A question I hear often from restaurant owners is, “Where should I be priced?” When it comes to setting restaurant prices, there are three things I think about right away:
Are you really, really good and can set your restaurant prices above your competition? Your style of service, location, quality of product, demographic you serve are all part of the equation. You can’t charge high dollars in a place where there isn’t a lot of expendable income.
Should you price the same as everyone else? If all the chains around you are charging $12.99 for a burger, why shouldn’t you get to charge for that? This is especially true because your burger is probably better.
Should you price below your competition? For example, a dive bar that is really focused on selling alcohol views food as a kind of a throw-away, must-have item, but the quality doesn’t really matter, so the cost can be pretty low.
The challenge with this is you need to examine and understand your guest experience. Focus on service. The truth is – and forgive me, chefs – people come back to your restaurant not because of your food but because of the service and the experience and memories you create.
Think about it. If you have a restaurant that has terrible service but great food, how often are you really going to go there? You have to really be craving that dish to go out of your way to put up with subpar service.
But if you come upon a restaurant that has mediocre food but stellar service, a customer is much more forgiving because they’re having a great time.
With that said, moving forward, focus on service. There’s a book I recommend to every restaurant owner and restaurant manager. He should be paying me a commission based on all the people I recommend read this book – but he’s not! It’s called Secret Service and it’s by John DiJulius. He is the guru of customer service. He’s written many books and taught many seminars.
There are two major take-aways I get from the book.
- There are things called non-negotiables that anyone who works for you must do.
- The second thing is what really matters for this topic: where you set restaurant prices.
Dijulius says with WOW customer service, you make price irrelevant. And he tells a story about a haircut shop offering $15 haircuts that opens across the street from an existing salon that gives $50 haircuts. Rather than adjust their prices, the salon put up a sign outside their storefront that said, “We fix $15 haircuts.”
Restaurant owners tend to try to undercut a new chain that moves in down the street. They lower prices in reaction. But Dijulius says that’s the wrong approach. If you’re more concerned about your price, then you’re more concerned about it than your customers. If you’re getting pushback on your pricing, then your service probably sucks. That means you need to pay attention to your service and find what needs to be improved. You need to look at training and focus on customer service.
Your core values, your quality, your service, your location helps you determine where you should set your prices. But if you do what Dijulius says and give an incomparably good customer service experience, you will have happy customers all the time and the price will be irrelevant.