This is a guest post from Ian Said, founder of idealsoftware.co.za, a software development company specializing in Inventory Control and POS reporting solutions. Follow Ian on Twitter @costofsale or email Ian info@idealsoftware.co.za.

Using Inventory Control Effectively

August 2012 Issue of Ideal Software's Niche Notes, our FoodService industry newsletter.

IdealSoftwareNicheNotesAugust2012

7 Tips in Determining Restaurant Menu Content and Prices

There is one question that every restaurant owner has to address when setting up their business, and that is “How do I determine my restaurant menu content and prices?” While there are a number of considerations that can help you in answering this question, you need to be aware of the fact that it is by no means a static question.

In other words, setting the cost of the items on your menu (or resetting the cost of them) is something that will need to be done multiple times over the course of your establishment’s lifespan. But where do you start? The seven tips listed below should help you in getting started.

1) Determining COST:

In order to correctly determine the prices on your menu, it is important to be able to price your menu items properly. To do this it is imperative that you understand how to determine the cost of your products. This includes everything from wholesale product costs to delivery fees (when the item first shows up in your establishment) to cooking costs as well as wages and overhead in order to determine exactly what it costs for you to be able to provide this particular dish. While it may seem like a lot of work to do for every item on your menu, you may well be surprised to find out how much you are underselling. Once you have determined the costs you can then (taking into account your competition of course) determine a profitable price point.

2) It's All About the Price Point:

When you are starting out in the restaurant business, a good rule of thumb is to take the cost of each dish (see tip #1) and then double it or triple it (In South Africa, an acceptable cost of sale for food overall should be 32- 40% and beverage 25 – 35% giving an overall cost in the 30 – 37% range- if other costs such as labour and rent are below 10% each, you will still be able to be profitable with a food cost in the 45% region). Of course you will want to take into account what your competitors are charging for the same or similar items. In fact, when it comes to things like specialty desserts and coffees it is not unusual to see a 300% markup. So don’t be afraid to add a little extra. If you track your sales you will quickly be able to determine what the public is willing to pay and can adjust your prices accordingly.

3) Understanding the Price Barrier:

There is a point above which most customers will not go. This point is called “The Price Barrier.” While you may find some individuals who will buy the item, the bulk of those who eat with you will not touch it as it is not a good deal for them. While you may be able to get away with a slightly higher price if you specialize and produce something with a little extra (a steak with all the extras for example) most of your middle income customers will stay below this barrier.

4) Knowing Where to Display your Prices on the Menu:

The art of displaying your menu prices is one that depends a great deal on your individual establishment. While having a standard dish/price column may be expedient for diners to determine whether they can afford a dish, if you’re selling upscale foods you may want to have the price listed below the description of the item to make sure your customers read about the food before dismissing it out of hand.

5) Take Demographics into Consideration:

While considering the demographics may seem like something you would expect from a corporation of chain restaurants, know this; being able to determine what the class of diners that your establishment appeals to can help you determine what you should set for prices, and even how your menu should be designed. Upscale clients tend to pay more on the whole and prefer reading about their food before they decide whether or not to order it as opposed to those for whom price is the primary concern.

6) When Food Doesn't Sell:

It’s a horrible feeling when your food isn’t selling. However, there are ways to ensure that even the worst failure of a dish brings you some sort of return. One of the best ways to do this is to make the dish a “special” by placing it in a high visibility area of your menu, having your servers bring it to the diner’s attention, and by lowering the price (or even offering 2 for 1 deals) in order to get it moving. You can even take advantage of your Twitter or Facebook page or send out special email runs to regular customers in order to advertise your special. Who knows, you might have a sleeper hit brewing that just needs a little nudge!

7) How Prices Affect Establishment Image:

Keep in mind that choosing the price for your menu is a direct reflection on your establishment. It’s true! As much as we might not like to admit it, upscale establishments almost always cost more than middle or lower class establishments. The higher the prices, the fancier your clientele is going to expect your establishment to be. Can you deliver? Do you have the ambiance and the service to back up the high menu prices? If so, then go ahead and raise your prices; however, be prepared to lower them if your clientele decides that there is a point above which they cannot go.

These seven tips are by no means the only factors to be considered as you determine the pricing of your menu. However, by following the advice listed above, you will most certainly see a change in the profitability of your establishment. In a few short months you will see positive changes that you might never have thought possible. All it takes is a little time and attention to detail.

For more info on Ideal Software’s Inventory Management system for controlling food cost follow the link IdealStockControl

July 2012 Issue of Ideal Software's Niche Notes, our FoodService industry newsletter.

IdealSoftwareNicheNotesJuly2012

9 Tips for Choosing the Best Catering Staff

Whether you’re looking for a staff to prepare and serve food at a family function or an exquisite wedding reception, following some tips will help you to hire the best staff for your soiree.

1. Narrowing the Options:

If you live in a highly populated area, dozens of food service providers might exist. Ask for recommendations from family members and friends. You should also check out reviews via online websites / searches to see how the company fares in the grand scheme of things.

2. Menu Options:

When you’re hosting a braai/barbecue, you probably don’t want a company that only makes heavier foods best prepared in an oven, such as turkey and mashed potatoes. On the other hand, opting for a platter of sandwiches and potato salads is not the best idea for an elegant wedding reception. Make sure the style of the company matches your needs.

3. Cleanliness:

Visit the physical location of the food service staff and assess how clean the space is kept. If it’s dirty in there, chances are your food is not going to be of the cleanest and freshest variety.

4.Dietary Restrictions:

When members of your group have certain dietary restrictions, you must make sure the cooking staff can accommodate them. For example, if certain members of your party keep Kosher, see if special Kosher meals can be prepared for them. If some individuals are allergic to shellfish, make sure that none of the food is cooked near or with any shrimp, clams, crabs and so forth.

5. Cost of the Service:

One of the biggest concerns for many people when they are hiring individuals to staff their party is the cost. You want to know what the cost of the food is going to be. Be honest about your budget. In the event that you’re unable to afford the particular company, ask if they have packages that are more suitable to your budget.

6. Value of Customer Input:

Once you begin working with a company, you want them to value your input as opposed to just taking over the process. You may have a specific sauce recipe that you’d like them to follow. Ask how much input you’re allowed to have before booking the company.

7. Size of the Staff:

You also want to make sure that the staff can handle the party. Ask how many servers and cookers will be on staff the day of the party. If you’re having a 100 person function, one server is certainly not going to be enough.

8. Tastings:

Before booking with a food service company, find out if you can do a tasting. The only way to know if the food truly pleases your palate is to try it out!

9. Go With Your Gut:

It may be cliche to say “Go with your gut.” However, gut feelings are often right. As a human being, you can often pick up on people being dishonest or trying to swindle you. When you’re preparing for a party, you need to feel comfortable with all of the vendors, so choose a company about which you have a good feeling.

The food service staff is just one of the elements involved in planning that perfect party. Picking the best one in the area ensures that this area of the event will be a big hit that people talk about for years.

For more info on Ideal Software’s Inventory Management system follow the link IdealStockControl

If you enjoyed this article, please click on the Social links below and “Share the Knowledge”. Thanks!

June 2012 Issue of Ideal Software's Niche Notes, our FoodService industry newsletter.

IdealSoftwareNicheNotesJune2012

The Importance of Social Media for Restaurant Profitability

It is uncommon now for a business person not to have heard of the importance of using social media in marketing their company. Since your customers are using social media to see what people are saying about your restaurant / food service establishment, if you don’t have a business development plan that includes social media marketing, then you losing out!

What is Social Media?

In a nutshell, social media are those social networking sites where individuals congregate to connect with friends and family; sites like Facebook, Twitter, LinkedIn and the newest addition, Pinterest, to name just a few. With so many people with similar interests congregating in one place it is no wonder that the business world quickly caught on to the importance of having a presence on these websites in order to promote their businesses. Facebook alone has 900 million users worldwide. Twitter has 200 million users worldwide. Another social media avenue to consider is your own website with a blog.  Having your own blog allows you to gain more advertising foothold in the social media world.  Blogging is often free or has very little cost associated with it, although there is a real time commitment to blogging.

How Social Media can affect your FoodService Business

One way to utilize social media when it comes to the food service industry is to ensure that your business has a presence within the social media structure.  For example, by using YouTube and Twitter channels to broadcast your company’s latest updates you can drive more traffic to your website or to your business itself.   By having a Facebook page you can ensure that your presence will be felt on Facebook, and that when you purchase selective advertising blocks on Facebook, that your ads will be seen by those who are most likely to increase your sales. One of the primary benefits to using social media – especially when it comes to food service businesses – is as an interactive two-way conversation with your customers; a means of getting input directly from them with regards to your food, service, location, cleanliness and any other aspect of your business.  Being able to determine how your customers really feel about your food service establishment can help you learn from them and to strike the right balance in your business. Engagement is the biggest key behind social media strategy.

Why Social Media Matters

No matter what marketing strategies you employ, the biggest advantage to social media marketing is in connecting and engaging with your customers; in making them feel as if they are a part of your business.  When your customers obtain instant updates in their email or on their Facebook page they feel as if they are involved in what is happening.  This is a feeling that does wonders for promoting customer and brand loyalty, even when it comes to an industry as volatile as that of the food service industry. But don’t take our word for it.  Look into what the leading social media sites have to offer in their corporate or business advertising sections and see if any of their options could potentially be used to promote your own business and to generate customer traffic.  You may find yourself pleasantly surprised at the results. Above all remember that social media requires patience, insight, some skill, and a clear understanding of your goals and of your audience.

What social media sites is your business using to connect and engage with your customers? 

For more info on Ideal Software’s Inventory Management system follow the link IdealStockControl

If you enjoyed this article, please click on the Social links below and “Share the Knowledge”. Thanks!