Avoiding pricing pitfalls: a guide to restaurant pricing strategy

In the world of restaurant pricing, there’s a delicate dance between staying competitive and maintaining profitability.

Surprisingly, many fall into the trap of letting competition lead this dance.

But remember, they’re not the ones paying your bills.

Think about it: Are you really focusing on the right competitors, given your broad competitive set? And do their costs mirror yours?


Here’s where the strategy shifts. Instead of blindly following the competition, consider using price to address the competition in two key areas:

– Cross-shopped Items: Use pricing to showcase your affordability or premium quality, making your position clear to customers who compare.

– Role: Understand the role of that product/category in driving traffic and margin and how price fits into that role—then decide if/how to respond competitively.

Use these two techniques to take advantage of your position better.

And what about your customers in all this? Are you considering their reaction to price changes?

Tactics like pre-testing, attitudinal data analysis, and extended sampling can offer invaluable insights.

Bottom line: It’s time to rethink pricing as a strategic tool, not just a competitive response.