There comes a time in every restaurant and café owners’ business when they are faced with a harsh reality…the cost of running their business is more than the profits coming in.
Some are running their cafe’s or restaurants for years in the red.
If they don’t do anything, they may have to close their doors permanently.
What can they do?
Raise prices along with rising costs.
However, the mere mention of these words can instil fear in the hearts of all restaurant owners. If you raise your menu prices, aren’t you at risk of scaring away new customers as well as losing your loyal ones?
This is the dilemma that most café and restaurant owners face time and time again. With the current economic uncertainty and excessive discounting by major chains, it is understandable that an owner would consider the negative effects of price increases on their customer base.
The reality is that your customers are used to others prices going up. They see these increased prices reflected at their grocery store, the gas station, and even their phone bill. This is the reality of the times. The cost of living just keeps going up.
Although price increases are never popular, there are some strategies that you can use to lessen the impact on your customers…
Time it right
An ideal time to adjust prices is when your customers are happy and satisfied with your service and restaurant. If you have a steady stream of loyal customers that keep coming back again and again then it is most likely that they will stick with you during this price transition.
Make sure your price increases are reasonable
As you consider the amount of your price increase, know that most restaurant patrons will be understandable of your price adjustment…but only if it is reasonable.
If you increase a main course from $15 to $20 overnight then you can expect some backlash from your customers and they may never come back.
However, if this same dish is increased by just a $1.00 and you explain the reasons, i.e; you are now using organic higher quality ingredients, most customers will understand the price increase.
Check out your competitor’s prices
To really know what is happening with your competitors, it is wise to go check out their café or restaurant in person. Have they increased their prices and by how much? Are there extra perks that help soften the bite of the price adjustment, such as a basket of complimentary bread or chips? Learn from them and then apply it to your own establishment.
Consider seasonal menu changes
Using produce that is currently in season is a smart way to keep your costs down. Using strawberries in the middle of winter not only costs more but also lacks that fresh, sweet taste of in-season berries. Be open to the idea of playing with your menu and rotating dishes based on the season. Your customers will be delighted by the change in dishes and will have something to look forward to with each upcoming season.
Show gratitude to your customers
A little thankfulness goes a long way in retaining your customers. Consider training your servers to ask the patrons if this is their first time visiting the restaurant.
If so, make a point of going to that table and personally thanking them for giving your restaurant a try. Consider offering them a free dessert or a discount on their next visit. If you are appealing to your regulars, consider having a customer appreciation night for your most loyal customers.
This can be as simple as a wine-tasting event or a small plate gathering. Your regulars will love it and will definitely keep coming back for more.
References:
http://www.arffinancial.com/3-tips-for-handling-price-increases-at-your-restaurant/
http://www.restaurant.org/Manage-My-Restaurant/Marketing-Sales/Food/Is-it-time-to-raise-your-prices
https://www.restaurantowner.com/public/When-to-Raise-Prices-and-How-to-Do-It.cfm
https://www.inc.com/young-enterpreneur-council/10-ways-to-raise-your-prices-without-losing-customers.html