It’s been almost 2 years since we opened and still have the same menu (hiked up the prices last Oct.) and have only changed/added a couple of new items.
With all the new costs in wheat/cheese and pretty much all my produce and some of the frozen foods… and the lack of customers within the past 6 months… Iâ€™ve decided to do an overhaul of the menu. Take off a few of the sandwiches, add pastas and calzones, and readjust the pricing.
How I am calculating the food costs is, Iâ€™m taking every single item that goes into or onto the product and adding them all up… but i am not including the wrapping/boxes because I get 50% eat-in, 50% Del/Co so itâ€™s different with every order.
I’m taking the total item cost X 3 to give me the sell @ price
Once I did this, I see that some items are now VERY expensive and others are dirt cheap.
So, do I adjust the prices accordingly to the 3x’s rule… Or do I cut the prices of the expensive stuff (and make less off of them), and raise the prices of the cheap stuff to make up for it?
I just went through the same exercise with my menu. What I did was looked at it from the eyes of a customer. A place has to increase prices every now and then but not everything at the same time.
I increased the PREMIUM item prices and increased the base price on the basic cheese pizza. I also seperated my toppings into different catigories again with an increase for the premium toppings.
BTW, I’ve also used the 30% food Costs formulas… which seem to make the prices even higher…
Burger: 1/3# meat, 1 slice tomato, 2 slices pickel, 1tsp chopped onion, 1 oz. lettuce
My cost: $.995 (as of the past 4 months in cost mark ups)
Use to sell @ $2.89
New Sell @ price using x3 $2.99
New Sell @ price using 30% $3.32
And people were bitc#ing before about the high prices. :roll:
I hope you will reconsider not factoring in the paper & packaging costs. They can be quite substantial. I am presently buying 14" logo boxes at .37. We drop a single face ripple pad into each box @ .08 this week, so that’s $0.45 you are leaving unaccounted for. At the very least, add it in as a direct cost if your believe half your business is dine in. You will then be “approximately” running a 50% food cost (using my numbers for a 14" pizza)on the packaging portion of your carry-out/delivery sales. Also, do you serve fried foods? If so, how are you accounting for the grease you are using? You should factor it in also, cooking oils have risen sharply as well. If I sold a 14" cheese pie for $10, the packaging cost is 5%.
Also, consider running even lower food costs on the dirt cheap items & publish market prices.
I would suggest using 4X rather than 3X. By the time you add in waste, spoilage, mistakes etc etc starting with 3X is going to give you food cost in the high 30s which is way too high.
This kind of multiple is a great place to start with pricing, but in the end you need to go back to your items with a view toward the market. If the multiple gives you a price that is lower than you currently charge, you leave that one alone. On the ones where your selling price is way too low you raise the price. On the others look for natural prices that do not leave you too far below your price hurdle (established with the multiple)