Is there a standard markup for menu pricing?

booksnjava

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Sep 20, 2011
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Just curious if there is a standard markup for menu pricing. I have heard cost x 2.5 and cost x 130%. Which, if any is more standard? I am trying to revamp my menu and wondering if there is some calculation I should use for every item.
 

wmark

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Nov 12, 2008
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Normally, my business partner would say, "whatever the market will bear".

Do you have competitors and what are your competitor's charging ?
Is your customer base discriminating ?
Are you serving the same product or better than your competitors ?
 

Mr Shave

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Jan 24, 2011
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On top of that it is important to recognize who you are competing with.
Is your product quality on par with the local gas station or is it the best in town with a loyal following?

Many restaurants still use the rule of thirds for COGS (cost of goods sold). A lot of coffee shops are able to set pricing so their margins are greater then 67%, it isn't advisable to have anything with a margin less then 2/3 (this covers all of your other operating expenses).

Meaning cup of coffee costs you in beans and water .33 you would not sell it for any less then $1.00
.33 = 33% of 1 contribution margin = .67
2.5 *.33 = .83 contribution margin = .50
130% * .33 = .43 contribution margin =.11


I would reccomend visiting all of the coffee shops in your area, try their signature drink and take pictures of their menu. This is what I did, then made a spreadsheet of all the overlapping common drinks and compared by size and quality.
 
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booksnjava

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Do you have competitors and what are your competitor's charging ?
Is your customer base discriminating ?
Are you serving the same product or better than your competitors ?[/QUOTE]

* I don't really have "competitors" per say, there is several fast food chains that have a fairly inexpensive iced coffee (which is my specialty). People do come in and when they try my Iced Coffee they say, "This is better than (national coffee chain)." I don't want people to feel that I am ripping them off by charging to much, but I also am VERY small so I can't buy the bulk that other places may be able to so therefore, I am unable to get my items at a super cheap discount.
* Not sure what you mean by "is your customer base discriminating"
*In my opinion and from my customers remarks my product is way better than others! :-D

Thanks!
Christy
 
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