raising our menu pricing

with the cheese market rising and the futures for corn, poultry and beef looking high is anyone else thinking about an across the board price hike?

I am struggling with the same issue. Increased costs both food and labor are making it necessary to rethink how I price my product. Right now I have stooped to the level of the other stores in town using the buy one get one 1/2 price. I am thinking of going to a straight price based on food cost. The part that scares me is the customers here always ask what kind of deal do you give? They have been trained by the chain stores the you get the second pizza for a “DEAL”. The big question is how do I shake this train of thought?

We raised our prices an average of 10% (13% on our pizzas) back in April.

Regarding swaying customers “off the deal” mentality, it’s a slow brainwashing type of process.

We opened May 2006 and started out with coupon advertising, giving away stuff, etc, but then we weaned away from it. Then, we just advertised with no deals or coupons. Now, we are weaning away from monthly advertising and looking at quarterly advertising.

Best advertising is word of mouth!

To also gravitate away from deals, we plotted our daily specials to be “not so special”, like 1/2 off pasta salad with 1 large 1 topp pizza. They call and ask what the special is, but then order anyways.

The bottom line is hook 'em with great food - they will come

Daddio:

I am struggling with the same issue. Increased costs both food and labor are making it necessary to rethink how I price my product. Right now I have stooped to the level of the other stores in town using the buy one get one 1/2 price. I am thinking of going to a straight price based on food cost. The part that scares me is the customers here always ask what kind of deal do you give? They have been trained by the chain stores the you get the second pizza for a “DEAL”. The big question is how do I shake this train of thought?

Click to expand...

I’m similar to you Daddio.

With the servere drought in Australia for the past 3 - 4 seasons and last period being Australia wide wehave seen smallgoods increase by about 15%, chicken nearly 20%, flour 42% etc. Rent goes up Consumer Pice Index (CPI) + 2% which equates to about 5.5% pa and wages have gone up about 5%.

We took over our store 18 months ago and stayed with the previous menu / pricing, only putting up delivery fees to cover the 40% increase in fuel cost.

We have absorbed all the price increases but now have to increase prices.

We have changed the price grouping of our pizzas and moved some up to the higher level by between $1 - $1.50 for a large while others have gone up only 50 cents. Our previous Gourmet pricing was all over the place and now we have one price point resulting in increases of $1.00 - $2.00.

Unfortunately the previous owner was a jerk and priced his pizzas on the base size of large (13") and then by what the next size was percentage wise ie Family (15") was priced at a flat $5 more where it should have been 32.5% more on an area basis. We are getting killed on Jumbo size (18") where he had the price about $10 more than a large when in reality it should be 94% - roughly $14 extra using the area costing.

If we priced everything on the area amount and the weight of each ingredient as it should be then we would need to put up prices by $2 - $3 per pizza but customers would walk out the store they would fly.

So in the end of the day we are trying to do a price creep by moving some up less and other a bit more by changing to lesser price points. It will be swings and round-a-bouts where we make a little on some and more on others.

I guess one consolation is that we are steadily increasing sales and customers are used to waiting up to 45 minutes for over the counter orders on peak times so we have a strong consumer backing and hopefully they won’t react from price increases.

In the end of the day they happily pay continued increases from the supermarkets who are running wild with price increases just to show more and more profits to the greedy shareholders so they should accept our modest increases. Funny thing is they never complain when their favourite tin product goes up 5% in price and down 20% in size, but if we are a little bit light on a topping or they think they should be getting more pasta than they got then they are on the phone real quick. I guess they see the small guy as fair game but the biggies as untouchable.

As someone else said in another post Maccas have had numerous price increases in the past few months and no-one complains. PH and Domino’s have also put their prices up from $5.95 to $6.95 and still run hot so I have no trepidation in taking ours up.

We were doing a new menu but now are sticking with the current one but just slightly streamlined so any increases are not blaringly obvious.

Sorry about the ramble but it is a touchy topic when we are at the upper price area and are surrounded by PH and Domino’s. Luckily our closest indy competitors are virtually unknown and do very small trade.

Dave

Daddio:

I am struggling with the same issue. Increased costs both food and labor are making it necessary to rethink how I price my product. Right now I have stooped to the level of the other stores in town using the buy one get one 1/2 price. I am thinking of going to a straight price based on food cost. The part that scares me is the customers here always ask what kind of deal do you give? They have been trained by the chain stores the you get the second pizza for a “DEAL”. The big question is how do I shake this train of thought?

Click to expand...

I’m similar to you Daddio.

With the servere drought in Australia for the past 3 - 4 seasons and last period being Australia wide wehave seen smallgoods increase by about 15%, chicken nearly 20%, flour 42% etc. Rent goes up Consumer Pice Index (CPI) + 2% which equates to about 5.5% pa and wages have gone up about 5%.

We took over our store 18 months ago and stayed with the previous menu / pricing, only putting up delivery fees to cover the 40% increase in fuel cost.

We have absorbed all the price increases but now have to increase prices.

We have changed the price grouping of our pizzas and moved some up to the higher level by between $1 - $1.50 for a large while others have gone up only 50 cents. Our previous Gourmet pricing was all over the place and now we have one price point resulting in increases of $1.00 - $2.00.

Unfortunately the previous owner was a jerk and priced his pizzas on the base size of large (13") and then by what the next size was percentage wise ie Family (15") was priced at a flat $5 more where it should have been 32.5% more on an area basis. We are getting killed on Jumbo size (18") where he had the price about $10 more than a large when in reality it should be 94% - roughly $14 extra using the area costing.

If we priced everything on the area amount and the weight of each ingredient as it should be then we would need to put up prices by $2 - $3 per pizza but customers would walk out the store they would fly.

So in the end of the day we are trying to do a price creep by moving some up less and other a bit more by changing to lesser price points. It will be swings and round-a-bouts where we make a little on some and more on others.

I guess one consolation is that we are steadily increasing sales and customers are used to waiting up to 45 minutes for over the counter orders on peak times so we have a strong consumer backing and hopefully they won’t react from price increases.

In the end of the day they happily pay continued increases from the supermarkets who are running wild with price increases just to show more and more profits to the greedy shareholders so they should accept our modest increases. Funny thing is they never complain when their favourite tin product goes up 5% in price and down 20% in size, but if we are a little bit light on a topping or they think they should be getting more pasta than they got then they are on the phone real quick. I guess they see the small guy as fair game but the biggies as untouchable.

As someone else said in another post Maccas have had numerous price increases in the past few months and no-one complains. PH and Domino’s have also put their prices up from $5.95 to $6.95 and still run hot so I have no trepidation in taking ours up.

We were doing a new menu but now are sticking with the current one but just slightly streamlined so any increases are not blaringly obvious.

Sorry about the ramble but it is a touchy topic when we are at the upper price area and are surrounded by PH and Domino’s. Luckily our closest indy competitors are virtually unknown and do very small trade.

Dave

We’ve been in busines for a little over nine months now, we noticed the prices of alot of things going up, not just cheese. Instead of going through and raising all our prices, we decided to change our coupons. Probably 75% of our business is special related, so instead of overing a buy 1 get 1 or 14" 6 topping for $9.99, we decided to do the $2.00 off an 18", $1.50 of a 16" and $1.00 off a 14"…simple coupons that can be used all the time.

Now wed still offer a great deal on our board out front, but there not cut throat ones. And i hate having to do it, but I’m not here for my health, it’s still a business.

We’re in same boat as well. We make a gourmet pizza with a higher price point so we have been a little reluctant to make that jump. But with all these product, labor and fuel increases I think its unavoidable.

The previous owners we heavily into coupons. They were always the same and they never asked for the coupons. We decided to follow Karrinton’s logic and not discount our pizzas, but rather use “FREE” breadstix, salads, 2 Liters, etc. so people would not be used to not paying full price for a pizza.

We stopped running the old coupons and began asking for the coupons to be brought in if they still had them. We didn’t play hard ball if they didn’t have them but the point was still made and eventually people stopped calling in coupons that they did not even have. It was hard at first because there were a “few” (very few) people who were upset that they would not be getting their customary discount but we got through it and sales have been steadily climbing . . .

We have more aggressive offers that go out to the general public while we are much more conservative in our POS offerings.

We’ve done the discounted extras as welll like breadsticks for a buck or cinnamon sticks for a buck, theyre cheap to make. The word free always gets the customer’s attention. You just need to entice with something they would still like. For example, a free any size brocoli and anchovie pizza might now work too well…but the free sticks 2 liters or salads are a great idea and people will still add those.

The problem in offering Free sides is that people are used to getting cheated from the chains for so called free sides. When Dominos introduced brownies, the gave away an order for free with purchase of a large pizzaat regular menu priceMenu price was $5 more than what they would quote you if you called and asked how much for a large pep. Great, pay 5 bucks more and get a $3 side for free. The consumers are so used to this they consider every free ad a scam.

We raised our delivery charge from 90 cents to $1.50. Everyone knows what the price of gas is doing. A few customers asked about it when the price for the same order they always do changed. NOBODY squaked. The typical comment was “I guess that makes sense”. That change produced 60 cents on every order which covers the increase on the gas ANd the increase on the cheese. On a percentage basis our costs are up, but on a cash basis we are about even.

I am more reluctant to change the menu prices but will do so after the summer if the cheese price stays up there.