Most restaurant owners are often too scared to increase the prices of their offerings, fearing their existing customers will look for inexpensive options and new customers would never stop by. However, restaurant meal prices have to be changed time and again, due to increases in raw material prices, employee salary hikes, etc. Before raising the prices, it’s important to be on top of your costs and ensure the restaurant is running efficiently. The following tips/strategies should help your cause.
Proper Timing
Raise your prices only when you’re extremely sure your customers like your food and won’t mind a marginal price increase. In other words, plan a price increase only if your restaurant has proved its mettle in the months before.
Reduce Sizes
Most restaurants resort to this ploy – they don’t mess with the prices but slightly reduce the serving sizes so the changes go unnoticed. This tactic could be implemented almost for any retail item, from candles to cosmetics. However, the whole tactic may backfire even if the customer gets slightly suspicious. As an alternative, you may try a dramatic reduction in proportion sizes and a not-so-equivalent, simultaneous price drop.
Raise or Add Fees
Adding fees can help avoid raising actual product prices. Utility firms do this every time, and several smaller companies use this ploy when electricity and gas prices go up. This strategy would pay dividends if you believe the price increase will be temporary; the fee can be removed anytime you feel it’s not needed anymore.
Discounts
Discounts can be offered for canceling out the price hike. When raising prices, you are likely to lose the extremely price-conscious buyers. To keep them on-board, increase your prices, but provide occasional deals and discounts that would pull the price down to its original level. Frugal customers are likely to use such discounts – other customers won’t care too much.
Bundle Services or Products
Soften your customers’ agony over the price increase by providing them fresh bundles of services or products. For example, if you own a coffee shop, add a couple of free cookies to your primary offerings.
Alter Your Target Market
If you have no option but to increase product prices and your existing customers are likely to jump ship, it’s time you create a new, more affluent customer base that doesn’t mind paying premium prices. Even if the price increase is marginal, targeting new customers or expanding your market could be the ideal way to offset any potential sales drop you may experience with customers who’ve exited.
Raise Prices Regularly
If you run a restaurant with affordable meals, your customers would probably know increasing prices is a part of the industry. If justified, increase the prices at the start of every year or once you’ve got loyal customers. If the services are monthly, offering an inflation-proof six-month or yearly membership would entice customers who’d like to avoid the rate increase.
Plan in Advance
As mentioned in the intro paragraph, ensure you have taken into account your current costs and also the likely cost increases in a year or two. Ultimately, your objective must be to not struggle through the process.