Importance Of Restaurant Pricing

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Setting of menu’s prices is a pivotal decision for the restaurant. Pricing is an item that needs to be periodically revisited as the restaurant should respond to changes in the industry, fluctuation in market prices and the mood of customers.[8] Setting prices involves considering many factors, including the cost of food or row materials, cost of labor. It is also significant to take into consideration competition in the market and the willingness of customers to pay a price that is suggested. So it is necessary to examine these issues as food costs and added value, situation in the market and customers preferences. 1. Food Costs. Food costs are one of the first considerations that go into restaurant pricing. These costs are connected with…show more content…
Competition. There is no tendency in the restaurant industry to stiff competition relating with attraction the same customers. But it is a known fact that every restaurant should have a distinctive feature among others. It is not always about beating the prices. The restaurant may make up for pricing differences by offering better customer service, higher quality ingredients, a more engaging dining atmosphere or extra services as children's entertainment, live music, disco. It is better to find ways to set the restaurant apart from the competition. Pricing can play a big role in that strategy, but it needs to be backed up with some…show more content…
There are three main objectives of pricing, which are the most important for a restaurant: support of the image, profit maximization, provision of high quality products. It is a known fact that the price of the final product consists of its costs and trade margins. Thus, to determine the pricing formula: price=average cost + profit + VAT (tax). At first price will be established on the basis of cost of the row product adding a little part of profits to the price to attract clients, thereby advertising the restaurant through visitors and creating favorable consumer

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