Establishing Opening Criteria
All menu pricing must be done with the utmost of consideration possible given to how it will affect guest counts, sales and your bottom line. Your success may depend on how professionally and successfully you deal with your pricing actions.
Step I - Establishing Opening Criteria
- You must have a clear, documented, complete picture of your concept(s.)
This must include not only esthetics, menu, quality, pricing and style of service but competitive positioning as well.
- Shop your local market (competitors) as well as the regional market for comparability’s in food, esthetics, style of service, pricing etc.
Carefully document and date all that you learn.
- Perform a relentless analysis of your concepts vs all that you learned from your competitive shopping.
- Form a knowledgeable group of professionals willing to assist you by participating in a focus group.
This will give you credible feedback on your concepts including pricing strategy.
- Menu
- Anticipated menu mix (menu engineering)
- Costed Recipes
- Quality standards (including portions and presentation)
- Pricing
- Esthetics
- Service style
- Investment issues
- Occupancy issues
- Personnel standards (training etc.)
- Marketing criteria
- Minimum income required to succeed
- Minimum number of guests needed to succeed
- Document the frequency of monthly return visits you can expect
- Sustainability issues (all inclusive)
- Exit strategy
- Document a through, detailed line item operating budget.
- Using this research finalize your concept(s).
- Document projected cash flow
- Consider all traditional cost increases including inflation etc.
- Include adequate reserves and fail safe back up financing resources.
- Have your budget verified by an industry expert.
All of the above issues must be carefully verified. Once you have completed this research phase of your new business enterprise you must verify if they are all in balance with your pricing strategy.
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