A restaurant doesn’t do well only because it has the best dishes to offer, is ideally located, has the perfect ambiance, and has great reviews online and offline. Restaurant meal prices also play a role in determining how many footfalls the place witnesses on any given day. The price of a meal not just includes the ingredient price or labor that went into preparing the food; overhead costs are also added to the mix. Things could go awry when these costs are not accounted for or if there’s some miscalculation when arriving at restaurant meal prices. The following tips and techniques shall help with the calculation.
The dish’s ingredients must be listed, which should also include small food amounts – such as ketchup or mayonnaise. Also, do not forget to consider cooking oil, garnishes and seasonings. Each appraised dish must have a portion control mechanism in place to make sure the costs don’t fluctuate with servings.
Calculate each ingredient’s cost in every dish. Also, other miscellaneous costs such as interest fees, delivery charges, return charges and similar expenses directly relating to the foods purchased must be included.
These are costs reflecting a restaurant’s attributes and which add perceived quality or value. These could be food preparation and labor, locally grown ingredients, and other unique aspects adding to the restaurant ambiance – for instance, live music. The overheads part of the costing include product presentation, decor, marketing/advertising and amenities.
Your restaurant type also determines the final food prices. For instance, the cost of a hamburger at a fast-food restaurant and a more traditional restaurant could vary. This is because full service restaurants also charge their customers for enhanced service, dish ingredients and the ambiance.
Food costs can be calculated in a variety of ways. The following three methods are fairly common:
• Ideal Food Pricing
Based on the preparation, location, and demand and supply, a menu item’s direct cost must reflect 20 to 30 percent of the total price. For example, if the ingredient costs of a pizza is $10, then you’d probably want to sell the pizza for upwards of $30. The gap is not just the seller’s margin but it also comprises indirect costs, service and overhead.
• Competition Pricing
Compared to the previous technique, competition pricing method is much simpler. This entails looking what other similar restaurants are charging for specific dishes and pricing your dish accordingly. If you are just starting out and are competing with an already established restaurant, you’d probably like to price your offerings a tad cheap, to give consumers a reason enough to consider your unknown business over a reputable service provider. However, charge higher if you believe your service and food quality is the real differentiator.
• Demand-Driven Pricing
This method bodes well for a restaurant that’s offering a dish unique to its region or area. In other words, if you can increase the prices and don’t see plummeting sales, then this pricing approach would be beneficial. Like always, know more about your customer base and study the market before resorting to competition pricing.