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A restaurant can increase its profitability by 20% by highlighting the most profitable dishes and adjusting its prices. Menu engineering provides an analysis of your customers' consumption habits. It categorizes dishes by assessing their popularity and profitability.
Before setting prices, it's imperative to align the restaurant's financial objectives with its pricing strategy. This involves an assessment and consideration of objectives:
By clearly defining these objectives, the restaurant can direct its pricing strategy to achieve the optimum balance between attractiveness and profitability.
Gross margin plays a central role in identifying your menu prices. Calculated as the difference between the selling price and the cost of raw materials. It represents the profit margin on sales before operating costs are taken into account.
Optimizing gross margin means striking the right balance between competitive prices and profitability to cover costs. In foodservice, this margin rarely exceeds 35%, and is calculated as follows.
👉 Gross margin calculation: selling price - material cost
This approach involves summing up the cost of food per portion, taking into account each element used in the recipe.
However, it is essential to also include production costs, such as staff salaries and fixed charges (rent, electricity, etc.).
This calculation ensures that the selling price covers all the costs associated with preparing the dish, thus ensuring profitability.
👉 The cost price corresponds to : Cost of ingredients + Production costs
A simplified but effective approach is the "Food Cost". This calculation allows you to work out the cost of a dish by dividing the price of the ingredients by a theoretical percentage of the food cost. This method offers a quick way of determining the price of your dishes.
👉 Calculation of theoretical percentage of food cost = (Value of stock at start of inventory + Purchases - Value of stock at end of inventory) / Amount of sales made
💡 Good to know
The cost of the ingredients used to prepare the dishes should not exceed 30% of the selling price of these dishes.
Example: You want to set the selling price of a burger. If the cost of ingredients comes to 2 euros, with a theoretical percentage of food costs of 30%. The selling price of your burger will be : 2 / 30% i.e. 6.67 euros ex VAT.
To find out more about key ratios and how to optimize margins in the foodservice industry
The Omnès principle in foodservice encompasses different strategies aimed at optimizing costs, maximizing profitability and attracting more customers. Here's how these principles can be used to set food prices:
Offer a varied range of dishes at staggered prices to attract different customer segments. For example, more affordable dishes can encourage a first visit, while upscale options can maximize profitability.
So that some dishes are more expensive than others, creating a diversity of choice for customers. This maximizes sales by satisfying a wider range of customers.
Adjusting supply to market demand
If a certain number of dishes are in high demand, the restaurant can adjust prices upwards, maximizing profits. By highlighting its dishes, the restaurant can influence customers' choices and maximize profitability.
Sales analysis helps identify trends, successes and opportunities for improvement. This includes adjusting prices and costs according to actual menu performance. If certain offers are highly successful, price adjustments can be considered to maximize sales.
At Yokitup, we've designed a fully customizable dash board that centralizes all your data in real time. By tracking each establishment's key ratios in real time, restaurateurs can quickly identify areas where savings can be made. This flexibility not only optimizes the bottom line, but also helps build customer loyalty.
Want to find out more? You can now make an appointment with our team to set up the best inventory management strategy for your restaurants.
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