I am opening a fast food restaurant soon, hot dogs, hamburgers etc. How do I price my menu items right?
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M$7 Answers
…. Base it off of:
•What is the minimum cost to create
•How much are you looking to make? What is your profit margin
•Pricing must be justified – promise you offer
•Know your competition
o How do they price
What do I get for it?
• Their Promise
• What is included with the price (what all the customer gets when they
purchase)
• Package look/appeal
•Price is a great indicator of value
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M$
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Furthermore, it is advisable that it is more advantageous on your part to exceed in the determination of the cost of your menu instead of having a more conservative approach, since you can make adjustments later. Aside from this, it is also best to automate your inventory system and integrate it with your menu, thus giving your business the most recent cost estimates.
For a more detailed analysis, kindly visit this helpful page below:
http://www.hsgpurchasing.com/Articles/menupricing.htm
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M$
Introductory offers are always a good ploy, usually people will try a new restaurant out of curiosity, to see what it's like, but you want them to not only return, but to recommend their friends. To do this you could give them vouchers offering special discount or something for free on their return visit. Try to offer something the other restaurants don't, to be successful in the restaurant business, is more about quality and service, than price.
Good luck with your venture.
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M$
With a fast-food restaurant you have the freedom to play with the menu, do not enter any overcrowded segment rather select something that is unusual but appealing, on pricing front you must try reduced profit margins for the initial period and must increase it slowly as the pace picks up.
Hope my advice is helpful to you.
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The example is hypothetical:
If a hamburger is costing you £5 to MAKE. The price to sell would be £14.
5/0.35 = £14.
Ideally the percentage you are charging should be around 28% to 38.5%. In the example above, it is 35%
For drinks, you should charge 28%.
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M$In the recipe process you will discover what products you will use and who you are going to purchase them from. You now need to calculate your menu item cost. If you are partnering with one main supplier you can ask you sales rep to help you with these steps. If you are not and are getting your supplies from multiple sources you will have to do this on your own and there are programs out there that you can purchase to help you keep and track these prices or create your own excel spreadsheet if you know how. You will want a program or an excel sheet that updates all of you menu items when a cost of a good changes. For instance if you cost of buns goes up $.05 you only have to update that price in one cell and it will change your menu cost for all items that have a bun.
I would agree with SBDC, below. Perform all those steps they write about. Enigmatic is also correct when they say it is more important to focus on quality of product and service. I would not make as little profit as possible for as long as possible that is not a good idea. This will give you the reputation of being the cheap place in town and when you have to raise your prices to survive you will lose business. If you want to do a discount look for promotions like Groupon or Living Social. You will only recoup 25% of what you are selling so not enough to cover your costs but it will introduce you to a lot of people. Wait to do this till you have been open for a while and are running smoothly. You need to wow these discounted customers so they become returning customers.
Also I know you did not ask the questions but I will give you a few other pointers as well.
A great resource for any restauranteur is the magazine Restaurant Start-up & Growth. Also join your local Restaurant Association.
Get a POS system to track your sales. You will need this to preform proper menu engineering in the future.
Ask these 2 questions about your business.
1) "What am I going to be known for?"
I am not talking "the best burger in town", I am talking "My 1/3 pound all natural ground chuck burger with apple-wood smoked bacon and a chipolte BBQ sauce" It's your most popular item and when someone talks about your place it's what they tell everyone to try. You might not know what item that is know but you should once you open and don't change it and try to promote it.
2) "What sets me apart from my competition?"
You only use fresh ingredients not canned or frozen. You use locally grown beef. You use fresh cut french fries. You have an old family recipe passed down 4 generations. You need to know what you stand for and what you are about and you need to plaster that message out there so it sticks with your target audience. Put that message on your website, on your take out menu, in your restaurant.
Lastly get yourself on Yelp, UrbanSpoon, TripAdvisor, Facebook, Twitter, Foursquare. They are all free and all have free apps you patrons probably already have on their cell phones.
Good luck and you can always follow me on twitter for more ideas. @eberhardtmike
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