Today, I want to help you increase your restaurant profits
using what I call the Price Value Curve.
Hey, everybody. My name is Ryan Gromfin.
I am an author, speaker, chef, restaurateur,
and I am the founder of the RestaurantBoss.com, as well as clickBACON.com.
And I want to explain to you the Price Value Curve
is what I like to call this.
See, we don't buy products based on price.
People don't buy products based on price.
We think they do but they don't. They buy based on perceived value.
If we only purchase products based on price,
everybody would be driving a base-model Kia.
We wouldn't have Toyota's and Audi's and Honda's
and Mercedes and BMWs and Tesla's and Ferraris
and Bentley's and all these other cars.
Everybody would just drive a cheap car.
We buy based on perceived value.
Now, I got hired about five years ago by a steak restaurant that
called me up one day and we came and we talked a lot and I said,
what's your biggest problem? And they said people think we're too expensive.
See, this restaurant had moved from an old location to a new location.
The new location was big and beautiful and had
amazing shiner and glassware.
It much different than their older location.
And they said that people are complaining about price.
And I said that's interesting. I don't really think so and so I went to work.
I put together this whole competitive price analysis from
all the other steak restaurants in the area and what they're charging and
what this other restaurant was charging.
When I compared it all,
I actually found that the restaurant that hired me
was a couple percentage points,
maybe a dollar or two cheaper than all of their competitors.
So how could people at their restaurant be complaining about price?
Well, they weren't.
They were complaining about value,
but nobody says to their waiter - I don't think I got enough value today.
They say, “oh, that was too expensive, I'm not coming back”.
See, values about expectations, when this steak restaurant redesigned,
rebuilt, opened up with new shiner and glassware and
silverware in a whole new big location,
people's perceived value went up, they expected more.
So the price value curve basically says that the higher the price,
the lower the perceived value.
The more I charge for someone
or the more they think they're being charged by the
expectations they have,
the lower the value they're receiving.
They're expecting higher value than they're actually getting.
And so one of the ways that a lot of you guys,
a lot of restaurants
keep their perceived value high is by keeping prices low.
I can't tell you how many times I hear clients or in emails
people reaching out to me and saying,
I can't raise my prices because people won't come in.
Well, I want to challenge you on that.
Now, I'm not necessarily telling you to raise your prices,
but maybe instead of lowering your prices
or instead of keeping your prices low
where they are in order to increase value,
can't we just increase value?
Can't we give them more?
Can't we give people better service,
better food, maybe a bigger portion? It's not always portion,
but its perceived value.
You have to find out
where is your customer placing values.
Some of your customers place value on portion size,
some of your customers place value on quality,
some of your customers replacing value on service,
but if you don't know what your customer is looking for
on their value curve,
you don't know how to price your products.
You may think that by keeping your price low, you're keeping your value high,
but in reality, a lot of times it has nothing to do with your price,
it has to do with how you are delivering value in the marketplace.
The only way that we can establish
value is to first know your customer’s expectations,
and then over-deliver on that by even just 1%.
How do we find out what our customer’s expectations are?
Ask them, survey them.
One of my favorite things to do
is to walk up to a table and instead of saying, how is everything,
just ask a very simple question. It's difficult to ask,but it's easy -which is,
did everything exceed your expectations?
It's a hard question to ask,
it's easy to say. It's hard to ask.
Well, simple isn't always easy.
Now your customer might come back to you and say, “yes,
everything exceeded my expectation, it was amazing”. Well, great,
but oftentimes your customers would say, well, I was expecting this,
I was expecting a bigger portion,
I was expecting a better piece of meat,
I was expecting the French fries to be crispier, I was expecting this.
That information is gold.
That is how you establish value
is by finding out what your customers want
and then exceeding their expectation.
It has very little to do with price.
Keeping your prices low does not increase
a customer's perception of value.
The only way we increase perception of value
is to find out their expectation and exceed it by just a little bit.
I hope you enjoyed this week's training.
I look forward to seeing you next week
[Music]
Hey, everybody, Ryan here.
I really hope you enjoyed that video.
Would you mind doing me three really quick favors?
1st) Would you like this video?
Wherever you're watching it, there'll be a button for you to
go ahead and click and like the video,
and then leave a comment somewhere so I could answer your questions.
2) Would you go ahead and subscribe to this channel,
that way I can continually deliver you
the newest updates every time I release a video.
And then 3) I'd like to give you something.
If you're the kind of person who really wants to get ahead in life faster,
I have a 90-day planner here that I'd like to give you.
I use this planner every day in my business and actually,
I think this is one of the reasons why I'm able to get as much done
as quickly and as efficiently as I am able to.
See every year when I sit down to plan out my year,
I sit down and I do 4 of these 90 day planners because
I believe that we can't get as much done in a month as we think we can,
but we can get a lot more done in 3 months than we think we can.
And so I've developed a system,
I call it my 90-day plan or system where you can achieve
just about any goal you want in 90 days if you follow this.
And I'd like to give it to you completely free. Like I say,
this is on my desk every single day and I use it in my business
and I teach my clients how to use it.
And I'd like for you to have it for free.
All you have to do is head over to
TheRestaurantBoss.com/Goal.
G-O-A-L.
Again, that's TheRestaurantBoss.com/Goal
and then just give me your first name and email address
and I'll send this right over to you, all four pages.
Until the next time I see you,
go out every day and improve the lives of your customers,
your employees, your vendors, and of course, your family.