Chapter 7 - Food and beverage pricing. In this chapter, you will learn about the important relationship between the costs of the products you will sell and the prices you must charge your guests. If your prices are too low, your profits may be too low also. | Chapter 7 Food and Beverage Pricing Factors Affecting Menu Pricing Assigning Menu Prices Menu Price Analysis Chapter Outline Learning Outcomes Identify the factors that affect a foodservice operation’s menu pricing strategy. Utilize the product cost percentage and contribution margin methods of menu pricing. Utilize matrix analysis and goal value analysis to evaluate menu pricing strategies. Factors Affecting Menu Pricing Perhaps no area of hospitality management is less well understood than the area of pricing food and beverage products. Some of the most common factors affecting menu prices include one or more of the following. Local Competition. The price a competitor charges for his or her product can be useful information in helping you arrive at your own selling price. Service Levels. As the personal level of service increases, costs increase and thus prices must also be increased. Factors Affecting Menu Pricing Guest Type. A thorough analysis of who your guests are and what they | Chapter 7 Food and Beverage Pricing Factors Affecting Menu Pricing Assigning Menu Prices Menu Price Analysis Chapter Outline Learning Outcomes Identify the factors that affect a foodservice operation’s menu pricing strategy. Utilize the product cost percentage and contribution margin methods of menu pricing. Utilize matrix analysis and goal value analysis to evaluate menu pricing strategies. Factors Affecting Menu Pricing Perhaps no area of hospitality management is less well understood than the area of pricing food and beverage products. Some of the most common factors affecting menu prices include one or more of the following. Local Competition. The price a competitor charges for his or her product can be useful information in helping you arrive at your own selling price. Service Levels. As the personal level of service increases, costs increase and thus prices must also be increased. Factors Affecting Menu Pricing Guest Type. A thorough analysis of who your guests are and what they value most is critical to the success of any restaurant's pricing strategy. Product Quality. You should select the quality level that best represents your guests’ anticipated desires as well as your own operational goals, and then price your products accordingly. Portion Size. The effect of portion size on menu price is significant. It will be your job to establish and maintain strict control over portion size. Factors Affecting Menu Pricing Ambiance. Prices may be somewhat higher if the quality of products and ambiance also support the price structure. Meal Period. In some cases, diners expect to pay more for an item served in the evening than for that same item served at a lunch period. Location. A location can be a good for business or bad for business. If it is good, menu prices may reflect that fact. If a location is indeed bad, menu prices may need to be lower. Sales Mix. Sales mix has the most influence on a manager’s menu pricing decisions. Sales mix refers to the frequency .
