How to Raise Prices Without Alienating Price Conscious Guests
Most entrepreneurs don’t enjoy raising their prices. This is no different in the restaurant industry. There is the ever-present concern that you will lose customers when you increase your prices. There are also many things to consider when raising your prices. You’ll want to know what your competition is doing, how the timing of the price increase will impact your business, and whether or not you’ll be offering the exact same dish at the price increase or if you will be changing the dish by adding extra perks like complimentary bread or chips.
Here are a few things you can do to make sure your customers keep coming back, even when you increase your prices.
Change with the Seasons
Featuring seasonal dishes is a great way to increase prices. Because seasonal items aren’t normally seen on your menu, customers don’t have a set expectation regarding what it should cost. Seasonal dishes often cost less to make because the ingredients are in season and readily available. You can also bring back seasonal dishes you have served in prior years but at a higher price point without surprising your guests too much because they haven’t seen the item for a while.
Most customers understand a price increase is inevitable. Smaller price increases that are less than a dollar, for example, are less likely to be noticed by customers than larger increases like doubling the entire price of an item. The larger the price increase, the more explanation that will be required to justify the increase to your guests.
Check Out the Competition
You know your guests have other choices when it comes to dining out. Why not visit your competitors and see how their pricing stacks up to yours. It’s best if you can go in person so you can really evaluate things like customer service and any other perks your competition might have that don’t show up on their menu. Knowing your main competitors’ pricing will help you stay on top of things when creating your new pricing strategy.
A more precise way to increase prices is by using data from your own restaurant. Using data to determine how and when to make a price increase ensures your customers will stay with you through the increase – essentially understanding how elastic or inelastic a customer is. Marketing Vitals software solutions models the price elasticity of demand to suggest price increases for different menu items. Not only does this allow you to avoid increasing prices on all your menu items at the same time, but it takes into account how items are commonly ordered in combination. Our analytics help you understand how your pricing impacts your guests’ ordering decisions.
When you’re in business, it’s inevitable that the time will come when you need to raise your prices. Marketing Vitals can help you do this in a way that won’t alienate your price conscious customers. If you’re guessing at what to increase your price to or using trial and error, our software can help you make the price increase process a lot smoother and less time-consuming. Contact Marketing Vitals today to learn how we can help you increase your prices the right way.