JP's new menu boards
I know of a pastry shop in the area that my wife goes to quite frequently. Not only does she go there frequently, but she has gone there for years. My wife and I were talking a couple of weeks ago about the fact that we just raised prices at JP’s and she made the comment, “Wow, they haven’t raised prices at Maggie’s (not real name) for years. As a matter of fact I’ve been going there for 5 years and they have never raised prices.” That made me sad.
Why did it make me sad? In the last 5 years the CPI (Consumer Price index) has gone up an average of over 3%. The cost of labor has gone up (in Michigan minimum wage went from $5.15 to $7.40 in 2 years). The cost of ingredients, utilities and fuel has gone up. Typically all expenses related to running a business go up over time. Doesn’t that suggest that the prices we charge should also be going up? And if the prices we charge don’t go up eventually the margin between COGS (cost of goods sold) and gross revenues won’t provide enough money to support running a business. Which in my mind means that at some point Maggie’s will cease to exist. Which makes me sad (because they have great pastries).
So we printed our new menu boards and raised prices across the board at JP’s. It took me longer than I wanted (I started the complete redesign of our boards in March). Just having put up the boards now made it two years from our previous price increase (longer than I wanted, but…). We increased the brewed coffee about 3%, 12 and 16 ounce lattes around 3% and our 20 ounce lattes about 8-9%. (I had gone through many discussions with my staff, my manager and even myself about whether to keep 20 ounce drinks. I did, but raised the prices significantly to cover costs. Prior to this I always priced 20 ounce drinks lower to sell more. Mistake on my part.) Although I had raised prices many times before, I was still a little nervous doing so especially when the economy is tougher here in Michigan than that of most other places.
So the boards went up on Monday morning two weeks ago and I have been asking my staff for feedback about what customers have been saying. Here are an example of the comments we’ve heard:
- “I was wondering when you guys were gonna raise prices“
- “Wow, that’s not as bad as I thought it would be”
- “I had a free coffee coupon at (fast food joint) and used it this morning. I took one sip of the coffee and it tasted like cardboard. It was also very weak and so I dumped it in the parking lot and came here. I don’t mind paying more for quality. Keep doing what you’re doing” (this from a usually persnickety customer too!)
And that is the extent of it. It’s been a non-event. No complaints. No backlash. Just more money in the register everyday to cover expenses and turn a profit. Think about it. Don’t your customers WANT you to succeed? Don’t they love what you sell and won’t they be bummed if you go out of business? Yes, they will, just like I would be bummed if my favorite donut place or burger joint or Mexican restaurant went out of business. I don’t mind paying more as long as they keep the quality and service at or above current levels and can stay in business. As a matter of fact I hope my favorite joints make money and can make a good living at what they do.
How long has it been since you raised prices?
Filed under: Business, Coffee, Pricing, raising prices
