Happy 2016! We all know that a new year brings a new menu and this is the perfect moment to refresh, not just your menu, but your pricing strategies. We want to share with you some recommendations to achieve better results.
The importance of an expensive dish
When choosing, our brains save energy by comparing options instead of analyzing each option separately. The way our brain compares is by using anchors in our memories, in this case it would be the most expensive item in the menu. By first presenting the most expensive dish, generally your guest won’t choose this entrée, rather they will feel better by choosing the second most expensive.
For this reason, it is very advantageous to have an item with a very high cost that would potentially lead to higher revenue. Because the majority of your customers will avoid this dish, the anchor will generate an attraction to other dishes with lower, high prices. Create this effect by carefully selecting the best way to display it.
Avoid aligning prices
If you are in the culinary industry, you would love for your customers to make their selections based solely on the recipe, not the price. Unfortunately, price plays an important role in their selections, therefore the details of the dish must be exalted. Highlight the description and the name of your items and avoid aligning the price in columns that will ease the direct comparison on price. Try writing the price at the end of the description instead of the beginning.
Know your customers and align your pricing strategy
Identify your customers and the reasons as to why they follow you. Forget about the price war for a moment and determine the factors that make your customers loyal to your service and your differentiating factors. Is it your speed? Your promotions during lunch? Or maybe it’s the ideal place to have a special dinner?
Gather and analyze all the information of your guests and give them what they are looking for. Remember that methodologies like menu engineering helps you with more insights about customer behavior.
Recognize your target market and build your prices around it. If you want to try new segments, use seasonal entrees or limited time promotions. Remember to always measure and analyze your results.
Advice on the price range
Check the range on your entrée prices. It is recommended for the most expensive entrée of your menu to not exceed 2.5 times the cheapest (you can eventually have higher dishes, but the important thing is that most dishes are in this range). This helps your guest in their selections by reducing high changes in prices, they will not perceive any changes or differences, and also helps the analysis of your strategies by avoiding bias prices.
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