There is a difference between the following two statements: “that was an expensive meal” and “that meal wasn’t worth the money I spent”. The difference lies in the true definition of the term: value. The amount of money that a person spends for a meal becomes most relevant when value is not present. This also is a separate issue from the economic profile of the consumer because within every socio-economic group there is a disparity of restaurant value. Restaurateurs must be cognizant of the socio-economic group that they are focusing on as potential customers and the definition of value that is appropriate to that group.
Value takes into consideration so many different variables that make the whole process of building a successful restaurant. These variables include atmosphere, location, table top appointments, service, wine and food education offered, the talent in the kitchen, the detail of presentations, the source and quality of ingredients used, various forms of entertainment, the reputation of the restaurant, restaurant accolades, and even the other guests who patronize the operation. The amount of money spent by guests must equate to the package of variables offered and the perception that those guests have about the experience.
Quick service restaurants define value in terms of price and speed of service. Most would agree that the meals served here are “worth the money spent” even if many would still say that they are not fond of the experience. It would be rare to hear a person say that a meal in a quick service restaurant was too expensive. It becomes far more complicated when one looks at full-service and especially fine dining restaurant operations. In these situations the restaurateur must spend a considerable amount of time and effort in creating a “dining experience” that warrants the price charged. This is the process of creating a different sense of value.
The process of building value experiences must focus on all of the details that build up to the presentation of the check; this applies to many businesses outside of the restaurant business as well. What is most interesting is that “the experience” includes components within and outside of the provider’s immediate control. The value experience of a vacation at Disney World begins way before the guest actually arrives in Orlando. The Disney experience begins when the guest makes a decision to travel to Florida, the process of booking a flight, drawing money from their account at the bank, booking a hotel room, watching the weather channel for the forecast during their stay, the rental of a car in Orlando, traffic on the highway to the park, parking of the car, etc. Notice that many of these “points of experience” are beyond the control of Disney, yet they impact on the overall guest perception of value. Once the guest arrives at Disney World, he or she is in the hands of the provider and the experience can be controlled, but what about all of those events leading up to the day of contact? This is why companies like Disney look for ways to control those points either through partnerships or acquisitions. It is the same with restaurants that charge a higher tariff for their experience. The restaurant “event” begins with the reservation on the phone or on-line and continues to evolve from that point. Value perception has been well established before the guest even walks up to the host-stand for their table.
At this point the restaurateur must constantly work on ways to maintain or change the perception of value. It is never enough to charge high prices because the operator buys the best raw materials. Somehow the restaurant must relay that information and demonstrate “why” this is important to the experience. It is not enough to charge high prices because the restaurant hires the most talented staff unless the operator demonstrates “why” this has value to the guest. It is not enough to charge more for your wine simply because the operator uses only Riedl glassware unless the reason why this is important is apparent to the guest. Value must always be apparent if it is to have a positive impact on the perceptions of the guest.
If a guest emphasizes how expensive a restaurant experience is or was without qualifying “but it was worth it”, the restaurateur or chef has failed at their job. Guests within a socio-economic group will return time and time again and pay the price that you deem essential, if they perceive that value exists. Value trumps price more often than not. A Mercedes may not be affordable to every socio-economic group, but most would agree that the quality of the automobile is exceptional and after driving or even riding in one, the value experience is apparent. For those who are in the socio-economic group that could afford a Mercedes, the expense is easily justified. This would not be the case if they felt that perceived value was not there. The same rule applies within any and every socio-economic group and the goods that they intend to purchase.
Here lies the kicker: value is universal and the relative quality of a product or service today is the price of admission regardless of the socio-economic group that a business is approaching. Consumers have a much higher expectation of relative value than ever before. Restaurants cannot simply use the age-old adage: “you get what you pay for”. No, everyone wants and expects value whether it is $3.00 for a quick service “value meal” or $100 for a price fix menu at a fine dining establishment.
Define who your targeted socio-economic group is, research their ceiling for pricing, determine how you will create a value experience for that group and then ensure that you can consistently provide it. Price will be well received if you work from this premise.
PLAN BETTER – TRAIN HARDER
Harvest America Ventures, LLC