The conundrum of menu pricing

>>By Simon Stenning, executive director, Allegra Foodservice

Allegra’s Eating Out Panel data from Q1 this year showed an increase in average spend at dinner, indicating that consumers were treating themselves and turning dinner into a more indulgent occasion, whereas breakfast and lunch were more functional with consumers spend more cautious. Consumers were taking a debit/credit approach and spending more on occasions that delivered extra value, especially for food pleasure seekers broadening their food horizons.

This outlined growth for operators that could deliver premiumisation, however

this also provides a conundrum.

Operators have to develop menus that reflect value, so that they’re not alienating consumers who still haven’t seen their wages overtake inflation, but at the same time encouraging consumers to spend a bit more when they feel like splashing out A great example is ASK Italian, which is well-recognised by consumers for delivering value, and where typical main dishes cost £9.95. In their 2014 spring/summer menu, a dish of Lobster & Seafood Tagliatelle was introduced, increasing their highest price to £14.95. This is still fairly cautious as other brands raise menu prices above the £20 mark seeking to premiumise their offering.

It’s surprising that Frankie & Benny’s have a higher exit price on their menu of £22.25, than TGI Friday’s do with theirs, which only goes up to £21.49!

Consumers are becoming used to price differentiation with products such as

beer and fuel, therefore it should come as no surprise that restaurants flex their prices too. It is important for independent operators to compare their pricing to branded operators, making sure that they have a price differentiation, which

does not necessarily mean cheaper.

Indeed Allegra believes that every restaurant operator should be carefully managing menu pricing in order to combat the challenges of an improving economic situation with a consumer population that still doesn’t

have more money in their pockets.