July 1, 2011 |

2011 July: Ask Big Dave

By Dave Ostrander

Dave, I really need to raise prices, but fear I can’t. I don’t know what to do and need your advice. What do you tell your clients on this issue?

J.B. Linter
Portland, OR

How long has it been since you really re-did your menus? If you haven’t done it yet this year you are probably just breaking even — or worse.

Menu entrée re-pricing, re-positioning, re-naming and entrée removal is not one of our favorite things. It requires time and patience to do the work. If I don’t like the task at hand, I’ll procrastinate until it goes away. I hate crunching numbers and would rather have someone else tend to details while I keep the train on the tracks. I am here to tell you right now, on the record, that I fear our industry is on the verge of a financial train wreck. We hear the politicians and media reporting that the economic downturn is easing. I say: “Prove it.” The price of pizza is less than it was 20 years ago with inflation factored in. What are we thinking?

You may be thinking: “If I raise my prices to reflect the increases in food and expenses that I have no control over, my customers will stop buying from me and find a lower cost producer.” Maybe they will. History has personally shown me that after any noticeable price raise, people will grumble. A few bottom feeders will move on, but most customers won’t bail on you. When you raise, and raise you must, your real customers will understand and cough up another buck or so. They are in love with your pizza. They don’t want you to screw it up with cheaper ingredients. They know that groceries and fuel are never going to be lower than they are now.

We owe it to ourselves, our families and our employees to make a profit. We will not be good community members if we are teetering on the verge of insolvency and existing on credit instead of dealing with the problem head on.

There is no shame in going under.The shame is to know how to fix the problem and ignore it until it goes away. It’s not going away.

So here is the plan. Make a commitment to yourself to finally raise prices to attain profitability (or to remain profitable if you already are hitting that mark). That is the business of business.

I’m redesigning my menu for the fall with emphasis on heartier foods and darker, heavier beers as the weather starts to turn colder. I will add a few soups in place of some of my summer salads. What pitfalls do I need to keep in mind as I re-work the menu?

Sandra Willett
Minneapolis, MN

Without seeing your menu and your numbers, I can’t give you specific advice that is tailored to your precise situation, Sandra. I can, however, give you this list of mistakes that I see frequently.

Common Menu Mistakes

1. Not knowing exactly how much money it takes to create each and every pizza or menu entrée.

2. Not knowing which menu items are the most and least profitable to sell.

3. Not knowing which menu items your customers order the most and the least.

4. Pricing your menu by collecting your competitors’ menus and positioning yourself in the middle of the pack.

5. Offering too many choices.

6. Failing to raise prices when the cost of food keeps going up (Small incremental increases are easier to explain than across the board, big hikes).

7. Not enough professional images of food. A great picture says a thousand words.

8. Allowing sloppy portion control practices on the make lines.

9. Failing to tell your unique story on all the little differences between your pizza and anyone else’s.

Big Dave Ostrander owned a highly successful independent pizzeria before becoming a consultant, speaker and internationally sought-after trainer. monthlycontributor to Pizza Today.