How can restaurants use pricing strategies to increase sales?

Pricing is one of the most important decisions that restaurants have to make, as it affects not only their profitability, but also their customer satisfaction, loyalty, and perception. However, many restaurants do not use pricing strategies effectively, either by setting prices too high or too low, or by ignoring the psychological and behavioral factors that influence customers' choices. In this article, we will explore some of the ways that restaurants can use pricing strategies to increase sales, such as:

1 Value-based pricing

Value-based pricing is a strategy that involves setting prices based on the perceived value that customers get from the product or service, rather than on the cost of production or the market competition. This way, restaurants can charge more for items that customers value highly, such as signature dishes, seasonal specialties, or premium ingredients, and less for items that customers value less, such as side dishes, drinks, or desserts. Value-based pricing can help restaurants increase their revenue, as well as their customer satisfaction and loyalty, by creating a sense of quality and fairness.

Add your perspective

Amer B.

PMI-PBA, Top 1% in Business analysis. Hospitality, Services/ Real Estate. Operational Planning, Budgeting. AI. Strategic Partnerships. Tourism Opens Minds SDG's 2030.
Report contribution
Restaurants can employ various pricing strategies to boost sales effectively. Menu engineering, bundle pricing, psychological pricing, and happy hour specials are key tactics. Additionally, dynamic pricing, loyalty programs, limited-time offers, and upselling contribute to increased revenue. Value meals, tiered pricing, online ordering discounts, and seasonal pricing provide diverse approaches. Family packages, combo deals, and dynamic menu pricing enhance the overall strategy. Regular analysis of customer behavior and market trends ensures the continued success of these pricing strategies.

Like
FERNAND KOUADIO

Analyst revenue Management chez Air Côte d'Ivoire Officiel (+225 07 49 429 379)
Report contribution
Hello, It's true that this is an exciting sector, which is a little like the air transport sector. The aim is to satisfy the customer, and certain adapted strategies can help maximize sales. Here are just a few: Psychological Pricing (where we use fair prices below a round figure, for example, 9.99 euros instead of 10 euros), the use of Bundled Offers, Loyalty Programs...and Dynamic Price Management (by which I mean adapting prices according to seasons and events). A final strategy is to work with local farmers and suppliers to guarantee fresh, high-quality ingredients, thereby enhancing the customer experience and increasing their customer base. My contribution

Like

2 Price anchoring

Price anchoring is a technique that involves presenting a high-priced item first, followed by lower-priced items, to create a contrast and make the lower-priced items seem more attractive and affordable. For example, a restaurant can display a $50 steak as the first item on the menu, followed by $25 chicken and $15 pasta dishes, to make the latter options seem like a bargain. Price anchoring can help restaurants increase their sales, as well as their customer perception and positioning, by influencing customers' expectations and preferences.

Add your perspective

Cristina Imperial Carl
Report contribution
I've done this before and have gotten mixed outcomes. Customers tend to be pretty savvy so I don't tend to lean in on this practice.

Like

3 Price bundling

Price bundling is a strategy that involves offering two or more items together at a lower price than if they were sold separately, to encourage customers to buy more and increase the average check size. For example, a restaurant can offer a combo meal that includes an appetizer, a main course, and a drink for $20, instead of charging $10 for each item individually. Price bundling can help restaurants increase their sales, as well as their customer convenience and satisfaction, by providing value and variety.

Add your perspective

4 Price differentiation

Price differentiation is a tactic that involves charging different prices for the same or similar items, based on different factors, such as time, location, customer segment, or demand. For example, a restaurant can charge more for dinner than for lunch, more for delivery than for dine-in, more for regular customers than for new customers, or more for peak hours than for off-peak hours. Price differentiation can help restaurants increase their sales, as well as their customer loyalty and retention, by adapting to different market conditions and customer needs.

Add your perspective

Cristina Imperial Carl
Report contribution
In my experience, this is a tricky one. Guests may call out these differences and put the staff in an awkward position. Of course training goes hand in hand with this strategy. If this is something that is interesting to your team, having a sold training plan to support it is key.

Like

5 Price framing

Price framing is a method that involves presenting the price in a way that makes it seem more appealing and reasonable, by using different words, symbols, or formats. For example, a restaurant can use the word "only" before the price, use a smaller font size or a lighter color for the price, use decimals instead of round numbers, or use a slash or a cross to show a discount. Price framing can help restaurants increase their sales, as well as their customer perception and trust, by reducing the pain of paying and increasing the perceived value.

These are some of the ways that restaurants can use pricing strategies to increase sales, but they are not the only ones. There are many other factors that can affect how customers respond to prices, such as the menu design, the service quality, the atmosphere, the competition, and the customer feedback. Therefore, restaurants should always test and monitor their pricing strategies, and adjust them accordingly, to optimize their performance and profitability.

Add your perspective

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

Add your perspective

How can restaurants use pricing strategies to increase sales?

1

2

3

4

5

6

1 Value-based pricing

2 Price anchoring

3 Price bundling

4 Price differentiation

5 Price framing

6 Here’s what else to consider

Hospitality Management

Rate this article

Thanks for your feedback

More articles on Hospitality Management

More relevant reading

How can restaurants use pricing strategies to increase sales?

1

2

3

4

5

6

1 Value-based pricing

2 Price anchoring

3 Price bundling

4 Price differentiation

5 Price framing

6 Here’s what else to consider

Hospitality Management

Rate this article

Thanks for your feedback

Explore Other Skills