Should you raise your restaurant menu prices?

In our recent restaurant survey, we realized that most of the independent restaurants that we were working with had raised their menu prices by an average of 10%-15%. It really made us curious to know the kind of impact this sudden change had on the restaurant’s sales, profitability, and most importantly, consumer behavior, especially with furloughing and layoffs being the common scenario amongst households.

We spoke to a few restaurant owners and the results were astounding…

54% of restaurant operators shared that by increasing the prices helped them continue operations during the pandemic crisis, especially with increased operational costs and safety norms.

32% of the restaurant operators were elated to share that they didn’t see any substantial drop in orders after the price increase. In fact, the customers were quite supportive and understood the need for the change.

45% of the restaurant operators highlighted that increasing prices is directly proportional to the groundwork that goes behind delivering high-quality service to customers. With slight markups in the menu prices, they were able to operate more efficiently and intelligently.

Following these observations, we decided to dig deeper into the alchemy of brands that increased their menu prices over a span of a year and how it impacted their business, per se.

According to the Bureau of Labor Statistics, the prices for food recorded history in 2021 with popular chains like McDonald's, Taco Bell, and Chipotle hiking their menu prices as much as 10%. The average Chipotle meal now costs $0.30 to $0.40 more than it did before, and the “Big Mac” from McDonalds is more expensive.

Wrestling with rising inflation, chains like Krispy Kreme and Domino's have acknowledged difficulty finding staff, delivery driver shortage, and increased labor cost - a few most critical components for smooth operations.

However, despite the substantial increase in the prices, McDonald's reported a 7.5% increase in U.S. store sales for its fourth quarter ended Dec. 31, 2021, while Yum! Brands grew 34% in revenue, with KFC contributing at 11%, Taco Bell at 8%, and Pizza Hut at 4%.

While the projections are bright, there are a few things that one should take into account when marking up so the end consumer doesn't feel cheated or dismayed when dealing with the restaurant:


Give your customers the choice to buy their favorite dish in the budget that best suits them. For example: If you wish to increase the price of a regular margarita that serves 1, make sure to add the option of Personal Slice against it so anyone who doesn't want to spend additional money but still wants to enjoy the treat with minimum hit on their wallets.

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No Surprises

One thing that your loyal customers wouldn't appreciate is feeling betrayed by the brand. Whether you decide to trim the menu or increase the prices, make sure to effectively communicate it to your customers. You can use newsletters and social media marketing to keep them informed.

Add More Value Meals

Even though the prices of value meals may also shoot up a little during the final staging, having the option of value meals on the menu gives your consumers the satisfaction of saving on the final bill, especially if they are buying for a bigger group. Running special discounts is also a great way to ensure successful checkout.

Read how value meals became the most popular option for consumers during the pandemic.

Maintain Consistent Quality

Despite the increase in the prices, if they are coming back to your business, it’s for the food and experience that they crave. Americans have adopted a new "consumer consciousness" that makes them more prudent with their dollar. This means that the more they spend, the less likely they are to tolerate a subpar order. Consistency along with the terrific presentation and/or final delivery is vital if you want them to order more and spend more

Your Customers are Expecting a Rise in Menu Prices - This is the right time!

Most customers today are aware of the chaos created by the pandemic and its ripple effect on the economy. With hundreds and thousands of restaurants shutting down month on month, your loyal customers only want to see you stay open and succeed, even if it means paying a bit extra for their meals.

So this is a unique opportunity. If you have been contemplating the right time to mark up those dollars on your menu, this is that time. But make sure that you continue to deliver the quality that your customers are accustomed to from your business. The key is to take all the factors in to consideration when raising prices. This may include technology, operations, staffing, and a little bit of margin for other future crises. Read our article on how to prepare better for future crises.