Start Up: Pricing Your Menu Items

There are a few different battle plans for pricing out your menu, but you’re always gonna end up with the good ol’ trial and error process. You don’t want to charge prices customers won’t pay and you don’t want to charge less than what they’re willing to pay. There are a few factors to consider, including consumer demographics, competition, and standards. And One Fat Frog Restaurant Equipment wants to help you use these factors to determine your price points.

What’s a “price point?” These are the ranges of prices for specific types of menu items. For instance, prices for sandwiches on the lunch menu should range from $4.95 to $7.95. Anything below that is far too cheap and over that is ridiculous. People won’t buy it. In the high competitive market of the restaurant business, price points are essential for survival. If you are charging more for certain items than your competitors, then you need to justify the price with quality, service, add-ons, etc.

Here are some important questions to ask yourself when determining price points:

What’s the competitor charging? And how can you combat those prices without losing money?

What kinda clientele are you trying to attract? If you wanna be a family restaurant, you shouldn’t have a horseshoe bar in the middle of the dining area and you should have prices that encourages people to bring their families there.

What price points match your atmosphere? For example, if you’re a diner that offers counter-service, you really shouldn’t have any items over $7.99. No one sitting there reading the paper is gonna pay $20 for an entree.

How can you use ingredients to help you hit your price points? Are there an less expensive ingredients, meats, etc. to help you achieve price point perfection? It’s worth some research.

Remember that prices have to cover the cost of the food your serving, the payroll, the rent, utilities, and (drum roll please) your profit. Customers paying for their food and drinks are the ONLY source of revenue your restaurant is going to have. To make sure there is profit when all is said and done (and paid for), you need to set a target food cost percentage to cover all your costs of doing business.

Commonly, restaurants target food cost percentage is in the range of 20 to 40 percent. Your percentage will be determined by several factors such as over head cost and rent. Here are a few steps, courtesy of One Fat Frog Restaurant Equipment, to help you determine the menu price of a specific item using food cost percentage:

• Find the actual cost of the item. Add up the raw ingredients, as well as any freebies like bread, lettuce, etc. to create a food cost.

• Take that food cost and divide it by the food cost percentage. For instance, if you’re food cost percentage is 30, if a burger costs you $3.75 to make, the charge to the customer should be $12.50. ($3.75 divided by 0.30 = $12.50). ROUND UP!

One Fat Frog Restaurant Equipment

One Fat Frog • 11473 S. Orange Blossom Trail • Orlando, FL • 407-480-3409
One Fat Frog • 1137 W. Airport Blvd. • Sanford, FL • 407-936-2733


2416 Sand Lake Road • Orlando, FL • 407-480-3409!/onefatfrog