Pricing Wars – It’s Pretty Competitive Right Now!

In ten seconds I bet I could name at least 8 restaurants in my home town promoting themselves on pricing.

  • The right portion, the right price
  • 10 entrées under  $10
  • Lunch for $5.99
  • Buy one entrée get one free
  • $1.00 drinks all day

How far can this go!  The industry is falling into a coupon discount mode that is changing the perception of the guests and killing the bottom line.  The reality is that the percentage of profit is small enough and discounting your products even 10% can make you lose money on that particular item.

We need creative ways to bring people into the restaurant but be sure that your promotion works for you.  Let’s say you create a Chicken Wing Night that drops your food cost on wings to a 47% from a 38% because the cost of chicken wings are very high.  This would take away any profits that you would make on this specific night unless it is done correct and here are a few tips:

  1. Design the promotion to get new people in your establishment – Promote it outside your business not just inside.
  2. Turn your servers into Order Takers not Sellers on this item.  Your promotion was designed to bring people in the doors that does not mean you need to sell them the highest cost item you offer.  Have your servers sell them your other great menu items.  They will order the wings if they want but you do not need to talk them into ordering them.
  3. Have your staff in full sales mode with all the extras to accompany the Chicken Wings.  Drinks, sides of fries (loaded), extra celery and blue cheese and of course dessert.
  4. Promote this night to every table on other nights.  If your night is Wednesday than make sure your servers are telling every table about the promotion every other night.  This will give the impression to your guest that you have great specials and hopefully bring them back on a night that they do not normally visit you.

If you need to run discounts, promotions and coupons make sure that you are taking full advantage of the opportunity.  Limit the discounts that you are offering and if this is all you are doing slowly pull away from too many discounts.  It’s great to create higher sales but not when it is losing you money.

The concept behind discounts is to bring in extra people to try your establishment so make sure that your Service and Food is perfect.  This is how giving a onetime discount can turn into building repeat business.

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