Price increase or Portion Reduction?

This must be one hard part of being in the food business: balancing your aim to earn vis-a-vis the customer's value.

When menu review comes, a restaurateur is always faced with the hard decision of either increasing prices or reducing portion size so as to keep the price where it is now.

Owners or managers would always be afraid to increase prices since it might turn off customers. They might opt to go to another restaurant instead. On the other hand, reducing proportions is a turn-off as well. Guests often think they've been cheated upon when the portion is not the same as their last visit.

Are you in this same dilemma as well?

Before you decide, look at some factors to consider:

IS YOUR FOOD ADMIRED UPON?

Restaurants whose food is a favorite will probably have less problem incerasing prices and more problems if they reduce proportion. If your food is some kind of a market leader, it is better to increase prices as minimal as you can.

DO YOU HAVE OTHER COMPETITORS WITH BASICALLY THE SAME FOOD?

Same product lines with basically the same taste would put you in a difficult situation.

IS THE ECONOMY WHERE YOU ARE BAD?

You might think increase prices to make up for the lesser market share or reduce proportion to keep customers. Increasing price in this situation would mean making up for the lessened number of guests. Reducing proportion might turn off customers as well thus lessening your profit all the more.

Whichever you decide on, remember to be as discreet as possible. If you're increasing prices, do it in the least amount of increase you can muster. With the inflation and oil price hikes, customers tend to understand non-substantial increases.

If you reduce proportion, it's either you couple it with a price reduction as well. (Think sachet economy. A little of something.) Or if you reduce proportion, try to make it as not very obvious as you can. Reducing proportion but maintaining your price is dangerous sometimes in the food industry especially for high-end products.

Price increase or portion reduction? Weigh your options well and ask your customers about what they think. Whichever you choose, always remember to keep your customers in consideration and not just your own gains.