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Restaurants must raise prices

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A few weeks ago on the net I witnessed what appeared to be a prelude to an interesting debate on the establishment of prices by a well-known restaurant. What it was supposed to be an exchange of views on whether to raise prices or not, He concluded with a public lynching the restaurant had decided to change its rates.

Definitely, change prices has never been an easy task, and there is no “magic Manual” for each business, to be able to tell us when we modify and to what extent.

Ticket means declining

Crisis 2008 He pushed many restaurants to take action to revive their establishments. we witnessed the proliferation of menus at establishments that never before had, even appeared novel night menus, nonexistent until the day he disappeared financial giant Lehman Brothers.

Deals also emerged as the second menu with a discount 50% or the famous 2×1 and all He did nothing but lead to a drop in average tickets most restaurants. To move the sector size, I saw great reviews, and price movements, of course all down.

Here I must say that the reaction had business in crisis negatively surprised me. The entire sector got into a deflationary spiral, in search of a market that no longer exists. And the bars and restaurants were fighting for market share lost, down prices and margins.

The reality is that before the 30% unemployment we had, these potential customers had disappeared from the street, and lower prices to look for that share loss, those consumers who had vanished, I could only lower gross margins and profit.

Like competitors reacted, Polygon bars were fighting for the cheapest breakfast, without realizing that many of its customers had lost their jobs and no longer they went to their businesses work. Restaurants acted the same way for the meals of some companies, when in fact these were cut or eliminated these expenses to employees. To no avail cut prices to regain market share that no longer existed.

I've seen other crises in other countries with very different reactions, something like: "If we were selling 100 cafes and now only sell 90, prices go up to pay fixed costs rather close the restaurant ". That thought did not show up here, It would have been much less traumatic for the sector.

Currently we have a new scenario, product of the economic recovery and especially the sector. Thus, not to wonder, that currently, a restaurant decides to successfully raise prices. Nevertheless, Given this fact we are witnessing a barrage of massive criticism. Something that truly amazes me is that there is a double standard public, if they are increases or decreases.

The 10 keys to understanding the sector restaurants

Beyond the media hype networks, I would like to remind hoteliers 10 unwritten laws, perhaps from today itself, I seem vital to understand this complex context in which the sector is:

1.-It is perfectly legal and acceptable prices change your business, upwards or downwards

2.-Recompose the lost margins in times of crisis it is not only not bad, it is an obligation for your company.

3.- You have a business and your goal should be to make money today and tomorrow to sustain the business over time.

4.- Do not negotiate with yourself when setting prices, is negotiating with customers.

5.- You should try to get the maximum profitability, provided this does not undermine the quality your product or business sustainability over time.

6.- Always better for your business to work on price increase long term, to lower the quality of your product or service.

7.- You You can not only increase revenue by raising prices, if not working on the average ticket, Suggested selling or volume of its customers.

8.- They can be change prices carefully renewing the letter and dishes and even wines, you can do so by updating all or gradually making it so that the impact is less on your client.

9.- You must determine the target you want and guide pricing strategies accordingly. You can have a letter for a particular segment, a clientele bounded to certain characteristics, or a menu to expand the spectrum of audience it addresses.

10.- If you have a business You should not feel bad about making money, If you should feel bad If your customers have not experienced a good emotion in your local.

Recover profit margins in restaurants

The truth is the crisis has lasted more than necessary in our country when others were much more fleeting, almost a decade. He hit all sectors, It has impoverished businesses and workers, means lowered wages and increased unemployment. We have overcome only when businesses return to recover their profit margins and move some of them to wages.

The way is none other than increase productivity and profit margins, therefore not only a rise in these prices today is feasible and correct, it is almost an obligation for every company. Every restaurant should analyze their time and not being afraid to raise prices when it sees fit.

About the Author

Oscar Pirrone

Benetti creator and Pecoraro, leader in Spain in the sale and distribution of Italian-Argentine products for restaurants and Director of Galiffi & Giacomo, business advisory and business consulting.

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2 Comments

  1. Well I do not have I so clear…because they are many times that what they do is raise the cost and lower or maintain when they have done has been to lower the quality of the product which does not seem right.
    Also with regard to the point 8 renew the letter and prices and even wine, with regard to wine they spend the vast majority of pregntandose depues prices because they do not sell both, jajja thing q hallucinating. In this case should have correct prices because it is clear that change anything.
    Raise prices …It depends because there are many factors…

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