Catering: how to set your prices (14 good reflexes)

Too high and you risk losing customers. Too low, and you won't be able to generate enough sales. The prices you set in your restaurant are therefore at the heart of your strategy. So how do you go about it? What are the average prices on the market? How do you calculate them?

Strategies, calculations, Omnes principles... We tell you all about it in this article!

What are the average restaurant prices?

Before we talk math, let's start with a few basics:

• According to a survey conducted by TheFork, the average bill in France (what a customer spends on average for a meal) is around €25 in a "classic" restaurant. 
• It is estimated that the ideal margin for a restaurant to be profitable in France is around 70% on food and 80% on drinks.‍
• This means that, to preserve your financial equilibrium, the cost of your raw materials (food cost) should not exceed 25% to 30% of your sales. 

These first elements (and the associated articles) give you an overall idea of what the French spend and how most establishments operate.

Now, other factors will influence your prices:

• Restaurant category

👉 If you're a gourmet restaurant, your prices will be higher (average ticket: €50), justified by top-of-the-range products, talented chefs, an exceptional location, a unique experience...

👉 If you're afast-food establishment (food truck, pizzeria, coffee shop), your prices will be lower (average ticket: €10) but your sales volumes higher. 

• Location

Between the heart of the 8th arrondissement in Paris and the banks of the Loire in Tours, property prices are not the same. That's logical: neither are your charges or your rent. The purchasing power of your customers is also important. Remember to define your clientele clearly (profile, consumption habits, etc.).

• Temporality

In general, prices are higher/personalized in the evening (the emphasis is on the quality of the moment, the dining experience) and lower/fixed at lunchtime (the emphasis is on speed).

• Seasonality also plays a role: prices rise during peak seasons such as winter (Christmas menus, New Year's Eve) and summer (events, cocktails). 

To put it plainly: to set your prices properly, you need to go into detail.

Get out your calculators! 🤓

How to set prices in your restaurant: 3 methods

There are 3 main ways to price your menu.

• Method 1: calculation by portion or "cost price

Objective: calculate the total cost required to produce a specific portion of a dish.

This highly precise method is based above all on portions. You'll need to create recipe cards for all your dishes.

👉 Benefit: you can determine exactly how much it costs to produce a dish, and simplify your ordering from suppliers. 

👉 Disadvantage: this does not include margins, expenses or profit.

The formula : production costs = sum of ingredient costs

• Method 2: food cost calculation

Objective: calculate the price of the raw material and then set the price of the dish.

Food costing is the most common method used in the restaurant business. It consists of applying 20% to 30% of the raw material price to the final price of the dish. 

👉 Advantage: the remaining 70% (the gross margin) allows you to take all your expenses into account. 

The formula : Food cost of a dish = (total cost of raw materials / selling price of the dish) x 100

• Method 3: Stock removals

Objective: Calculate the average price of a dish based on the products actually consumed.

At the end of each day (or service), raw materials are divided by the number of covers. This gives you the average price of a dish.

👉 Advantage: better suited to larger structures (groups of establishments, franchises), this method is based on your customers' actual consumption. 

👉 Disadvantage: it doesn't take into account waste, losses, dishes consumed by your teams, etc.

The formula : cost per dish = (total cost of raw materials) / number of place settings

14 good habits for monitoring and adjusting your prices

It's perfectly possible to use a combination of the 3 methods described above. The most important thing is to adapt the method to the constraints and particularities of your plant.

To adapt and adjust your prices throughout your life as a restaurateur, think of :

• Create value around your restaurant to legitimize your work and your prices (show what goes on behind the scenes on social media, talk about your producers, highlight your teams). The digital marketing is a must here;
• Use the right ratios (such as average ticket or food cost);
• Doing menu engineering ;
• Adapt your prices to inflation to absorb costs and stay competitive;
• Challenge your suppliers, meet new ones and regularly renegotiate your products;
• Favour local and seasonal products (cheaper, better quality, appreciated by customers);
• Adjust and rethink your portions and technical data sheets;
• Combat waste (use peelings, create condiments, jars, etc.);
• Digitize your processes to save time;
• Use Omnes principles.

🔎 Focus: the Omnes principles are a global strategy for setting restaurant prices based on 4 key principles :

• Open range: offer a wide range of prices to suit all budgets;
• Price dispersion: avoid all your dishes having a similar price by planning three "zones" or ranges (premium, medium, low);
• Supply and demand: adjust your prices according to the popularity of your dishes and promote your popular dishes;
• Promotions: use special offers to increase customer volume or promote less popular dishes.

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Setting restaurant prices is no simple task, but by combining the right methods (technical data sheets, food costing, market analysis) and the right strategies, you can achieve your profitability targets.

Our final piece of advice: invest in a lasting asset, digital marketing. In addition to giving you back control over the flow of customers, it brings in an average of €3,500 a month for restaurants that invest in it! Find out more in the study below.

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