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Menu Pricing

Menu Pricing. Goal 4.03: Calculate prices of menus for a culinary business. . Operating Costs. anything it costs to do business M enu prices must cover operating costs. Menu Price Influences. 1. Labor. time , care, skill needed to prepare a meal

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Menu Pricing

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  1. Menu Pricing Goal 4.03: Calculate prices of menus for a culinary business.

  2. Operating Costs • anything it costs to do business • Menu prices must cover operating costs.

  3. Menu Price Influences

  4. 1. Labor • time, care, skill needed to prepare a meal • the more time, care, and skill needed the higher the price

  5. 2. Competition • review competitor’s menus/pricing • use competition as a pricing guide • portion size and ingredient quality may differ

  6. 3. Customers • Types of customers a foodservice operation will attract influences menu pricing. • families- charge less than business people

  7. 4. Atmosphere • Style of the foodservice operation influences menu prices. • expected- fine dining=higher prices

  8. 5. Location • cities=higher prices/people usually have more disposal income (leftover money after bills are paid) • small towns=lower menu prices

  9. Pricing Methods *helps businesses make the highest profit

  10. Factor Method • uses a pricing scale based on a percentage of the food costs needed to operate the restaurant • using the factor method: • determine what food cost percentage should be (divide the total cost of food by total food sales) • Take the food cost percent and divide it into 100%. This is your factor.

  11. 3. Multiply the factor by the cost of the menu item. This is the selling price. EX: food cost 5000 total sales 20000 food cost % .25 X 100=25% .25 divided by 1.00= 4 (factor) cost to make a burger and fries 1.50x4(factor)=$6 (menu price)

  12. Markup-On-Cost Method • take the food cost and divide it by the desired food cost percentage=selling price • EX: you want food cost to be 25% • grill cheese and soup costs $1.25 to make • 1.25 divided by .25= $5 selling price

  13. Competitor’s Pricing • charges what the competition charges for similar items • charge a little less to be competitive • charge a little more to appear upscale • risky method since overhead charges are different (rent, labor, food costs, profit)

  14. Psychological Pricing • used after other methods • based on how a customer reacts to menu prices • instead of $6, charge $5.95 • a price increase from $12.95 to $13.25 seems more than an increase from $13.25-$13.75 • better to start at a low number $13.25 so you can increase without hitting a new dollar amount • fine dining does not use this method- image of luxury and elegance

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