So, I’ve been wondering this for years as I sometimes (ok, a lot of times) feel that our prices have exceeded the average customers budget. We have been in business for going on 50 years serving deck oven pizza and full Italian cuisine Our town is lower middle classed. Thing is, we are a beach town tourist destination that will guarantee a constant flow of higher income customers every summer season that fill the seats until summer is over. Problem is, I get both online reviews and direct emails stating that we are overprice. “Fine dining prices without the fine dining”. Not a ton of them, but it’s probably the number one complaint. It’s really starting to wake me up and wonder, how the hell do I get out of this situation? I don’t want to be the place that is overpriced… I also understand that you can’t make everyone happy, believe me, I get it, but I really am starting to hear it (or maybe now I’m just noticing it) more and more.
Question is, what do you do in this situation? Our overhead is massive at this location and the thought of slashing prices scares me, to say the least. So what else can you do? Add value? We’ve already switched to including a free soup or salad with all entrees, but I don’t really know if people appreciate it as much as we thought they would… What is worth more? Added value or lower menu prices? Any ideas? Anyone ever successfully lowered menu prices without the result of instantly losing cash without actually gaining any customers? I’d love to have some more of the local business through the off season, as I’m afraid that most of them simply cannot afford to eat at our establishment. I’ve talked to friends and they say that not everyone can afford to drive a nice car, or live in a nice house, but I don’t know how I feel about that in this situation.
I can not answer your question exactly as I am not a restaurant owner…But where I live I have seen many restaurants come and go…The common theme is they were overpriced for the market…And overhead was too high to support a lower price point…I saw one location at out local mall close down…Their rent was going up 33% when the lease ended…They proposed a decrease of 33% and that was rejected…They closed and the location has sat empty for several years…
Is there anythign you can do to reduce overhead so it can be more aligned to your customer base?..
My customer base is similar to yours and i’m also seasonal. One thing that has worked for me is to discount the regular locals 20%, have a few things on the menu that are more affordable , the rich folks have pricier options, example : Super Meat Lovers 16" $27.95 , i was scared to go that high last menu printing , 4 dollars higher than all the others, wow i’m amazed, no complaints and we sell a lot of them !
In our ski resort town we have similar issues. Comparatively high wages, high rent, hi cost to advertise… constantly changing customer base so long term awareness advertising, while great for locals, has zero impact on tourists… We also have comments about high prices… at least until they order a hamburger somewhere for $18.
We keep our base pie prices as reasonable as we can and charge a bit more for toppings. If someone wants a 14" pepperoni and they hunt for a coupon, they can get three dollars off and the pizza will be $12.50 or they can get some soda or half price wings etc. We really try to build the ticket average with attractive higher-end combos using ingredients they do not see at home.
We do have coupons out there. Lots of them. Part of the game especially when trying to reach a customer that is not local and has no reason to prefer one place over another. Most of our coupons published for visitors offer either something extra for free or a discount on an order with two or more pizzas.
We do 20% off for our online customers if they know the promo code. Essentially, this becomes a local’s discount because we promote that offer using FB and by email to those who have ordered online before.
Part of all this is perception thing too. I have actually had a customer comment on how much more our 16" “Big Dog” pizza was than a 16" pepperoni that they ordered from a competitor. Really? Yes really. The customer was surprised that our five topping pie was $8 more than their one topping pie. (We are one dollar higher than they are on the base pizza plus $1.75 per topping for the four additional toppings) Where do you go with that? Who knows. Is it our job to help the math impaired? Well, only if you want the order.
Focus on marketing that explains what makes you special. The value and the higher price is implied… you don’t need to talk about it. Remember, if all you talk about is price, you are telling the customer that price is the only reason to buy.