Your restaurant may have started with great aspirations of providing great quality and innovative food at low prices. After twenty or thirty years of running your business, what may have been a vaguely-expensive $1 plate of fries has now become a steal for $1, given the current economic climate and years of slow-but-steady inflation.
It may be time to consider increasing your prices, if you’re finding that you’re not making the comparative profit you once did, and especially if you’re finding that your profit per item is getting to the point where you have to consider carrying the items. In another situation, if your prices for ingredients have gone up, you may have to pass that cost on to your clientele.
How can you do this without causing a loss of clientele, and why should you do it in the first place? Major chains and restaurants are having to implement this policy; following how the major restaurants are doing it may give you insight in how you can adopt new prices at your restaurant.
McDonald’s has recently had to kill off the “Dollar Menu” that featured multiple $1 items, for either the budget or calorie conscious, which many consumers went to by default to save money and fill up their tanks cheaply. The new “Dollar Menu and More” selection includes $2 sandwiches on the side alongside a $5 pack of 20 Chicken McNuggets, according to Huffington Post. Naturally, this is an attempt to keep sales growing at their restaurants, and while they aren’t particular raising the prices of items, by putting higher-priced items with a traditionally lower-priced menu segmentation, many consumers may perceive them to be a better deal than they are.
Chipotle Mexican Grill instead is actually raising the prices on their menu next year, Nation’s Restaurant News reports. For Chipotle, the move is in an effort to combat rising food costs. The chain has a commitment to not using ingredients that have been genetically modified, and certain ingredients, such as chicken, avocados, corn, dairy and tomatoes have gone up in price. They expect a 3-5% price raise, but it keeps their ingredients to the same standard that customers expect. In addition to these price raises, Chipotle is also looking into adding tofu and catering options to their menu.
Hamburgers and burritos may be seeing a price jump or menu re-evaluation for profit, but another formerly-simple field may be seeing a price jump itself. Hot dogs are posed to make a jump to premium dishes with praise and attention, according to Eater. If you sell hot dogs, you may want to see if premium ingredients can go on them to see profits rise; if you’re prices are going up, you may want to justify it with superior ingredients.
There are multitudes of reasons to raise prices, but there’s one best way to go about it; silently. Update the menu, revise prices; you don’t want to advertise higher prices, but you may want to advertise a commitment to quality ingredients or new, superior ingredients. When prices are raised correctly, profits increase without losing any customers.