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I think that most small restaurants tend to undervalue their food and service. Part of it is people's expectations, but even beyond that I believe they are so w

I think that most small restaurants tend to undervalue their food and service. Part of it is people's expectations, but even beyond that I believe they are so worried about going out of business that they try to run on the thinnest margins possible rather than raising prices by 50 cents and having some room for error. There's also a lot of... this is how much it costs for me to make, so I should charge a little bit more. Where I think it should be... this is how much it would cost my customers to make in groceries and time. When I eat out I almost only get food that is too inconvenient to make at home. I don't get spaghetti at the Italian restaurant, I get lasagna or stuffed shells or something that would take me hours of work at home. Yet, for a restaurant these are fairly easy items to cook because the time is less of a problem and are in many ways simpler for them to prepare because they are cooked ahead of time and reheated when ordered. So for the restaurant, it makes sense to price a big plate of lasagna the same or lower than a plate of pasta they have to do more work on to serve. But to me the lasagna is worth more because it would take me at least 2-3 hours to make. So the restaurant sees it as a cheap thing while I see it as a valuable thing.

josephcsible 5y ago
> There's also a lot of... this is how much it costs for me to make, so I should charge a little bit more. Where I think it should be... this is how much it would cost my customers to make in groceries and time. Your competitors would love it if you set your prices like that.
- neltnerb 5y ago
  Oh, no doubt. It's a difficult place to be, with no real margin for serious actual testing of what the price should be. It's too risky. But I do think that they're subject to the pressure to under-price what they produce because to them it's easier. It's easy to discount your own labor when you think the job is easy. Usually that perception of whether the job is easy is wrong. In any case, I can't imagine a small restaurant having any way to seriously or accurately measure what their prices should be better than maybe a dollar. There's just not enough business to tell, and if you hit a bad region the place shuts down. You can try setting it based off nearby businesses, but even then it's probably not better than a dollar of correct.

josephcsible 5y ago

> There's also a lot of... this is how much it costs for me to make, so I should charge a little bit more. Where I think it should be... this is how much it would cost my customers to make in groceries and time. Your competitors would love it if you set your prices like that.

neltnerb 5y ago
Oh, no doubt. It's a difficult place to be, with no real margin for serious actual testing of what the price should be. It's too risky. But I do think that they're subject to the pressure to under-price what they produce because to them it's easier. It's easy to discount your own labor when you think the job is easy. Usually that perception of whether the job is easy is wrong. In any case, I can't imagine a small restaurant having any way to seriously or accurately measure what their prices should be better than maybe a dollar. There's just not enough business to tell, and if you hit a bad region the place shuts down. You can try setting it based off nearby businesses, but even then it's probably not better than a dollar of correct.