This is part of NRN’s special coverage of the 2011 Multi-Unit Foodservice Operator conference, or MUFSO. The conference is taking place Sept. 25-27 at the Gaylord Texan in Grapevine, Texas. Follow all coverage on NRN’s ‘At the Show’ section, check out NRN blogs, Reporter’s Notebook, and Tweet with us using #MUFSO.
Restaurants are under pressure to raise prices as commodity costs climb, but customers, reluctant to spend in these uncertain economic times, are likely to push back if their favorite menu items get more expensive.
Carl Howard, president and chief executive of Fazoli’s; Randy DeWitt, chief executive of Twin Peaks; and P.F. Chang’s chief executive Lane Cardwell shared their strategies for keeping margins in line without irritating their customers in a MUFSO panel moderated by Scott Taylor, chief operating officer of Baton Rouge, La.-based restaurant operator Last In Concepts.
Dazzle them with specials
Fazoli’s multi-tiered promotion strategy allows the restaurant to include both value items at the low end and samplers at the high end, Howard said.
Currently, the chain offers “family meals” for group dining at a maximum $4 per person, as well as a special $3.99 pricing of pizza-baked pasta. Customers can also upgrade those baked pastas to a “Supremo” — topped with extra meat, onions, peppers and Parmesan cheese — for $1.49.
Howard said about 25 percent of customers take the upsell. “It’s very profitable,” he said.
Fazoli’s also asks focus group participants what they would pay for various menu items. If they show willingness to spend more than the current price of certain items, they know it’s safe to raise prices on those items.
The quick-service Italian chain focuses on per person expenditures and per person profit — or the amount of money each customer spends and the profit Fazoli’s makes on that, Howard said.
