Ensuring your pricing strategy delivers both a healthy profit for the business and an enticing price point for the customer is always a key focus for menu developers. But with the current market conditions, food and drink price inflation, supply chain disruption, unprecedented energy costs, staff shortages in kitchens and the growing cost-of-living crisis for consumers, there has never been such a challenging time for pricing pub and bar menus and finding the right balance between absorbing soaring costs and passing them on to guests.
“We are supporting customers looking at ways to offset any price increases, such as looking at different products or rejigging the menu etc. to help them mitigate their problems in the food market.”
Whatever cost-savings you are managing to make in your business, it is inevitable that some costs will need to be passed on to guests with menu price increases, and operators shouldn’t fear this according to a panel of industry voices.
The group, which focuses on Mediterranean and British food, currently has around 35 sites, with further growth planned. Each inn is individual with a personality that reflects the local area it serves.
A family-owned company which has around 38 managed pubs. Lewis oversees the food offering, as well as 140 tenanted and leased pubs and a historic brewery, whose brands including Korev and Tribute.
Whose extensive experience in food development both internationally and in the UK, includes with Levi Roots. He supports pub customers with menu concept and dish ideas.
If you decide you need to pass on some costs to your customers then you won’t be alone, with CGA’s Business Confidence Survey[i] research highlighting that hospitality leaders have raised menu prices by an average of 9% in the last year, and plan to raise them by a further 6% in the next 12 months.
Oakman Group’s Ross Pike which has implemented two menu price rises this year, says: “Despite the price increases we have continued to score really well in guest feedback on pricing. I think the price increases consumers are experiencing when they do their weekly shop, and with food price inflation being so high-profile in the press at the moment, means customers expect it. People don’t want it to happen, but understand.”
Ensuring retail and food and drink standards remain high is also key. As Bidfood’s Business Development Controller Ian Whittingham says: “Customers are going to mind paying higher prices less at venues that deliver a quality experience.”
Neil Bell, Chef Consultant, believes operators shouldn’t chase hitting a set GP on every dish. He advises: “The GP is what is always discussed, but I think it’s the cash margin that is important. If you are retailing a fillet steak and you are making £12 on every plate of food you send out, perhaps you are better off accepting that, rather than fixing a GP and discouraging customers from choosing it. The GP is what is always discussed, but I think it’s the cash margin that is important.”
Oakman Group’s Ross Pike says the group’s menus are well-balanced between high margin dishes such as pizza and pasta, and higher-end dishes they want to feature with lower GPs.
He recommends: “If operators haven’t got that high margin area, which gives them that menu balance from a GP perspective, I worry for them. If they haven’t got this area now, then they need to find a menu area where they are going to do that.”
Many industry experts predict it will be value and premium offers that will appeal to consumers during these challenging trading times, with customers either looking for affordability in lower-priced dishes or to treat themselves with more premium dishes.
One tactic being adopted by a growing number of operators is to stretch menu price points. Lewis says St Austell are already experiencing the jump from the middle market. He says: “We are seeing guests who come and eat with us a couple of times a week choose the value option. But if it is a birthday, or a treat occasion we are seeing that jump in our premium pubs.”
He adds: “We are looking at menu price stretch on our middle-market menus, considering what is our entry price point and what we can stretch the guest to, so lower-priced dishes, but also potential for dishes from our premium Retreat segment menus, too.”
Ross says they have also included two ‘stretch’ dishes, spaghetti Bolognese and lamb hot pot on Oakman sites’ autumn/winter menu.
He says: “If people are coming out and don’t want to push the boundaries on the money front, they want something that they know is going to be good like a Bolognese or hot pot, which are good, classic, gutsy, warming dishes.”
With research[1] showing that due to cost of living increases, 40% of consumers plan to go out less, but will continue to spend more when they do, customers will continue to seek out food experiences which deliver memorable moments.
Ross says: “We are also finding that if someone was going out twice a month, they’re now going out just the once, but that one time they want to treat themselves and they want Champagne and the best starter and best main course.”
He adds: “We ramp up our specials with premium dishes at the weekends and put on high-end dishes such as racks of lamb or whole lobsters at sites where we know there is the market for them.”
Neil adds: “Consumers still want ‘let-your-hair-down dishes’. A three-day lobster festival event held recently created a real buzz and customers are prepared to pay premium prices for a premium product and nice experience.”
such as ‘Chef’s Pie of the Day’, ‘Fish of the Day’ or ‘Today’s Roasts’ to give more flexibility around produce using.
perhaps having a black board where customers have visibility of the number of portions left.
such as complimentary nibbles when ordering a main and dessert or free coffee and chocolates.
so customers know what there is to look forward to and save space.
(low or no prep options) for people to enjoy whilst looking at the menu. Orders could be taken as customers are seated along with drinks orders.
Lewis believes more guests are now pre-budgeting before they visit the pub.
He says: “Customers can get bill shock when ordering everything separately and they don’t really know how much they’ve spent. At St Austell, the dish is the dish and I think it is really important to be transparent with our pricing.”
Ross says Oakman Group are seeing strong demand for set-price offers such as afternoon tea and bottomless brunch.
He says: “When people are taking groups out, especially over the next few months, they want to know what they are spending without hidden cost. I think operators need to think more about pre-known price point occasions.”
People want to know what they are spending without hidden cost.
Craig suggests offering menu packages, such as two meals for a set-price, to help attract customers in, and offering simple trade-up options as well – a concept operators could look to capitalise on further.
He says: “Attract people in with the package and then train your team to upsell well, such as go for the large for an extra £4. Asking people if they want a larger option is a simple but clever way to drive up spend.”
Neil says early-bird type offers are also worth considering with a client enjoying success with a ‘Beggar’s Banquet’ menu available Monday to Friday from lunchtime to 6.30pm, with two-courses at £10.95 and three at £12.95. He says: “It offers super-value, chef-prepared dishes, which are all half size portions from main menu dishes, such as a 5oz rump steak – half of the usual 10oz they serve. Customers will often buy a bottle of wine to enjoy with it.”
Offering a range of enticing add-on accompaniments and wow side dishes is another keyway to drive up customers’ spend too. But operators need to ensure these are exciting enough to drive purchase, such as interesting salads, truffle cauliflower cheese with Sunday roasts or a choice of have-to-have sauces for steaks.
Ross believes that these challenging times will drive menu innovation further to help avoid adding costs to dishes for customers.
He says: “There will be some good operators that come out of this next difficult year of trading with some amazing dishes as they are going to have to get clever with ingredients to survive. Operators have got to look at how they can improve dishes without adding cost to it.”