The difference between a restaurant succeeding and failing can often come down to apparently minor details. Determining what prices to charge for each menu item is one of these pitfalls that demands special attention.

 

The unpredictability of demand in this industry, as well as the unique challenges in determining some fixed and variable costs, make this a somewhat specialized skill. Using a standardized framework to calculate optimum prices makes this job much easier.

The Difficulty of Pricing a Menu

A restaurant’s menu price policy needs to be aligned with multiple factors:

• Competitor research,
• Fluctuating revenue and running costs,
• Recipe composition, portion sizes, and ingredient prices.

In addition, industry norms and operational considerations play a role, too. Desserts, beverages and especially alcoholic drinks normally carry a large markup. Items that are quick to prepare, like soups and cold starters, can often be sold at a low price while still making a profit.

 

Pricier items may be sold at a loss in order to entice customers to order more of other items, while psychology, including the layout and graphic design of a menu, also plays a role.

 

Following some tried-and-true principles will enable you to make sense of these conflicting impulses when deciding on menu prices.

What This Course Will Teach You:

This course is relatively short at only an hour in length. It is somewhat intensive, though, and requires a practical understanding of restaurant and kitchen management.

 

Topics covered include:

• Calculating ingredient costs based on recipes and menus.
• How overheads and other expenses affect pricing.
• Qualitative aspects in menu pricing.

Pricing a menu too high, low, or inconsistently can lead to suboptimal revenue or even closing a restaurant. Chefs, F & B managers, restaurant owners, and kitchen staff hoping to build a career in food service can all benefit from understanding menu pricing a little better.