Pricing is the most important consideration for ensuring that your business is successful. it is the most important factor for your finances and marketing strategy.
Competitor research
Looking at how much your competitors charge is one of the most powerful ways of understanding how your restaurant might be seen in the eyes of your customers. Get an idea of the pricing of local competitors, similar restaurants and maybe even ask your suppliers who they supply so you can see what type of mark up other similar businesses are putting on food.
You will want to sit your pricing somewhere around these points to be competitive. If you are a more luxurious option, then you may be able to afford to be a bit more expensive than local competitors, or maybe you are looking to offer value for money and place yourself slightly cheaper than local competitors.
Food costs
Your food costs are an obvious factor in how you price your meals. Figuring out how much a meal costs you may be a tedious task but it is very necessary.
Consider all of the food waste and see if you can use it elsewhere to mitigate the price of the meal. If you can bring the cost down in any way then it will be worth it in the long run. Why not try bartering with your supplier?
Most restaurants look to make a 65-70% gross profit on meals. So if you add this mark up to your meal cost, the sale price should come somewhere around where you envisaged yourself in comparison to your competitors. If it comes out more expensive then you may want to simplify your meal, speak to your supplier or even try something else.
Maybe it is simply a more expensive dish that you think your guests would pay the premium for. Why not try it on your specials board to see if it works before incorporating it in to your menu full time?
If it comes out cheaper than you envisaged then you have the ability to add something else to your meal, increase your margin, or simply offer the meal as a cheaper option on your menu.
Indirect Costs
Indirect costs are the costs of everything else (also known as your overheads). To fully understand what type of margin your restaurant needs to be working to this should be fully comprehended. Consider rent or mortgage payments, business rates, staff wages, utility bills, cleaning costs, maintenance, and any other costs that your personal business may have. To run a sustainable business your revenue needs to be able to pay for all of the costs with some profit on top.
If your costs seem to be stacking up, then it might be wise to see where you can save on some bills. Getting rid of anything that isn't necessary or keeping your eye out for a cheaper supplier of necessities is a great idea for any business to reduce costs and, consequentially, boost profits.
If this isn't possible, then consider increasing your margin. But, be mindful of your valued customers when deciding to take this option.