Food & Beverage - 6 Price-rise Tactics: Smart Steps to Rebuild Revenue - By Ken Burgin
It's patchy, but there's an economic recovery underway - don't miss the opportunity!
If your sales have been battered by discounting, now's the time for some careful rebuilding of menu and service prices. But if you just chase (and attract) people who want the cheapest, this article is not for you!
• What discounts can be withdrawn or modified? You may have cut prices to meet tough competition, or in the panic that most businesses felt last year. But do the discounts need to be so aggressive and wide-ranging? Are there event and party charges you dropped that could be carefully introduced again? Do you still want to allow BYO birthday cakes and offer all that free food in the bar?
• Reduce the number of days when discounts are offered: does the 2-for-1 lunch have to be every day, or would Monday and Tuesday be sufficient? Can you bring back a room charge for functions on busier days?
• Emphasise special events, dinners and local food: I see restaurants having great success promoting regular 'beef and beer matching' dinners, 'meet the olive growers', 'jam making workshops' and 'local harvest lunches'. Cooking classes are more popular than ever! Versions of all these can be done in every venue: from cafes and take-out to bars and fine dining. The public's love of food talk, TV and events is unending! Smart operators price these competitively as a way to build loyalty and the database - two years ago they were often over-priced. Many customers are suffering from 'frugal fatigue' - they still love to eat out and want more than just beans. What's special on your calendar?
• Eliminate some of the low-priced options: these could be a cheap sandwich, small beverage or economy party option. Chances are they were introduced in desperation, and significantly lower the average spend.
• Don't touch the highest price item: they serve as a value signal. There are many opportunities amongst the middle and lower-range prices to add dollars and cents to boost revenue.
• Create some healthy 'price confusion': how many price points do you have for main courses or desserts? If they're all similar (eg all desserts $9), add some variations to mix things up. Add a mousse with a low, low cost at a slightly cheaper price, plus a new super-chocolate temptation at a slightly higher price. And the same with cocktails. If all desserts were $9, do a new spread ranging from $8.50 to $9.90.
Profitable Hospitality offers management and cost-control systems (Manuals & CD-ROMs) for restaurants, cafes, hotels, bars and clubs. The systems are based on the extensive consulting and operating experience of CEO Ken Burgin, and enable busy owners and managers to set up complete operating and cost-control systems in minutes, not months. Profitable Hospitality also runs regular management training workshops in the areas of kitchen profit & efficiency, restaurant marketing and functions management. A free monthly e-newsletter keeps you up to date on the latest industry management issues. www.profitablehospitality.com.
