Quick tips – Update your menu often

You can greatly improve your cash flow by adopting a policy of smaller, more frequent price increases instead of waiting for a year or longer before raising prices a larger increment.

Use this simple example to catch my drift:

Chicken tenders $5.99 from January 2008 – January 2009
Price raised to $6.99 after January 2009
4000 orders of chicken tender sold during whole year
$23,960 in sales for year

Chicken tenders $5.99 from January 2008 – March 2008
Chicken tenders $6.29 from April 2008 – July 2008
Chicken tenders $6.49 from August 2008 – October 2008
Chicken tenders $6.79 from November 2008 – January 2009
Price raised to $6.99 after January 2009
4000 order chicken tender sold during whole year, 1000 order per quarter
$25,569 in sales for year

By not waiting to raise the price, you gain an additional $1,609 in profit for the year off one menu item. You also help mask the price increase by doing it incrementally. Your customers are much less likely to notice $.20-$.25 increases compare to a $1 increase.

3 thoughts on “Quick tips – Update your menu often

  1. It’s both, assuming you are already at a breakeven or better.

    There are no additional expenses in the second scenario, so every additional dollar goes to profit.

  2. If the restaurant has the know how to build a “real” theoretical food cost than they could increase gross profit $ per plate by slicing away the losers on the menu. If you sell less items that have a low gross profit compared to your other menu items, well than it’s the same thing as raising prices, except without actually raising prices and upsetting customers.

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