3 Tips for Handling Price Increases at Your Restaurant
Are you thinking about increasing menu prices at your restaurant, but worried that you might scare your best customers away?
It’s a common concern among restaurant owners, so today we’ve put together a list of three tips to help you make a smooth transition into higher prices.
1. Price Increases Should be Reasonable
Most restaurant patrons understand that food prices fluctuate and that you may need to periodically adjust your menu prices. That being said, it’s up to you to ensure your price increases are reasonable.
In general, the larger the change in price, the more explanation you will need to justify the increase to your customers.
For example, if you double the price of a burger overnight for seemingly no reason, you will confuse, frustrate and likely lose customers. However, if you raise the price of a burger by a $1.00 and explain it’s because you’re now using organic beef, many of your customers will understand the price change.
If you raise your prices by less than a dollar just to reflect changes in the industry, many patrons may not even notice or care. If they do ask about the price increase you should have all servers trained to give a friendly explanation.
2. Evaluate Your Competitor’s Prices – In Person
You know your restaurant has competitors, and your patrons know there are other places to eat too.
Before you decide on your new prices, go evaluate your competition. It’s best if you can go in person to see if there are any ‘perks’ that may not show up on the menu.
For example, if you only see food prices when viewing an online menu, you might not know that the competing restaurant also gives a “complimentary” bread basket, chips or other little token that factors into their prices.
Knowing this information is important for setting your own prices and ensuring you remain competitive.
3. Make Seasonal Menu Changes
Joe Erikson, VP of RestaurantOwner.com says that one of the best strategies for lessening the impact of price changes is to periodically rotate or introduce new dishes.
Erikson says, “I’m a big believer that restaurants should change menus and, as a result, menu pricing several times a year.”
For example, if you only serve certain dishes seasonally, you could bring them back the next year at a higher price point without drastically surprising customers.
Bridge the Gap
Are you thinking about raising prices to pay for new equipment or a restaurant renovation? Are you worried about how a big purchase could affect your cash flow in the short-term?
If so, there is a better alternative to raising prices and risking the loss of happy customers. Instead you can take out a Working Capital loan!
A Working Capital business loan approved through ARF Financial has many advantages:
- Every loan comes with 24 hour access to our Line of Credit
- Collateral is not required on amounts up to $725,000
- 48 hour approvals and fundings in 3 to 5 business days
- Interest paid is tax deductible
- Enjoy fixed payments and flexible terms up to 36 months
Learn more about our business loan approval and payback process today to improve your restaurant and keep customers coming back for years to come.