Knowing how to handle restaurant pricing is essential for it to be profitable. However, this practice is as important as it is complicated, with several aspects that need to be taken into account.
The good news is that now you'll find out the most common mistakes when pricing products in restaurants and, that way, know what to avoid. Check it out!
Saiba mais: 5 secrets of successful restaurant owners
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What to avoid in restaurant pricing
Below you'll see what not to do to ensure efficient pricing that brings profit to your establishment without putting the final price out of customers' reach.
1 – Not having a recipe card for each item
The first step to knowing how to price dishes in restaurants is precisely knowing how much you invest in each one. It seems obvious, but it never hurts to stress: to know how much to charge, you first need to know how much you spent.
This, of course, isn't limited to the dishes' ingredients (more on that shortly), but ignoring the production cost or not estimating it accurately is a big mistake in restaurant management.
To prevent that from happening, keep a recipe card for every dish. On it, you'll have an exact description of each supply used in each recipe, and how much each one costs.
That way, you can know exactly what the dishes cost and then set a price that covers that amount and, on top of that, secures a Profit margin.
2 – Not calculating the restaurant's fixed costs
It's not only variable costs — those tied to supplies, commissions, credit card fees, and even shipping — that go into this calculation.
Restaurant pricing also needs to take fixed costs into account.As the name suggests, these are the expenses that, unlike supplies and fees, don't tend to vary much.
For example, how much you spend buying salt can vary from month to month (depending on how much of the supply was used or even on your supplier's price fluctuation). The rent for the restaurant space, on the other hand, stays the same.
In other words, don't forget to take into account costs like:
- Internet;
- Electricity;
- Employee wages;
- Rent for the space;
- Water;
- Gas;
- Cleanliness
3 – Forgetting to include taxes in the calculation
Another cost that needs to be in your restaurant pricing calculation is Taxes. Considerados gastos fixos, aqui na nossa lista eles ganham um espaço especial por um motivo muito simples: frequentemente são esquecidos.
Because it's an “invisible” expense, managers often forget to take these amounts into account when setting the price of a dish and/or drink. To do this, first find out how much tax you pay on each item produced.
In other words, for a portion of steak with french fries, for example, figure out how much of the total cost of each supply involved in the preparation (meat, potatoes, salt, seasonings, oil, etc.) is made up of taxes.
Then, by adding up the taxes on each supply in their respective proportions, you find out that your steak with french fries has 10% of its cost going to taxes.
That's why you need to add that 10% to the item's final price, to make sure you don't end up charging less than what you spend.
4 – Overdoing the profit margin
Finally, to set the price of a menu item, you need to add up all the expenses you had preparing it – fixed costs, variable costs, and taxes – with how much you want to profit from it.
That amount is called the profit margin. In other words, how much you expect to earn from selling each dish. Generally, the margin is set as a percentage of the total cost of producing the item.
For example, if a drink requires R$ 6 reais in total to produce, and you want a 50% profit, the price your customers should pay for the drink will be R$ 9 reais.
But do you consider a 50% profit rate a lot or a little? More importantly: will your customers be willing to pay that amount, or will your drink be too “salty” for their wallets?
So, be prudent when setting the profit margin for your restaurant's dishes. Look for the balance between prices that will give your business security and longevity without pushing the price so high that it scares off your customers.
One tip is to study your customers' profile in depth and, on top of that, study your competitors. Caso um prato similar esteja muito mais barato em um concorrente, por exemplo, isso pode ser um sinal de que a sua margem de lucro está muito acima do padrão do mercado.
Leia também: How to calculate your restaurant's break-even point
5 – Not using a tool to run the calculation
You can already tell that getting restaurant pricing right can be a big challenge, right?
Now imagine having to run all these calculations and keep track of all these numbers and variables on your own? There's no pen, paper, and calculator that can handle the job.
That's why the last mistake you can't afford to make is precisely underestimating how difficult this task is. Technology is an ally that's around you every single day – so why not let it help you at work too?
A good first step to make this task easier is using our pricing spreadsheet for restaurants – and best of all, without paying a thing.
Discover the best restaurant management solution
And if you want to take your establishment to the next level and get the most out of digital transformation, all you have to do is rely on an ERP management system.
Besides helping with pricing, it comes with an inventory manager, POS, KDS, digital menu and tab, and delivery tools, plus many other features.
Talk to one of our specialists and learn more!
Frequently Asked Questions
What to avoid in restaurant pricing?
2 – Not calculating the restaurant's fixed costs;
3 – Forgetting to include taxes in the calculation;
4 – Overdoing the profit margin;
5 – Not using a tool to run the calculation.
