I get it, profit in restaurants is sometimes hard to come by.  We deal with highly perishable goods, unpredictable customer behavior, swinging door staffing, and constantly escalating cost of goods.  Restaurants get hit from all angles so when there is a chance to push the envelope on pricing – many do.  It’s so hard to make money on that 10 oz. Prime Filet or 14 oz. Berkshire Pork Chop.  It seems impossible to push a positive bottom line selling that beautiful halibut fillet or Diver’s scallops, so we have to charge $60 for a steak or $45 for a piece of fish.  People will understand, so let’s just keep charging more and more until we cross that line of “what the market will bear”. 

So here is the line in the sand – WHERE IS THE VALUE?  At what point do you think a guest will ask: “Is this meal really worth $100?  Some of you will respond by pointing to the crazy cost of goods increases in recent years or the fact that we now (rightfully so) have to pay our employees a living wage or even provide some basic benefits – so we have no choice but to charge what we charge.  OK, I have been involved in the restaurant business for more than 50 years – I hear what you are saying, but I pose the question again: “Is this meal really worth $100 (or more)?”  Doesn’t it eventually come down to this?  Rationalize all you want, but if we reach a point where people begin to question value, then we will be lost.

Of course, there is a handful of masterful chefs and restaurateurs who can charge crazy prices to sold out audiences.  These are the restaurants where dining is much, much more than just consuming food.  They provide value through the provision of a very complex experience that includes ambience, the highest level of service, highly sophisticated and creative food presentations, and the aura of food as entertainment – I applaud them and admire their commitment to the extraordinary, but this is a very small percentage of the restaurants available.  How do the rest of us explain the menu with $25 appetizers, $60 entrees, and $20 desserts?  How do we continue to market wines at $20 a glass or cocktails in the same price category?  How often are guests seen leaving the restaurant gripping their wallets and shaking their heads?

The whole premise of a successful restaurant is making guests feel comfortable, welcome, and fulfilled.  We want them to return often and tell their friends what a great place this restaurant is.  It takes so much effort, time, and money to pull customers in for that first visit – we want to make them feel good about their investment and book another reservation soon.  If they don’t see the value, regardless of how tasty or beautiful that plate of food might be, then why would they return?

The average middle class American’s salary is $51,000 – that’s approximately $24 per hour.  That $100 meal took them four hours work to pay for.  So, ask yourself the question: “Is the meal that I provide that guest worth ½ of a day’s work?  Is there a ceiling to pricing where the average guest will simply say:  enough is enough?” 

So – what is the answer?  From my perspective the answer lies in menu planning, training, and labor efficiency.  Restaurants need to take a hard look at what they serve, how they serve it, and what they are able to charge in order to EARN a profit.  At the same time, it is essential that all of these efforts are focused on attracting a broader audience of guests who return frequently.

[]       MENU PLANNING:         If the only way that we can reach profitability with that filet is to charge $60, then maybe it’s time to take the filet off the menu and look for an alternative that with the right talent can be even more exciting than the filet.  If that halibut steak must sell for $45, then let’s take a look at the hundreds of other fish species available without the high price tag of the more common (over-fished) varieties.  If you need to charge $20 a glass for wine, then require your bar manager or sommelier to research “great find” wines that cost your restaurant under $15 and can enhance the guest experience for less than $12 per glass.  We have the ability to find value solutions, we just need to make this a priority. 

[]       PORTION SIZES:  Bigger isn’t always better.  Maybe it’s time to ween our guests off the 12 to 16-ounce portions of protein.  After all, this is a disservice to our guest’s health and wellbeing.  Let’s be more creative with interesting vegetable accompaniments and keep proteins under six ounces.  Smaller portions lead to lower price tags, broader acceptance, and enhanced value from a well-designed, balanced meal.

[]       TRAINING:  We all know the drill – it’s a business of pennies, but without everyone’s buy-in, those pennies will quickly evaporate.  Training in the current restaurant environment has never been more important or more beneficial to both the operator and the guest.  This is one surefire way of keeping selling prices in check.

[]       EFFICIENCY:  This is the hard truth – we may never go back to the era where there are far more qualified individuals to work in restaurants than there are positions.  This may be the perfect time to align menu planning, effective buying, solid training, and efficiency.  Restaurants will need to do more with fewer people – this means workable menus, the right equipment, and systems that allow us to wow our guests, keep portions in check, and do so with a streamlined crew. 

Welcome to the new world where VALUE is centerstage.  How will you approach it?


Harvest America Ventures, LLC

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