Question

Topic: Strategy

Restaurant Re-launch: To Price Or Not To Price !

Posted by Anonymous on 4/30/2011 at 8:24 AM ET 250 Points
I have recently moved to a new country and have been part of the Global Marketing team. Our company operates and manages several casual dining restaurant (international franchise like Applebees, Chili's, TGIF, Nandos, etc).

The restaurant in question here is a aunthentic mexican grill. The restaurant has been opened for nearly 2 months now. The initial launch campaign was very successful with the restaurant being packed most weekends.

A stupid decision from previous management resulted in a price increase of upto 60% on certain items overnight. This resulted in a dramatic decrease in sales and guest count. since joining the team, I have convinced the management to revisit pricing and they are now back to the initial point and in line with similar competitors. We are also launching a new menu to bring the new-ness factor and annouce something new is coming to their restaurant.

The question is in our re-launch campaign, should we be communication the new price point. My dilemma is would communicating a price point e.g. (Mexican Burritos now at $6.99).. I have my doubts that this might generate a price war and would put us in line with fastfood joints and not casual dining chains and might cheapen the brand. However without it, how could we communicate that the prices have been lowered.

Any ideas on how a casual plus restaurant, whose positioning is veryy different from fastfood and low priced eatries, communicate its new price point. Average spend by customer for a dinner with us is between $15-$18..

I'll appreciate your initial thoughts and any futher insight, i'll provide as we go along.

Regards,
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RESPONSES

  • Posted by mgoodman on 4/30/2011 at 10:21 AM Accepted
    You probably don't want to promote the price rollback too blatantly, or it will put you in the fast-food category in consumers' minds. But given the problem you're solving, it probably does make sense to tell people subtly that your prices are "affordable" or that they reflect the "casual" dining experience you offer.

    Net: Don't flaunt the pricing, but reassure consumers that the restaurant is affordable, comfortable, etc. If you have a special, perhaps advertise a fixed-price meal and mention the price for that.
  • Posted by Peter (henna gaijin) on 4/30/2011 at 10:23 AM Accepted
    "The question is in our re-launch campaign, should we be communication the new price point."
    If prices went up and that scared people away, and now you have lower prices, I think you definitely need to communicate that.

    One option would be to talk about something like a "New Lower Price Menu". This is more useful if the items that had the large price increase were main menu items (as opposed to side dishes or drinks), as I think most people base their decisions mostly on the main menu item prices.

    You shouldn't be pricing such that you compete with fast food. And I doubt you would get into a price war, as casual dining is not that price sensitive such that a few dollars price difference would really impact where someone goes to (if someone is that price sensitive, they would go to a fast food or similar discount chain).

  • Posted by Frank Hurtte on 4/30/2011 at 10:40 AM Accepted
    I would advertise - old favorites at rolled back prices.

    Another option would be to advertsie it as a special... for instance "our great $18 dollar Tamale plate is now only 7 bucks"
  • Posted by jstiles on 5/2/2011 at 5:51 PM Accepted
    Maybe try an approach that positions your restaurant better.

    We are committed to being your neighborhood partner. Come in and try our specially priced XXXX plate, with a portion of the proceeds going back to the community.

    Donate a percentage of those sales to the nearest elementary schools or needy youth sports program and get the organization to announce the special to the parents.

    You get advertising, communicate your special, benefit your area, and hopefully enjoy increased traffic.


    Best of luck!
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