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Did You Know Changing Your Prices & Menu Descriptions Can Increase Profits?

How you price your menu and describe your meals makes all the difference!

There are approximately 86 billion neurons in the human brain. This makes it one of, if not the most, complex ‘machines’ we as a species have ever had to analyse. Much of how we behave is still a mystery to our conscious minds. Psychologists are aware of this challenge and have begun to scrape the surface on how we make decisions – including which menu items we tend to purchase based on its pricing and description.

There is a science behind why your customers purchase one item over another, and why like the Pareto Principle, 80% of your revenue comes from 20% of your menu items. Taking the time to consider psychological pricing and storytelling in your menu could be the difference between this year’s numbers being the same as last year’s, or your restaurant getting a boost in profits.

Psychological pricing attempts to influence the customer’s perception of a product’s price

Ever wonder why your fridge cost $2,999.00 and bananas $6.99 a kilogram?

Charm pricing: how our brains are subconsciously ‘fooled’ when the number on the left side of a price is lowered

A recent psychological study using MRI scans focused on the frequency of thoughts as consistent neurological signals identified when one thought is transferred to another. We are now considered to think approximately 6,200 thoughts per day. This means that much of the time we’re doing things like making purchases we’re running on a type of autopilot, deciphering information subconsciously.

Once our brain has attached meaning to its analysis, our conscious mind can interpret one price as being of better value than another, so the chicken caesar salad’s price that starts with ‘9’ instead of ‘10’ looks great even though the actual difference in cost is minimal. Once the perceived value is registered by the conscious mind, you may have already attached meaning to it.

Get rid of those zeros and add nines!

Put simply, if a soft drink cost $3.99 instead of $4.00, your brain often attaches the idea of $3.00 to it, which looks much more appealing. This mainly works for the number on the left, so if you dropped a price from $3.50 to $3.49, it wouldn’t have much of an effect on how the numerical value is decoded by the brain.

Another ‘trick’ is to write the amount in cents, i.e., .99, in a smaller font. Give it a shot, as it’s been suggested to amplify this subconscious effect.

Can one cent make all the difference?

Strangely enough, it can. Purchasing behaviour is driven by our conscious and subconscious perceptions.

It goes both ways when value for money is thrown into the mix

Another experiment looked at products with prices set at $34.00, $39.00, and $44.00. Would you believe people would rather pay $39.00 than $34.00? They did, and this is because the ‘9’ emphasised higher value for money; I mean, it’s nearly worth $40.00, right? The $39.00 price tag also sold more than the $44.00 option. It’s a better deal of course!

Comparative pricing: standard vs. expensive

Psychologists often believe this to be the most effective of all pricing strategies, as for most people, when an item is more expensive it’s usually deemed as being of higher quality.

All you need to do is place two similar items next to each other, making one product’s price more attractive than the other. If you see the Wagyu beef burger right next to the standard hamburger, the customer must then go through a psychological game of choice. We don’t know how much better the Wagyu burger tastes, but we often choose the more expensive option because the inferred increase in quality is desirable.

Good, better, and best pricing!

This comparative pricing strategy can be tackled in 3’s too. When we offer three different versions of a menu item, we can showcase a ‘good’ ice cream sundae, a ‘better’ sundae with chocolate sauce and toppings, and the ‘best’ version – a giant sundae (even covered in gold leaf) that visually blows the others out of the water.

Of course, the ‘good’ sundae is the least expensive option, while the ‘better’ option costs somewhere in-between the good and best sundaes, with the ‘best’ version being accompanied by the highest price tag. The best ice cream sundae could even be churned in-store, use organic milk products, or be sourced from local cows – this is where storytelling comes into the equation.

Which options sells the most? Usually it’s the mid-level choice, so make sure your profit margin takes the cost of its ingredients into consideration.

This system of good, better, and best pricing works because human beings love the option to choose. Growing up in the Soviet Union, you didn’t have much choice for what shoes you were going to wear; you’d be lucky to get a pair in the correct size – after waiting in line for hours to receive them.

On the other hand, we also don’t like too many choices. Have you ever stood in front of the cereal section at the supermarket looking at the incredulous range of cereal names only to walk away saying, ‘I’ll just have toast’?

Establishing a sense of agency in the consumer

Having three options of a menu item to choose from works because it produces a sense of autonomous decision making in the customer. We like to have a say in what we do, and in what we buy! By having a say in which ice cream sundae toppings are going to be on our  dish, we tend to feel more satisfied with our choice, and less resistant to spending that little bit more to get exactly what we desire.

Also worth noting, the lowest level ‘good’ meal automatically makes the other two choices look more appealing, which can influence customers to spend a few more dollars to obtain the higher quality meal.

We can market dishes as being of higher quality through our menu descriptions, which when written well, are proven to be stored in people’s brains’ hard drives more easily.

Making the story behind each menu item count

Finally, you need to look at how you are naming, describing, and showing your products. A picture tells a thousand words, so make your product images ooze flavour and deliciousness. In addition, the few words you do get to write down next to an item can be easily forgotten, or they can stick with people for the long run.

Enticing Eskimo Ice Glacier, or Ice Cream?

Which ice cream dish’s name tickles your tastebuds more? There’s a lot in a name. Think about the story behind your restaurant’s brand and how its mission, vision, values, meaning, and purpose could be played upon in each menu item’s label.

It’s been proven – descriptive menus sell more!

Menu descriptions enable diners to determine the value of a meal even before seeing what it costs. If done well, the customer may not even care what the price is once they see it, so always show the description before showing the price.

Tableside ordering can be made more fun for customers if each item on the menu is named after fictitious sea creatures, characters from a popular novel, or airplane models from an age long past.

Then add your delectable descriptions. Talk about ingredients, how they’re prepared, where they were sourced, and what creative inspiration brought them to life! This can create a cohesive story for the entire menu, with short stories for each meal working as chapters in the overall plot.

People love a good story

Storytelling in your menu works because of humanity’s history of sharing our experiences through storytelling. First, we did it via an oral tradition, then through the written word, and now in motion pictures and the internet. Lucky for you, the written word is still alive and well.

Biologically, we are designed to be attracted to stories because of the emotional investment they create within us. This is done by activating our senses through curious plotlines, unique characters, descriptive settings, adjective-laced story arcs, and powerful overarching themes.

For restauranteurs, a great story makes it easier for a patron to justify paying for a specific meal item, even if it was psychologically more than what they originally intended on shelling out for the night. Learn more about ways to optimise your menu to not only look great but to also convert as many highly profitable sales as possible.

Get set-up with new pricing and menu descriptions using the Abacus POS system, and your Point of Sale can become a point of increased profits!