Monte Silva Shift Happens.

Don’t assume that you have to lower prices to increase value. 

Why Restaurant Value Shouldn’t Be Based on Price

Was the experience worth what the customer paid for it?

Have you ever eaten at a restaurant and thought to yourself, “This dinner wasn’t worth what I paid?” As restauranteurs, we have an obligation to make sure our guests see the value of their experience. Everyone assumes that value means low price. But, it doesn’t. It does mean that value is having something that is worth more than what you paid.

The food and beverages we create and sell are just commodities. 

They all have a value determined by the price you paid from your supplier. Typically, the better the quality the more you paid for the item. This usually means that the commodities (food and beverage) you are selling are equal to the price you are charging.

So, how do you create value (the item being worth more than you paid)? To raise the value so that the guest feels the meal is worth more than what they paid you have to do one of two things. Either you make the food or beverage taste so good that the product value is increased. Or, you create experiences so incredible that the experience transcends beyond the product.

So, it’s ok to increase the price if you have increased the value of the product through how the product is prepared or by how the personal experience becomes far better than the price paid. It’s OK to build sales. 

Up-selling for the sake of just building the check doesn’t add value. Unfortunately, there are a lot of servers who gouge the guest without ensuring the product or experience was worth the price tag.

Conversely, there are also a lot of servers who are so focused on not gouging the guest, that they don’t maximize the sales opportunity. I teach teams to up-sell to enhance the dining experience. It’s not gouging if the value perception exponentially grows beyond the check total.

My favorite meals of all time are when the server takes me on a culinary and beverage journey I wouldn’t have taken without their guidance. They encourage me to try things I may not have tried.

For the server or bartender to do this they must possess the following:

  1. Knowledge
  2. Confidence
  3. Quality Product

When the food and beverages are so delicious that they are more than just a commodity and when the care and hospitality are more than just another dining experience then the overall value will always outpace the price of the meal. Don’t assume that you have to lower prices to increase value. Someone will always charge less. And that is just a race to the bottom.

Editor's note: This is the 13th article in a new column from restaurant expert Monte Silva. More on the series can be found here. The first story, on Why Underpaying Restaurant Employees is a Recipe for Disaster, is here. The second, on Why Marketing is Not Expensive, is here. The third, on people-centric leadership, is here. The fourth, on Why Working 70-Hour Weeks in Your Restaurant is Not the Answer, is here. The fifth, on How to Provide Hospitality in a High-Tech, Low-Touch World, is here. The sixth, on ‘The Convertible Culture’ in Restaurants, is here. The seventh, on Why the Old P&L Model Has Set Restaurants Up for Failure,' is here. The eighth, on How to Scale Your Restaurant Business When There is Only One of You, is here. The ninth article, The Secret to Finding and Keeping Great Employees is Not Difficult, is here. The 10th, What Culture Do You Really Want at Your Restaurant?, is here. The 11th, on Your Restaurant Should Serve People, Not Product, is here. And the 12th, on Don’t Let Shiny New Toys Distract Your Restaurant from What’s Most Important, is here