When & how much do you raise your prices?

[idahopizzaman]

I was just curious as to how often you raise your prices & by how much? I have not had a price increase in 2 years. When I did raise them up it was about 10% increase.

 

[brad_randall]

We try and raise base pizza prices once a year by like 20 or so cents depending on the pizza size - usually around Christmas Break. Some side items get the same small bump in the Summer. By keeping in the range of just a few percentage points, there is little price resistance and we can keep in step with inflation.

More painful is when we have to hike the price on “the Deal” since, well, we’re basically competing with everyone else in town on price and we hammer away with it for as long as we can hold the line. Before school starts up again, we’re raising the price on our package special from $10.99 to $11.99. There will be some price resistance, but with wheat and other commodities marching steadily upward we have little choice.

The G.M. of one of our distributors told us we were being silly to not slip in a small price increase every so often - especially when we didn’t think we needed to. “Brad, you’re leaving money on the table.” He was right. Regular little increases prevent the need for that inevitable big hike that always seems to meet with painful price resistance.

 

[Daddio]

I was real bad for not raising prices. I went 3 years without a price increase. Recently I created a spread sheet that cross references my menu price with my ideal food costs. Each time I receive an order from my suppliers I update the spread sheet. When there is 25% of the prices that show I am making less than my ideal food cost I plan on doing a price increase.

 

[bodegahwy]

I prefer to raise my prices for pizza by round dollars when I need to do it. I do it every few years. In between, I raise the prices on soft drinks, sides, toppings and salads by smaller amounts.

I also got rid of smaller sizes of some things. No more 1/2 orders of wings or small cheesy breads.

I raise delivery charges by 10 cents at a time.

I must admit, nobody ever comments.

 

[smeagol8]

I tend to raise prices according to the price of mozzarella, and when I do so I raise each size by the cost of “extra cheese”. Since Mozz shot up to, and stayed at, about $2.90/lb two(?) years ago, I haven’t had to raise prices since. (Since the price eventually went down, and hasn’t reached that high since.)

 

[Cali_Pie]

I think you should raise them at least once a year! The key is to not make it too noticeable, .50 here…$1 on Xl, and so on. We raised our delivery fee from $1.50 to $2.00 a few months ago to compensate for gas prices, very few people mentioned the change. As our food costs go up, so should our prices. If people complain I explain how cheese used to be $1.30/lb…now it’s $2.30. I used to pay $13 for a sack of flour, now I pay $23 and it went up to $33 at one point. Guess what pizzas are mostly made out of?

Also, compare yourself to the competition. Do you claim to be high end? If so, you shouldn’t be less expensive than the chain store down the street. If people want cheap pizza, I send them to Little C’s down the road.

 

[idahopizzaman]

Thanks for everything! You all have brought some excellent points. I raised my delivery fee earlier this year by a $1 to $2 and nobody said a thing especially with gas going as high as it did. I am going to raise them a little bit at a time so that it is not a huge jump as before that way people will not notice it as bad.

Ed

 

[brad_randall]

Finally got the new pricing up everywhere (menus, menu boards, cups, website, online-ordering sites) and changed in the P.O.S. last week. I forgot what a P.i.t.A. that whole process can be…

Nothing to do now but sit back, get rich, and retire early!

 

[royster13]

Can you upload a spreadsheet to your POS?..

 

[wa_dave]

Like others I hadn’t raised prices for 2 years and recently did it. We were bleeding profit but the way the market had been we had to foolishly absorb increases until enough was enough. It got to the satge when all the fast food places were discretely putting up rices 10c at a time every few months and supermarkets doing it weekly. Neither had declines in customers so we took pen to the menu and lifted prices.
An example on how we did was our “favourites” range where we had two pricing structures - one with the lower topping pizzas and another with the higher number of toppings. We raise the lower ones so all are the same price without changing the large price on the higher ones but increasing smalls and family by 50c. The perception was that we hadn’t had an increase. Gouremts in large size were kept the same but again increases in smalls and family size were around 40c - 90c. Large premium pizzas increased 50c but was kept in the same $ bracket thus looking that the price stayed the same. We tried to do this with all pizza price increases so they didn’t go to the next $ bracket.
Where we made the most significant changes were on sides, especially pastas where we took a $1 increase. We also adjusted our deals eliminating 2 pizza, bread & drink deals which we were bleeding on whilst also increasing our 2 and 3 pizza specials, marginally on the 2 lge pizza deal (by 40c) but more significanlty on the 3 lge pizza and 2 family(1.40).
Overall the increases has added around $300 - $400 a week to sales.
Only 2 customers commented on the increases with 1 saying “I only paid xxx last week”. He was fine we we said this was our first increase in 2 years. The other was asking my manager why we increased prices and ket asking why this and why that. She politely told him prices hadn’t risen in 2 years, plus all the cost increases in power, rent etc, but he was still not satisfied so she suggested he go to the major supermarket where we are and ask them why their increases in the past 6 months had added over $40 to the average shopping basket. He never said another word and ordered and has continued since.
I guess the thing is that at times we are too concerned about what customers may think of us raising prices while the big supermarkets raise their prices weekly, Maccas, Dominos, coffee franchises etc raise their prices allbeit discretely all the time. The cost of doing new menus, price boards etc are a cost that has to be taken into account when changing prices for us and this can run into a couple of thousand to do so., hence one of the reasons of me holding back (foolishly).
Dave

 

[system]

Just too add a comment here. Everyone that knows my mindset on charging what you should and not compete with the big guys, unless that is your market also, I wanted to say something about fast food. I hate it and very rarely eat it but the other day my 4 year old wanted to go too McDonalds so I took her. She got a happy meal (4 chix nuggets, half a small fry, and a little drink…maybe 10 oz, oh, and thanks too Mrs. O-Bomb-A… 3 slices of apple, which was actually crispy and fresh!) and I ordered one of their new chix grilled club meals, regular size… she then said your total is $12.72! WTF! Well my 4 year old ate it all and I managed half a sandwich and a couple bites of overcooked and oversalted fries before I sucked down the cup of ice with a couple actual ounces of pop in it with the straw a size of a magic marker! So I do not understand people that whine and Bltch about paying $18-22 for a quality made pizza with good ingredients when they have no problem driving thru the fast food joints and buying loads of crap at these prices. I do give McD’s credit for the oversized straw they use. I remember years ago reading that when they switched to the new big straw over the standard size straw that people would drink their sodas so much faster that they would next order a supersized upgrade 73% of the time and that is just money in the bank. Charge an extra $0.70-1.00 for $0.10-0.15 worth of extra fries and soda. The article estimated that the straws add almost two billion to their net profit annually on $22 billion in sales. Not bad for a straw! :shock: