Had a very interesting day today with a client showing them how to put their prices up in BOSSII.
What was the most interesting part of the day was that this was a client who has been with us for around 9 months and in this current climate of unbelievable, seemingly daily price increases, this is the first time that this client has “gotten around” to putting their prices up.
Even with the extra maybe 10% they increased their prices I still think they will be at around a 40% COGS on their restaurants profit and loss statement.
Ive been telling clients for almost 18 months now that prices on almost all goods are heading up and when you receive invoices every week with price increases the norm then you know that you should immediately address this on your menu and not wait months later.
In my own venues I used to put my prices up religiously every 6 months. Here in Qld the alcohol suppliers have their sales tax increases lumped on them every Feb and Aug. On those anniverseries I would also address my sales prices at that point. I didn’t wait for a later date or after xmas to do so because I knew what was coming up. When putting prices up, it should be in response to a prediction of whats to come in the future rather than a reactive measure of what you as an operator have paid in the past for goods.
Unfortunately many people are loathe to increase prices because of a worry that customers will not accept the increase and therefore shop elsewhere. My response to that is 3 fold:
- Place a sign at the POS or a note on all tables explaining the price increases. Consumers at this time cannot but be aware of how expensive things are. They also go to their local supermarket and see that costs of Fruit & Vegetables right now are increasing daily. They will be aware of this and just need to be reminded that local restaurants are also not immune to these price rises.
- An operator must be sure of the product that you sell. If you know in your heart of hearts that the quality of the product that you sell is worth the value then it must be worth standing behind the new selling price, which means that there must be an understanding by the consumer that they must pay for that quality. You cannot buy a Ferrari for the price of a Kia. Its very simple.
- If you don’t put your prices up then you are on a long walk down the short plank of economic destruction and your customers wont get that product from you much longer anyway so why not pre-empt that madness by doing the right thing by your customers now and also more importantly by your own business now.
From what im seeing many operators are struggling with the understanding of these 3 reasons for price increases. I cannot understand why it is not more obvious. Many I feel are playing the game of waiting for their competitors to do so which is fighting a losing battle on price and gets none of you any closer to profitability.
At least you’ll be happy to know your POS costs wont be increasing because once we lock in a price with you now, we honour that same price for the lifetime of our relationship together. Small mercys I guess…