So you finally made up your mind to start a restaurant and currently you are laying the ground works. Part of the items on your to-do list will include coming up with the correct restaurant menu prices. This is important because it determines your profits.
Location of Your Restaurant
First consider the location or state you are running the restaurant in. Geographical location determines what kind of clients will be walking into your restaurant regularly. The same price for a buffet lunch in an uptown suburb will cost a lot more than the same buffet in a middle-income area. Study your customers to determine how much they can pay then come up with pocket friendly prices.
Other Restaurants’ Menu Prices
Look at other restaurant menu prices to come up with your own. Of course you cannot be the only restaurant operating in the location you chose. So visit your competition and see how much they charge for their food, especially if you are going to provide the same kind of food. However, things will be a bit different if you are operating an Italian restaurant in an area full of fast food cafes.
Consider how much labor you put into preparing all the types of foods you are going to serve. A perfectly done lemon marinade grill chicken should definitely cost more because of the preparation that was required. French fries or pizza take less time to prepare, and can be produced on large scale too, so it would cost less. If you also need to employ hired labor or equipment to prepare specific foods too, they are going to cost more than other delicacies.
Cost of Production
Weigh out the cost of production carefully to determine your end price. Cost can be anything from how much you buy ingredients for, how much you pay your staff, how much you are charged in taxes or the amount you pay to renew your business licenses. Every activity that will take money from the business should be noted and factored as a cost when preparing your profit margin.
Catchy Menu Layouts
Go online and search for menu layouts and more tricks on how to come up with one. The internet is the fastest way to get information on anything; you can even compare restaurant prices around your area and build a menu right at home. Believe it or not, there are also formulae available online that help you calculate food prices. If you really hated math back in the days, all you have to do is feed some information the formula will ask, like cost of preparation and profit margin, then it calculates the rest for you.
Remember that coming up with restaurant menu prices is not a onetime affair. The dynamics of running a business keep changing by the day—business licensing fee may go up, you may want to renovate your hotel or the cost of pepperoni for your pizza may go up as well. The point is, you should carry out regular audits of your business and determine if enough profit is made. Factor in all the changes that occurred overtime, and which affected your restaurant operation, then use this knowledge to come up with fresh restaurant menu prices.