The pizza Chef: September-October 2013
By Diana CoutuFeatures Business and Operations Finance
Is it time for a price increase?
When was the last time you increased your prices? And when you did, did
you raise the prices for all the items on your menu, or just a few?
When was the last time you increased your prices? And when you did, did you raise the prices for all the items on your menu, or just a few?
Some operators implement a price increase yearly, while many of us are afraid of losing business over the smallest increment. I’ve spoken with many operators across the country who haven’t increased their menu prices in years. When I ask them why, the answers are all too familiar. There has been almost non-stop talk about a stressed economy and cutting back, not to mention the news about financial distress and recession in the U.S. Putting the gloom and doom news aside, all of our input costs are going up yearly. Here in Manitoba, minimum wage increased twice in the same year. Why is it that some operators don’t believe these input costs need to be passed on to our customers? How are we to stay in business if we don’t charge enough?
In my city of Winnipeg, I’ve driven past several old and weathered pizza banners with a fluorescent number stuck over the original price. It looks bad. Let me say that if you don’t have money to purchase a new banner or sign, then that should be an indication that it’s time for a price increase.
We recently implemented a long overdue price increase at my pizzeria. Our last price increase was in 2009, four years ago. We believed that it was necessary to keep our menu prices static in order to keep the existing business we had. This was a very poor strategy and simply a bandage fix over a larger issue. Rather than increase our prices a little every year, where customers may or may not notice, we now had to implement a much larger increase.
We approached it like having to rip a bandage off of an open wound. We could either do it slowly and painfully, or we could do it with one swift movement and a shortened exaggerated pain, but get it over with. We chose the latter.
We informed all our staff that a price increase had taken effect and prepped them with a short response explaining why. It’s important to give your staff a script to use in the event that a customer is questioning a price increase.
Are you curious to know what happened? Most customers didn’t even notice, while a few others just wanted to make sure that they had been charged the correct price. Once my staff informed them that it had been over four years since our last price increase almost all our customers agreed that it was indeed time. There were a couple of irate customers, and we did our best to make them happy by offering a free side salad or other item with their order.
Overall, the increase has been a very positive experience. It’s something we should have implemented a long time ago. Really, we were the ones standing in our own way.
Diana Coutu is a two-time Canadian Pizza magazine chef of the year champion, internationally recognized gourmet pizzaiolo, co-owner of Diana’s Gourmet Pizzeria in Winnipeg, Man., and was a director on the CRFA board from 2009-2013. In addition to creating award-winning recipes, Diana is also a consultant to other pizzeria owner/operators in menu development, creating systems to run a pizzeria on autopilot, along with marketing and positioning to help operators grow their business effectively and strategically. She is available for consulting on a limited basis, for more information contact her at Diana@dianasgourmetpizzeria.ca.
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