Hi, this is Gopal Kammath and welcome to Get Your Restaurant.com. I am a restaurant owner and the founder of Get Your Restaurant.com where I teach you how to open your own successful restaurant. And today I have got a very important topic very close to my heart and one of the most crucial topic as far as success of your restaurant is concerned. I am going to cover the menu pricing. What I mean by menu pricing is what should be the pricing of your food items which you are serving to your clients. How should you reach the pricing structure, pricing of the menu as far as your opening of a restaurant is concerned which will kick the bowl out of the stadium which is like the perfect pricing to make sure that a lot of customers, a lot of guests come to your restaurant and have food and you make a lot of profits in the long run in the interchange of food and beverages. So now this pricing is on the eighth step of my restaurant launch formula. I have a nine step process. I have boiled and distilled down to a formula which if you follow step by step will make sure that you can open a successful restaurant. You can get this whole restaurant launch formula. I can show you this restaurant launch formula. You can get this whole restaurant launch formula. If you click the link in the description section below and you can download this whole restaurant launch formula. Now let us get back to the most important topic of this video that is the menu pricing. Now why is pricing important? Why do you feel that we should price our menu? We can always copy our competitors and keep the same price. The client will go there and sometimes he will come here. If you are thinking like that that is one of the most sorry to say but stupidest mistake you can ever do as far as the restaurant owner is concerned. There are a lot of things which you need to consider in order to price your menu and only after doing that can you price your menu right. Because if you the whole purpose of opening the restaurant is to make profits. It is not about feeding people. It is not about creating a change in the society. It is not about anything like that. It is a business if you open is about making profits. That is the number one rule and that is the only rule. How you do the profits? What you do with the profits is a different issue. But if you are running the restaurant then please make sure that you will make profits. You have to make profits from it. Otherwise you better run a lunch. Run a lunch hour. You do not run a restaurant. The lunch hour is like a charitable kind of an organization which is cool. I mean I am very okay with it. So let us take the first topic of what you should consider in order to price your menu. The first is the input cost. What all is actually costing you in order to produce that food. What all are things which are going in that in your monthly basis which you are paying in order to cook that food and then each item which goes carries all these costs when it goes to the customer and it is it. So there are a lot of things which are there. The first is your rent or your liability. How much rent are you giving in the place? If the rent is very high and if you are selling the food very cheap and you are just selling a couple of plates you are totally going to go into losses. Second is the labor cost. What is your staff? What is your salary? What is your daily wages? What all labor cost is there? What is the raw material cost? How much are you paying in order to get these raw materials which you need in order to cook the food? All the raw material ingredients are oil, you are salt, you are masala, you are vegetables, you are non-vegetarian, whatever you are cooking as per the menu. What is your energy cost? How much gas is required? How much electricity is required? How much? Each and everything you have to first calculate in order to make sure that that is the bare minimum which you need to get in in order to make sure that you are a breakeven as far as your restaurant is concerned. How much will be your profits? This is one thing which misses in most of the people who are planning to open a restaurant. As you know I am concerned a lot of people in order to open their restaurant and they forget to add the profits. So I said where is your profit percentage in this? So I said okay, this is my cost. I mean I have not added profits. I said why? You should add minimum 20 to 25% of your profit margin because if you don't add profit who is going to give you the profits? If you don't ask for the profits, how are you going to get these profits? So make sure you add that in mind. As I said earlier profit should be a number one priority. Profit should be your number one formula. Number one principle as far as running the restaurant is concerned. So these are a few things. There are a lot of other miscellaneous things also which you can calculate. I am just giving you a brief idea. The second thing is type. What kind of a restaurant it is? Is it a mass? A restaurant for masses? Is it in front of a railway station? It is in front of a bus stand where huge number of people are coming in. So comparatively if the volume is very high, you have to keep the pricing little average because masses as you know have limited spending capacity, their requirement is limited, their quantity size is also limited. So I have given this topic as volume versus exclusive. Volume in the sense the masses exclusive is when you are serving food in a premium kind of a restaurant. If your restaurant is in AC restaurant, it is a lounge or it is a premium restaurant. Then the pricing will differ, the pricing will go higher. The reason is the costs also grow higher and you cannot sell a what about in 10 rupees in a fine-dined restaurant because all the masses will come in there. You will not be able to the what happens is the exclusive the client which are premium client want people want to sit with people who are the same like theirs. So you cannot mix both the classes. I have nothing against the masses, I have nothing against the classes. I am just giving you a common senseical answer over here, a common senseical opinion of mind. So make sure that you know which kind of type of restaurant you are opening. The third is the wastages and pilfages. This is one of the biggest thing which most of the people forget. We do not consider the, sorry we do not consider how much wastage we are doing in that wastage which is going in down the drain in the night when the when your chef or when your cook he throws away the leftover dal or the leftover rice or whatever he because it has gone bad or it is not going to be used the next year or whatever. He when he throws that down that much cost is actually your profit which is going down the drain. First of all you have to make sure that you have to reduce the wastage. You have to reduce the, you have to cook as per the order. You have to, you have to systemize your restaurant in such a way where each order is made after using the materials then and there itself. You do not have to cook a huge quantity of each item and then make, if nobody comes in you just throw it off. That will make sure that you, your restaurant is on as fast as possible actually. So wastages and pilfages are also very important. You have to have a eagle eye view on that and the last is the market relevance. What I mean by market relevance is the type of restaurant which I have covered which you have opened. What is the menu costing of your competitors? How much are they charging? How many restaurants are in the periphery area of your restaurant which charge which give the same items like you or more or less the same menu? What are the charges? You have to keep those charges at a 5 or 10 percent up and down compared to those restaurants. If that restaurant, let us say for example is serving pasta, let us say, pane in white sauce. If a restaurant is serving it at 200 rupees and you are nearby that restaurant, you cannot sell your pasta in, pane in white sauce at 1000 rupees because that is simply not going to work. Ideally restaurants in the same area attract customers from the same residential locations or locations unless your restaurant is very high end and it is situated in an exclusive kind of a restaurant then you can charge that amount. But ideally if the restaurants are in the same location, your menus should more or less be pricing should more or less be a little bit similar. And again I have put this on the last side, you do not have to do this first. Most of the people do the mistake of just copying the competitors pricing. They do not know what they are charging, they just copy it and then they do not know how to make profits. So make sure you think of this. I know it is not a sassy topic, it is not a very attractive topic but I totally believe in the 80-20 rule. So this is the 20% which is going to make sure that you get 80%. Do not deny this, do not ignore this topic. Menu pricing is one of the most important aspect of success in your restaurant. It is not very sassy but it is very, very significant, very, very important. So I am sure you get a lot from this video. Please ask me questions, comment on this video. If you are new to this video, if you are new to this channel, subscribe to this channel, share it with your friends on your Facebook page, on your Instagram page wherever and make sure that you stay tuned because I cover more or less all the topics which are required in order to you to open a successful restaurant. Ask me questions and thank you so much for watching this video. This is Gopal Kammat signing off. Bye bye.