In this article we will talk about:
- The importance of setting prices for the dishes of your restaurant or snack bar
- Fact sheets, the first step towards good organization
- With your set cost, think about the mark up
- Do not forget to analyze your break-even point
- Organize the pricing of your restaurant with a tool
See also: How to set sales prices?
For any entrepreneur or manager who works in a restaurant, cafeteria, hamburger or any other type of gastronomic establishment, one of the great difficulties is to achieve set sales prices of your dishes correctly and without losing sight costs.
This difficulty is often tied to the fact that we live with very high inflation, food prices that change all the time, and depending on the season, it may even be difficult to find an ingredient that will need to be changed. Lastly, it is not easy to keep track of all this and having an organized method of managing your pricing is extremely important not to have detrimental dishes, to understand which dishes are more profitable and also to maintain the financial health of your restaurant.
The data sheet is your first step on this price-setting path. It serves to organize your dishes and, in general, has the following items:
- Name of dish
- Portion size
- List of ingredients
- Cooking Time
- Special Instructions
Since some of these items do not help at all in the price formation of a dish, in our a la carte restaurants pricing worksheet we just kept the name of the dish, the list of ingredients, the quantity in the dish in question and their respective costs, see:
With the tokens ready, you already know exactly how much you will spend to put a plate on a customer's desk.
With the costs set, you can start setting prices for your dishes. For that, you will need to think about your markup, which is the difference between the sale price and the cost you had, a kind of desired profit margin in relation to each dish.
See that in our a la carte restaurants pricing worksheet, all the already defined items are organized and you only have to enter the percentage you want per meal:
According to this set amount, you will already be able to see the total cost of the dish, its sale value (markup plate value) and the contribution margin that it gives you individually.
In theory, at this point you already have the pricing of your restaurant set and you do not have to do anything else. It turns out that in addition to the direct costs, you also have your fixed costs (with rent of the establishment, employees, equipment, etc.) and an important factor is to understand if with the set selling price your restaurant will be able to pay all bills at the end of the month .
To reach this understanding, we will calculate the break-even point of our restaurant, and for this, we will make a generalization of the average price of our dishes and the average contribution margin. The worksheet already does this calculation automatically for you (in the image below the average selling price is $ 59,19 and the average contribution margin and 37,74%), but also opens the possibility for you to define new values if you prefer. In our case, I set the values of $ 60 and 40%:
With the contribution margin and the total of our fixed costs, we were able to calculate the breakeven point (when revenue and expenses equal) from our restaurant. In our case, this indicator are 417 dishes.
With this information, we need to get out of the worksheet and think. You need to assess the number of days your restaurant is open and the average sales of those days. Let's assume we open from Tuesday to Sunday, with an average of 20 dishes sold on weekdays and 40 on weekends.
In this scenario, in a normal month with 4 weeks, we would have 16 weekdays and 8 days on weekends, generating the following sales calculation:
- 16 x 20 + 8 x 40 = 320 + 320 = 640 dishes sold per month approximately
That is, according to our projection, it makes sense to keep the pricing indicated, but if we had a different reality, we would have to think of alternatives such as increasing the price of the dishes, reducing cutos or creating other sources of more profitable recipes (new dishes, events, etc).
What I did in the calculations was a simulation, which is very important to do and our spreadsheet also gives you this moment, see below that you can do calculations with variations of the number of dishes sold or variation of average markup:
That way, you'll be able to analyze exactly what you can do to further improve the profitability of your restaurant.
See how it can be simple to set prices in an a la carte restaurant? Just having the right tool (I indicate our restaurant pricing worksheet), a little organization and monitor the variation of their costs on a daily basis.