Restaurant Menu Pricing Strategies That Work for Independent Operators

Restaurant Menu Pricing Strategies that Work for Independent Operators - How do you decide what to charge for your menu items? Do you just look at what your competitors are charging? Do you think about what people would be willing to pay for an item? Or do you literally just ask your chef or kitchen manager to give you a price based on their own idea and their own gut? I want you to stop using your gut to price out your menu now! To help you, here are some restaurant menu pricing strategies that work for independent operators.
#menuengineering #restaurantmenupricing #runningarestaurant

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Restaurant Menu Pricing Strategies That Work for Independent Operators

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.

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Find more about how to run a restaurant business on my other platforms:

[DavidScottPeters]

Come on, tell me... how many menu items are priced based on someone pulling the price out of the air? Now you know there's a better way - let's take the steps to properly price those menu items so you make money on every single item.

[DrLaraZib]

This makes so much sense to use a specific way to cost, rather than putting it out of the air!

[YesToTech]

Wow! These strategies are absolutely fantastic! Literally can't wait to put them into practice! :)

[MalloryRoseCo]

I love it! Really applies to people who arent sure how to price their items

[ortallevitan]

Thanks so much for sharing this information! you clearly know what you're talking about and the amount of detail you go into when explaining this just showcases your expertise

[CoachShayain]

great topic. Love your advice and tips. New Sub as well :)

[ryanlewer]

How does a higher contribution lower labor costs?

[davidschleiss]

Being off by only $1 can make or break a restaurant. Example charge $10 vs $9 that is 10% on your bottom line 5% profit margin to 15% profit margin. Yes I also made a spreadsheet with all my menu items about 15 years ago its been vary helpful

[MrVibesGod]

Hello David, absolutely great video, as usual, after having bought your book (not finished yet tho), listen to all your podcasts and watched probably dozen times, there is still something that keeps me out of sleep.
Now that I am a checklist and spreadsheet geek, now that I know how to read flawlessly a P&L and that I know perfectly how to make my recipe costing cards for my drinks and food items to the very cents, how to I decide how much to charge this very item? How do I account for labor or for general expenses in a dish?
This is the part where I can't find a clear solution anywhere on internet ...

[Spiritual_gravity]

I opened my second restaurant in vegas
Looking for a business partner

[cassmccomb]

Okay. I got the menu cost cards for all dishes. Now what?

[georgeanglin]

I run a truckstop and grill with the constant changes in food cost is it worth it to just leave the prices off the menu? Is there even a statistic on customers feelings on that specific of a
question lol

[sk_momoh_official]

I don’t understand the Number 2 please can you explain again.

[cococha]

hmmmm this is very unsual for me, i found it very interesting actually lol