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MENU PRICING GUIDE Key Components to Consider When Pricing Your Menu
Are you serious about success, Sysco Columbia is serious about helping you!
Key Components to Consider When Pricing Your Menu Have You Conducted a Prime Cost Analysis?
Pricing Strategies… Every Penny Counts We recommend that your menu items should end in nines. By moving from fives to nines, a restaurant that sells 2,800 items per week will add $5,824 in revenue each year with no added expense.
Food Cost + Labor Cost = Prime Cost
Complete documented, standardized recipes for every item in your restaurant. ie. sauce, dressing, batch recipe, etc. See your Marketing Associate for any questions. Next, your Marketing Associate has a Menu Analysis Program to assist you with developing your recipe manual and determining your actual food cost for each item on your menu. Conduct yield tests, many raw products lose weight or volume from the time they are purchased to the time they are put on the finished plate or measured for a recipe. One advantage of using value-added, ready to use products is that they can make the costing process easier since all or nearly all the product is usable. For each item on your menu, there is a labor cost associated with it. Those items that are more labor intensive inevitably increase the cost of producing that menu item.
Rounding Strategy Price all menu items under five dollars in the following increments
($.29, $.59, $.79, $.99) Price all menu items over five dollars in the following increments ($.49, $.99) Incremental increases move the item to the next highest price, ie., $8.49 to $8.99. Psychologically, the customer is less likely to notice the increased price.
Money Makers Beverages For soft drinks, tea and coffee, national chain restaurants charge between $1.85 and $2.19. Higher price points can be achieved with both alcoholic and non-alcoholic signature drinks. See your Marketing Associate for new beverage ideas.
Add Ons Offer toppings and add ons to current menu items for an additional price. Salads- grilled chicken, blackened shrimp, etc Steaks- sautéed mushrooms, crumbled bleu cheese, crab meat, etc. Burgers/Chicken- fried onions, bacon, etc.
Signature Dishes Although food cost is an important component of menu price, no single pricing strategy can be used to arrive at the optimum price.
What menu selections do you offer that are unique, different or special to your operation? - Signature Dishes alleviate price comparison and allow for higher profit margins.
Evaluate your prices on similar items with comparable restaurants in your area. See price comparison guide in the centerfold of this brochure. If you are below the market, there might be an opportunity for price increases.
Subjective Influences Perceived Value Ask your employees and customers “What would you pay for this item?”
Plate Presentation Creative and unique product presentation is important in forming the value perception of an item. ie. items with height, garnishes, sauces, etc.
Menu Description Use descriptive adjectives to explain menu items. ie. pan seared, fire grilled, etc.
Of all the business decisions a restaurateur has to make, the one that causes considerable anxiety is pricing the menu. restaurantowner.com
See your Marketing Associate for a more detailed list of descriptive adjectives.
Restaurant Location Downtown areas and tourist driven markets typically bear higher prices. From the moment a guest walks through your door, the atmosphere and staff professionalism will set the stage for their expectation of price.
Atmosphere and Environment
How You Can Fight Food Cost Inflation
MENU ENGINEERING Change up the Mix of OfferingsAdd additional, more profitable items to your menu. Consider expanding offerings in the more profitable areas and discontinue slower moving, more unprofitable items from menus.
Reprint Effective and Nimble MenusConsider reprinting your menus in a way that is easily updatable and allows you to change prices and update offerings quickly and inexpensively.
Offer Different Portion Sizes-
Leverage Culinary and Product Experts at Sysco-
Consider offering half portions at a lower price, but with a healthier margin. Today’s health conscious consumers appreciate having the flexibility of being able to order different portion sizes.
Our Associates can offer creative preparations with less expensive protein items. Consider offering sub primal cuts of Beef. In addition, items like Side Dishes, Soups, Salads and Desserts offer great profit and help increase customer check averages.
How Sysco Columbia Can Help Sysco is layered with experienced foodservice professionals that can support you in combating today’s industry challenges. Our team ranges from your Marketing Associate, Sales Management, Product Specialists, Business Resource Managers, Graphic Designers as well as our in-house Chefs. Each department understands that Our Mission is Your Success.
Service and Support Review Our team can help you determine how you can best fight back against food inflation. From Menu Analysis to Menu Layout and Design to tips on motivating your employees, we can guide your business toward continued growth and success.
Additional Education & Training Sysco can help you train your staff Educate your staff about rising food costs and train them to conserve energy and watch food waste in the kitchen. Leverage your highly skilled culinary team members to mentor those with lesser preparation skills.
Help You Educate Your CustomersIt’s more than likely that restaurant consumers already understand food inflation because of the rise in prices at their retail grocer’s. Explain how the establishment is affected and the things you are doing to keep costs down.
Fire up your Sales TeamTrain your staff to promote areas that drive gross profit. Beverages, Appetizers, and Desserts will increase check averages and gross profit per customer. Create internal competition and promotions to drive sales in these categories.
Observers fear rising gas prices will boost commodity costs, menu prices By Mark Brandau April 4, 2011 www.businessweek.com When gasoline prices began a nearly month-long rally in February, rising for 20 straight trading days and surpassing $4 per gallon in many markets, a sense of “here we go again” settled over consumers and operators who recalled 2008, a year dominated by a deep recession and sky-high fuel prices that took their toll on restaurant traffic and spending. But that was then and this is now, and experts say that both consumer attitudes and the environment are likely to make this time around slightly different — although no less painful. First, consumers are over the shock of seeing gas prices hoverregularly between $3 and $3.50 — even if that price is about$1 more per gallon than they were paying a year ago. In thepast few years, they have figured out for the most part how to curb their driving and not spend all their discretionary dollars at the pump. More significantly, fuel price inflation is likely to drive a more severe increase in commodity costs throughout the supply chain this time, necessitating menu price hikes for many restaurant companies and increasing the cost of eating out for consumers. Inflation by the barrel During a conference call with analysts March 1 — as political unrest in the Middle East and North Africa was fueling a steady rise in the price of oil — Patrick Doyle, president and chief executive of Domino’s Pizza, noted that store-level profitability would be more impacted by the pressure higher fuel prices put on the supply chain than by hits to consumer spending and higher costs associated with delivery.
Those fuel surcharges proved to be unpopular with operators, many of whom simply refused to pay them, said Caroline Perkins, a New York-based consultant to the foodservice community and a contributor to Nation’s Restaurant News. So when the price of diesel fuel declined, most surcharges were discontinued. However, Perkins said a survey in the Technomic Distributor Intelligence Report in December found that 95 percent of distributors polled said energy and fuel costs are having the most impact on their ability to make a profit. To help address that, some are once again adding fuel surcharges. As of March 21, diesel fuel averaged $3.91 per gallon, up nearly $1 per gallon from last year at this time, according to the Energy Information Administration. Darren Tristano, executive vice president at Chicago-based consulting firm Technomic, said cost increases rippling through the supply chain due in part to fuel inflation would hurt operators not only from a commodity price standpoint, but also in the erosion of their ability to take price hikes to cover their margins. “The last two to three years, chains have taken slight to moderate price increases,” Tristano said, “and with all the couponing, it has hurt what they’re able to sell in terms of price point. Lots of chains are hesitant to raise prices. Take Texas Roadhouse, which tested a 2-percent increase last year and went with a 1-percent increase this year.” In a recent conference call with financial analysts, Luby’s Cafeterias’ president and chief executive Chris Pappas said that while commodity costs had risen 5 percent in the second.
“You’re looking at a small number when you look at the gasoline reimbursement as a percentage of sales on the store P&L,” Doyle told securities analysts. “We would rather have lower gas costs than higher gas costs. But what we saw three to four years ago now was the way it played through in commodities, and I think we’re seeing that again, and that’s a bigger deal.” By comparison, he said, the hike in the federal minimum wage had a bigger effect than fuel inflation on overall profitability and required the chain to change its pricing and discounting strategies. For 2011, commodity prices that are expected to increase 3 percent to 4 percent are a bigger worry than spikes in gasoline prices. “There are ways to offset [higher gas prices],” Doyle said. “It’s pretty easy for our system to do the calculation on [where] their reimbursements need to move to make sure we are doing right by our drivers — and move that through to the consumer,” Doyle said. Rising gas prices could have other impacts as well. In 2008 when oil prices were hitting unprecedented heights, some foodservice distributors attempted to offset the skyrocketing cost of diesel fuel by implementing surcharges of 4 percent to 7 percent on each delivery.
34 Billion fewer miles driven by consumers in 2008, the last time gas hit $4 a gallon, largely through the cancellation or consolidation of shopping trips and vacations, according to the NPD group.
Want To Know Where You Can Find Current Market Information? Technomic www.technomic.com The go to source for food & foodservice industry data, intelligence and commentary. Their proprietary research, trend analysis and forecasts fuel business and marketing plans.
NPD Group www.npd.com (select foodservice) The leading global provider of consumer and retail market research information. They provide critical consumer behavior information and industry expertise.
Restaurant Owner www.restaurantowner.com Join their community of thousands of independent operators who are starting, improving and growing their restaurant business. Membership web based library of tools, forms and systems to help run your business profitably.
Who cares If one restaurant “makes it” when there’s always a dozen more right down the street?
Sysco Cares
Every day good restaurants come and go. At Sysco Columbia, we’re working to eliminate the “go” part. We support our customers, offering expert guidance on mastering the business end of restaurant success. The way we see it, every restaurant that stays open is a triumph – for owners and staff, for us, and most importantly for the people out there who just love good food.
Sysco Columbia, LLC 131 Sysco Ct. | Columbia, SC 29209 www.syscocolumbia.com 866.Go.Sysco. | 803.239.4000