3 Unusual Ways Restaurants Price Menus

Restaurant Industry Trends

Above. Food portions. Ingredient costs. Salaries. When the fun of putting together a menu ends, your attention turns to the prices, and these points become the center of attention. Food costs tend to be 30-35% of menu prices, leaving enough room to pay expenses and, more importantly, make a profit.

It’s a pricing model that works so well; has been made famous by celebrity chef Robert Irvine of ImpossibleRestaurantIn three days, Chef Irvine revamps a restaurant, retrains the staff, and, using the three-to-one pricing rule, transforms a failing restaurant into a profitable one. The basic formula is as follows:

Cost of food + labor + company expenses including profits = menu price

Although restaurants around the world have had success with this standard pricing analysis, there are definitely outliers. Some restaurant and cafe owners consider good manners to be just as important as buying ingredients, and others employ a pricing model that guarantees reservations.

These atypical models are unusual and innovative, and work like a charm. Below are three new charging models for restaurants that factor more than profitability into menu prices.

The sticker pricing model

Rude customers, go away! These restaurants want nothing to do with you. It seems those deep-L lovers are more irritated than the average customer because two coffee shops (that we know of) have developed a pricing model to encourage better ordering manners.

Across the pond in France, a restaurant in Nice found it necessary to encourage diners to order coffee in a friendly way. On an outdoor Le Petite Syrah sign , customers were shown a menu that called for the same ordering style as Cups’—only theirs was in FrenchPhotos of their new price menu went viral online.

With a sticker pricing model, it really pays to be nice in Nice, France.

In Japan, customers are happy to pay more for a license to be rude at Konro-ya pub in Tokyo . While the initial goal was to make bar patrons more friendly, the added benefits are not a bad side effect of the change in pricing model. Konro-ya has reported a strong bias in rude customers, who are amused by being a jerk. They’ve also added a beer tap to serve, which is a lot less than ordering a beer from a waiter, but you still see customers ordering rudely and willing to pay the price.

While the results for Le Petite Syrah were not shared publicly, customers in both examples took to the new pricing models in good spirits.

The Related Pricing Model

Would you pay more for a dish in one place, when you know you can get the same dish elsewhere for cheaper? It’s a question that Sam Polk and David Foster, owners of Every Table …are figuring out how to answer. So far, it’s Yes.

In 2013, Polk founded a nonprofit organization called Groceryships to educate parents in low-income areas about better eating habits and the importance of getting nutritious food. The common reaction was that there were no cheap and healthy fast food options, so McDonald’s became the next best thing.

Polk and Foster, two men with a background in finance, devised a strategy to combat this food crisis: Offer a healthy menu of hot and cold items, with prices that are relative to other establishments in the area.

Every Table’s first location is in South Los Angeles, a neighborhood with a median income of $13,000 a year. Meal prices will not exceed $4.

How is it possible?

Chefs will cook and package the fresh meals in to-go containers each day in a central kitchen, making them available for immediate pickup. Since no servers or seating space are required, this model allows two or three employees to run a small storefront location, with a higher percentage of the price redirected toward sourcing quality fresh ingredients.

In an effort to balance some of the costs, a second opened in a wealthy neighborhood near downtown Los Angeles. The menu will be priced between $7 and $10, based on residents’ income and neighboring restaurant prices.

Today, Every Table has eight locations and continues to strive to serve low-income areas with healthy food options by pricing based on geographic income information.

“Each store is designed to be individually profitable,” Foster explained in an interview with NPR’s Here & Now. “At $4 a meal in South Los Angeles, we don’t make a lot of money on every meal sold. But if we get enough people to come out – and we’re already seeing great traction – it will be really profitable. The location in the city center will also be profitable. So together they are part of this company that is working to improve access. The higher priced location will help fund new location growth in both markets.”

As a restaurant owner, location is a crucial point in what you can charge for dishes. Think about the area around your restaurant, and look at local market reports to determine the total cost of menu items.

The ticket pricing model

There is nothing more irritating to a restaurant than no-showsBooking a reservation is similar to signing a contract, except that the restaurant is only harmed when the contract is broken. Larger restaurants, particularly chain restaurants, can afford to miss the shows, but smaller venues with restricted seating cannot. Even a table of four can make or break the success of an evening at some restaurants, especially if you book at peak times.

To create a balance in the reservation agreement between the restaurant and the dining establishment, some restaurants have adopted a ticket pricing model. Just like when buying movie tickets, diners must buy their dinner seats first.

Nick Kokonas owns three restaurants in Chicago, and he started selling tickets to customers at his high-end venue Next for seats. Today, you find that to make a reservation, you have to pay for a dinner in advance, which can cost upwards of $3,000 depending on what you select. Since Kokonas implemented the ticketing model, no-shows to bookings have dropped to nearly 1.5%.

Menu changes are easy to do with a mobile restaurant POS system.

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