Increase Your Profit Series: Part 2 (Accurately Priced Menu)

07 Feb, 2014 | Tags: , , , , , , , , , , , ,

In the conclusion of our 2 part series “Increase your Profits” we are going to review the pricing of your goods, aka your menu. In our last discussion we reviewed that your labor costs should not be more 18% – 24% of your sales. This will need to be monitored closely to ensure you are constantly within your target labor costs. Of course once your sales increase, you will have more customers and need to have a higher number of employees to serve those customers, while balancing this with your target labor cost. But how do you increase the profits on your menu item while maintaining your current level of customers? You can ensure that your menu items are accurately priced to give you the best possible profits.

There are many different theories on how to price menu items and traditionally you look at the food cost for each plate offered, multiple that by 3 and you have your menu price, but this is not the whole story. There are a number of questions you should ask yourself before an accurately priced menu can be truly effective for you.

  • Are you storing a large amount of capital in your freezer?
    • If a large amount of your money is sitting in your freezer waiting to be sold, your profits can be significantly affected
  • Are you offering too large of a selection on your menu causing you to have large inventory levels?
    • Evaluate the items on your menu to see what does and doesn’t sell. By removing the low sellers you will not be stocking inventory on those items and regain some of your capital for use in other parts of your business.
  • Do you have a regular inventory audit procedure?
    • While we never want to think that our staff may be stealing, you need to maintain regular inventory checks to safeguard against theft.
  • Are you sure that your staff is following the strict recipes for your food and drinks? (Or do you even have strict recipes?)
    • If your bartenders are notorious for over pouring, or if you kitchen staff is increasing the portion size of your plated food, your accurately priced menu means nothing.

Once you have addressed these concerns, you are ready to look at your menu. You want to determine what the exact food cost is for each of your items and then figure out the plate cost. Once you have this information for each of your menu items, you are now able to accurately price these menu items. The plate cost of food should be no more than 29% -32% of your price. Beverage, however are a little different, some involve recipes of multiple items and have a more complex pricing strategy:


What Time Do I is a simple, easy to use, affordable staff scheduling software that is designed to help you save time and money managing your schedules, so you can focus on other aspects of your business (like an accurately priced menu.) Clients currently using the online scheduling software have found areas where they are overstaffed or scheduling a lot of overtime shifts and have significantly decreased their labor costs. Try it for yourself with our no obligation 30 day free trial!