top of page

Rising Cost of Goods. How to Price Your Menu

According to findings from the ABS, the hospitality sector is identified as having the highest risk of insolvency compared to any other industry, by a considerable margin.

While absorbing costs might be a short-term solution to keep customers satisfied, it's not sustainable in the long run.

Here are ten strategies to help you adjust your menu pricing effectively in response to supplier price increases.

  1. Pass it on: Understand that venues can't absorb increased costs indefinitely. Eventually, these costs need to be passed on to the customers to ensure the sustainability of your business. Customers may complain but it is just inevitable that the rises are passed on. If you are worried about pricing above the competitors, you may just have the last laugh when they cant afford to keep going

  2. Test Price Sensitivity: Start with small, incremental price increases to test customer reactions. This approach allows you to gauge their price sensitivity without risking significant backlash or loss of business.

  3. Analyse Dish Profitability: Conduct a thorough analysis of each menu item's cost versus its profitability. Focus on promoting dishes with higher margins that can better absorb cost increases.

  4. Optimise Menu Offerings: Revaluate your menu and consider removing low-margin items that can't withstand price increases. Streamlining your menu to feature dishes with better cost efficiency can help balance rising expenses.

  5. Implement Menu Engineering: Use menu engineering techniques to highlight and promote your most profitable dishes. Strategic placement and enticing descriptions can influence customer choices towards these items. Get more ideas here

  6. Communicate Transparently: Be open with your customers about the reasons behind price adjustments. A transparent approach fosters understanding and loyalty, as customers appreciate honesty about the challenges your business faces.

  7. Explore Alternative Suppliers: Don't hesitate to shop around for alternative suppliers who might offer better prices or terms. A competitive market can sometimes yield more cost-effective sourcing options.

  8. Focus on Value Perception: Enhance the perceived value of your dishes through presentation, quality, and service. Customers are more willing to pay higher prices if they perceive they're receiving excellent value.

  9. Offer Bundled Deals: Create bundled offers or fixed-price menus that provide perceived savings to the customer. These deals can help maintain customer volume and satisfaction while managing cost increases.

  10. Monitor Competitor Pricing: Keep an eye on how competitors adjust their pricing strategies in response to similar challenges. Staying competitive while ensuring profitability is key to thriving in a tough economic landscape.

Adjusting menu pricing in the face of supplier cost increases is a delicate balance between maintaining profitability and customer satisfaction. By implementing these strategies thoughtfully, you can navigate the challenges of rising costs while continuing to deliver value to your customers.

If your menu could use the creative touch of a chef skilled in the art of menu engineering, get in touch with ChefHire.

41 views0 comments

Recent Posts

See All


bottom of page