Pricing menu items for a successful pop-up restaurant can be a challenge. You want to cover your costs, make a profit, and attract customers with your unique concept and cuisine. But how do you determine the right price for each dish, without overcharging or undercharging? Here are some tips to help you price your pop-up menu effectively.
The first step to pricing your menu items is to calculate your food cost percentage. This is the ratio of the cost of ingredients to the selling price of the dish. For example, if you spend $5 on ingredients for a dish that you sell for $20, your food cost percentage is 25%. A typical food cost percentage for a pop-up restaurant is between 25% and 35%, depending on the type and quality of ingredients, the portion size, and the demand. To lower your food cost percentage, you can use seasonal and local ingredients, reduce waste, and negotiate with suppliers.
Menu costing can be hugely time consuming BUT there is some excellent software available which if used correctly will pay you back multiple times the modest cost. I like using www.GetJelly.co.uk but REKKI whatever you use you absolutely MUST know your costs to avoid losses!!
Although not as desirable, lowering the portion size or increasing the menu price will also help lower your food cost percentage. Even though these two do work, reducing quantity and increasing your menu price only works occasionally. The best bet it to figure out where you need to be in sales on a daily, weekly, and monthly basis. Calculating ones break-even point ahead of time will provide much more information in the long run. Combining as much information as you can collect will help with forecasting, purchasing, overhead and marketing. But most importantly it will show you your target sales number. From here all you need to do work backwards to figure out the menu price for each item. This will help you focus your customers buying.
The second step to pricing your menu items is to research your target market and competitors. You need to understand what your potential customers are willing to pay for your pop-up concept, cuisine, and experience. You can do this by conducting surveys, checking online reviews, and visiting other pop-up restaurants in your area. You also need to know what your competitors are charging for similar dishes, and how you can differentiate yourself from them. You can use a competitive pricing strategy, where you match or slightly undercut your competitors' prices, or a value-based pricing strategy, where you charge more for the added value that you offer, such as quality, creativity, or exclusivity.
I always advocate trying to stretch the price point……so using a burger as an example I’d price the basic dish, to cover value spenders and fussy eaters. Then adding upsell items to build the burger, then finally offering “The Full Stack” including all upsell items at a slightly reduced price to drive value perception.
you could "read the market", analyse what other restaurants are available in the local area, find the gaps and offer something different. This is obvs a risk, but if your offering is top notch you might be able to pull it off.
The third step to pricing your menu items is to define your goals and objectives for your pop-up restaurant. You need to decide how much profit you want to make, how many customers you want to serve, and how long you want to run your pop-up. You also need to factor in your fixed and variable costs, such as rent, utilities, labor, marketing, and taxes. You can use a break-even analysis to determine the minimum sales volume that you need to cover your costs, and a profit margin analysis to determine the optimal price that you need to charge to achieve your desired profit. You can use a simple formula to calculate your menu price: Menu price = (Food cost + Desired profit) / (1 - Food cost percentage).
The final step to pricing your menu items is to test and adjust your prices based on feedback and results. You can use different methods to measure the performance of your menu items, such as sales reports, customer reviews, and profitability analysis. You can also use different techniques to optimize your prices, such as bundling, upselling, cross-selling, and discounting. You should monitor your prices regularly and make changes as needed, depending on the demand, the season, the competition, and the customer satisfaction.