You don’t need us to tell you that menu pricing is one of the most crucial aspects of running a successful restaurant, café, or takeaway. But many business owners set their price and then wait many months or even years before they check to see whether this is still a fair and profitable price.

You may feel like you’re too busy to dedicate time to reviewing your prices regular. Or you might be worried that your customers won’t want to pay a penny more than what they’ve become accustomed to.

However, while pricing that is too high can negatively impact sales and revenue, prices that are too low can have the same effect, just in an even shorter time! Therefore, it is important to regularly review your prices to ensure that they are in line with costs and your profitability goals.

Here are five reasons why you should regularly review your prices if you’re not already doing so:

1. Keep up with costs

One of the primary reasons to review your menu pricing is to keep up with costs. Prices of ingredients (e.g. the infamous post-pandemic cheese inflation), labour (e.g. minimal wage), energy bills (e.g. the enormous rise in cost of gas and electricity since the outbreak of the Russia-Ukraine war) and other overhead expenses can change over time, and you must adjust your menu prices accordingly.

Failing to keep up with these changes can result in reduced profit margins or, in many cases of late, negative profitability. If you’re charging the same for menu items that use extensive amounts of olive oil, milk, cheese, or eggs as you did just one year ago, you’ll likely be making very little profit at all on these items.

2. Increase profitability

Another important reason to review restaurant menu prices regularly is to increase your profitability. By setting menu prices that maximise profit margins, you’ll be able to generate more revenue per sale and increase your overall profitability.

Approach this with some caution, however. With inflation currently at a near 50-year high, many people have less disposable income than they did before the COVID-19 pandemic.

So, as we mentioned earlier, setting menu prices that are too high can deter customers from spending their limited cash. Striking the right balance between price and profitability is key.

3. Stay competitive

Staying competitive is another important reason to review your menu prices regularly. Your business must stay competitive with other similar food service businesses in the area to attract customers and retain customer loyalty.

This may mean periodically visiting other businesses in the area to see what they are charging to see how you compare. Go on, enjoy a meal cooked by someone else, just this once!

4. Adjust to customer demand

Customer demand can change over time, and your menu must adjust accordingly. For example, certain dishes may become more or less popular which can impact profitability.

Similarly, customers may be willing to pay more for certain menu items based on trends or the popularity of the dish. If a certain menu item is incredibly popular will raising the price by one, two, or even 10% really affect sales – probably not.

5. Boost customer satisfaction

Finally, regularly reviewing menu prices can help boost customer satisfaction. Your customers want to feel like they are getting a good value for their money, and fair and transparent menu pricing is an important part of that. By setting prices that reflect the current market, you can boost customer satisfaction and build loyalty. This can help attract new customers and retain existing ones, which is critical for long-term success.

Think you may need a little help from a numbers expert?

At MSF Associates in Leeds, we are the numbers experts. We work with numbers every day. And one of the key numbers in any business that we specialise in is the price number. Using our skills with numbers we help you analyse your business model, understand different price points, and identify a pricing strategy that will maximise your profits.

We have a range of solutions that will:

• Identify a price strategy that will enable your business to grow more profitably.
  
  
• Establish price points that will yield greater profit.
  
  
• Present your price in a way that is more appealing.
  
  
• Make your price seem smaller than it is using the power of price psychology.
  
  

The bottom line is you will make more sales and at higher prices, your profit will grow, and you will have more cash in the bank. Call our team on 0113 240 4100 or book a call if you think this would be useful for your business.