Operational Research and Competitive Shopping

All menu pricing must be done with the utmost of consideration possible given to how it will affect both the top line as well as the bottom line.   Your success may depend on how you handle your pricing actions.

Step II - Operational Research and Competitive Shopping

Initial consideration:  It must be universally recognized and thoroughly understood that menu engineering must always be given serious consideration as one of the most important and critical aspects of any successful menu price review and the resulting operating strategy. 

Pricing option: In order to maintain competitive, consistent market pricing and in an effort to avoid the appearance of making large (albeit infrequent) periodic price adjustments management should consider utilizing a “pricing strategy team”.  This team, along with management, should set aside one week each quarter to review and determine the actual current “and anticipated” need for pricing action and/or menu mix adjustments for the next (rolling) quarter and twelve month periods. 

The team process should include:

• A formal detailed marketing review of your competition’s current menu, pricing and portions.
  This information should be carefully recorded and dated on a spreadsheet for current and future reference. 
  Included detailed notations of any “special or feature” (marketing) programs.
• Consistently maintain this spreadsheet (for all major competitors) indicating current prices, estimated portions and the dates that any price changes were introduced.  
  Include their apparent market strategy to the best of your ability.
• The owner and/or corporate office should identify to the team items they feel can or should be reviewed for change. 
• The owner/corporation should provide their rationale for these recommendations.

The pricing team should carefully review the owner/corporate recommendations.  Further research should be performed if needed. 

Following their research, the team should develop specific action plans for achieving stated company-pricing/margin objectives.  They should submit their plans for consideration. 

Each action plan should include items to be adjusted and by what amount. 

A tracking component designed to monitor and record on-going results to be included (i.e. sales mix, food cost, labor and other changes that occurred as a result of the pricing action.)

A very through record of all quarterly actions and pertinent work sheet information should be maintained for a minimum of five years.  This will allow the owner/corporation to make better more informed and more effective (competitive) pricing decisions in the future.