggafebrian]

unfortunately i only used cost plus for my restaurant and it seems not really good by the revenue that i get..most of the time over food cost hit me and target revenue was always under budget..both of those always happen...but anyway thanks for sharing chef🙏

[RideNShine]

I have the simplest of business. A sandwich food truck. I use the best of ingredients, have the lowest prices in town, and have my own signature red wine sandwich dressing along with my own signature hickory Smoked maple bacon seasoning blend but I still have trouble getting people to come. Where am I going wrong?