Design the menu to be cost-efficient. “ ”
DAVID KOSTMAN, NANOOSH MEDITERRANEAN
HUMMUS BARS & COUNTERS, NEW YORK
Make sure there’s enough variety,
but with a small amount of ingredients
so there’s little waste. It’s the key driver
behind menu development.
Those who dine in know they are paying about $1 to $1.50
more than those who order from the to-go menu, but it doesn’t
bother them, Kostman says, noting that it was uneventful when
the restaurants made the change. “The results of implementing
tiered pricing are hard to quantify, but it helped increase the
to-go business,” he says.
To determine prices, Kostman advises grasping consumers’ price sensitivities in the local environment, considering
competition and socioeconomics.
play to the price psyche
Though it’s best not to raise prices on center-of-the plate
items for which guests judge the value, appetizers, desserts
and bar drinks present better price-increase possibilities,
says Nick Pihakis, owner of Birmingham, Ala.-based Jim ‘N
Nick’s Bar-B-Q with 27 restaurants across several states. He
adds that the bar in particular can be profitable considering
the labor efficiency of one person making many drinks in a
short amount of time. “You can raise the price of a $5 drink to
$5.50, and the customer probably won’t care.”
Raised appetizer prices are hardly noticed considering
that guests often share them among the group and split the
cost, Pihakis says.
“Sales cure everything,” is Pihakis’ motto. He discovered
that some careful menu reengineering quadrupled his
salad sales. The restaurants previously offered various salads
with protein on them, such as grilled chicken salad; Greek
salad with a choice of meats; fried chicken tender salad; and
chopped salad with fresh vegetables and smoked chicken.
He found that before, if customers wanted a salad and
didn’t want meat, they either ordered the house salad or the
chopped salad, even though they didn’t want the meat that
came with it. “Those who didn’t want meat felt they were
getting ripped off,” Pihakis says. So he took the protein off
the salads, lowered the base price, and began charging extra
for added meat (bringing the price back up to the original
salad price). He discovered that many more customers began
ordering salads, yet the number of salad orders with protein
didn’t drop off, leading to incremental sales. He also realized
that the change better fit the needs of vegetarians, and thus he
broadened his customer base and eliminated the veto factor.
Interestingly, buy-one-get-one price promotions are the
ticket to higher profits for Ciaran Dunne, director of operations
for the 15 locations of Claddagh Irish Pubs, with headquarters
in Solon, Ohio. The chain is known for its fish and chips, so
Monday night is buy one, get one free. Tuesday is buy one
burger, get one for $2, and Wednesday is buy any pie (as in
shepherd’s pie), get one for $2. In a bold move, Thursday night
features items on the late-night menu of flatbreads and thin-crust pizzas free (from 9 p.m. to 1 a.m.).
Set sales goals. If you aim at nothing,
you’ll hit it every time. “ ”
NICK PIHAKIS, JIM ‘N NICK’S BAR-B-Q,
Then manage costs to
those goals (food, supplies,
labor, advertising, etc.). “Most
restaurants pass the cost of
their inefficiency on to the
customer.” Try to have a minimum
amount of inefficiency so you don’t
have to raise prices.
It’s all about driving traffic in for the deals with the hope
(proven by experience) that guests will order drinks. The $2
price on the second items on Tuesday and Wednesday nights
is merely to cover the food cost, Dunne says, noting that it has
been quite successful. Because it is a pub, it’s not a stretch
to anticipate that guests will order drinks, which have much
higher margins. “It warrants giving a second [food] item at
cost price,” he says.
Stock management is the new margin. “ ”
CIARAN DUNNE, CLADDAGH IRISH PUBS,
You can’t afford waste.
Manage plate cost by managing
people better. Make sure they
weigh everything to assure
proper plate yield. Then, stand
in the kitchen and watch what
comes back. If there’s a pattern,
adjust the portion size.