A New Restaurant

Economic times are tough, and if you listen to the financial experts, things are going to get tougher before they get better.  The talk is that people are going to have less income to spend on dining and entertainment.  As a restaurant owner that relies on paying customers for your success, this is a cause for concern, but don’t despair, you can get through this.  We’ve been through lean times before, and many restaurants find ways to avoid failure.

There are several different strategies that owners use to try top counteract a down economy.  In some restaurants when the income starts going down, they immediately raise their prices.  The problem with this strategy is, if people are staying away because of less money to spend, raising your prices will guarantee they will stay away.  You need to lure them in, not price yourself out of business.

The second strategy you see is lowering prices.  The problem is, your fixed expenses aren’t coming down at all.  Lowering prices across the board will lower your profit margin.  This isn’t necessarily a bad strategy.  Even with lower margins you can still be successful if you make up with the tighter margins with increased volume.

There is another option that you may want to consider; keep your prices where they are, and run lower priced specials.  This works for you in a couple of ways.  You have lower priced items that will continue to attract customers, but you still keep profitable items on your menu.  It’s helpful to have servers who are trained in how to suggestive sell.  Even when the money is a little tight, people still want to have a good time when they go out.  By suggesting appetizers and desserts, you can still see some nice check averages even with the lower priced items.

For your restaurant to be successful you need to make sure you have a steady stream of customers coming through the doors.  You need to keep the cash coming in.  The best way to do that is to make sure you are offering prices that will entice them in, without sacrificing your profits.