Competitive Menu Analysis in Restaurant Menu Pricing Strategy

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Restaurant menu pricing strategy doesn’t happen in a vacuum. Naturally it is important to study your own theoretical food costs and profitability targets, but this analysis must often be weighed in the context of the competitive landscape. In this case, you should perform a competitive menu analysis.

Competitive Menu Analysis

What is a Competitive Menu Analysis?

A competitive menu analysis is a study of price, portion, preparation, and presentation of comparable menu items for the competition as well as an overall general segment benchmark of how you stack up against others in your industry category and segment.  This is done by conducting a “by-category” and itemized comparison of the competitive set and non-competitive benchmarks. 

For example, you would take your appetizer category and list all items to see your highest priced, lowest priced and total quantity of items in that category.  Then you stack the same information for the competitors and benchmarks.  This helps you see how you compare in terms of actual pricing, “perceived pricing” and variety. Variety is important because too many items and you may be carrying  bloated inventory or make it confusing to customers to sort through, but too few items and it may have an impact on dining frequency due to limited choice. 

Some parts of this type of analysis are very much scientific and some are more an art form to compare.  In general, my feeling on competitive analysis is that the goal should be a menu (and brand overall) that isn’t easily comparable.  When it is, often the two compete on price rather than value.

Aaron Allen & Associates provides a holistic approach to the restaurant business. From conception to implementation, we pride ourselves on our commitment to the details, building concepts from the inside out. With experience in all 6 inhabited continents, in over 100 countries, and a client base who posts a combined $100 billion annually, we let our results speak for themselves.

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