7 Profitable Pricing Strategies For Restaurant Menus

Looking for a pricing strategy for your restaurant menu? Well look no further!

A well-optimised menu pricing strategy is crucial to ensure your business makes the mostbest possible profit possible while satisfying your customers’ needs. Without implementing a proper pricing strategy, your business could be running at a loss with too small a profit margin on popular menu items, or turning off customers with unnecessarily high prices.

An effective menu pricing strategy needs to suit your business’s overall goals. But why?

Keep reading and we’ll highlight why menu pricing strategies are important and showcase the best menu strategies to use for your business.

Why is your menu pricing strategy important?

Efficient menu pricing is vital to ensuring your business is turning a profit. Without a proper menu pricing strategy, you may spend more to make a dish than you can earn from selling it. 

According to ResDiary’s Beyond the Booking industry reports for 2025, 71% of venue operators in Australia and New Zealand increased their menu pricing in 2024, and 82% increased their prices in the UK and Ireland. Your competitors are closely analysing their menu pricing and it’s time for you to do the same.

So, why is your menu pricing strategy crucial for your business?

• Gross profits: Each dish has food costs to consider, as well as the general operating costs of your restaurant that you need to cover across your menu. An effective menu pricing strategy ensures that even less popular dishes turn a profit. This allows you to avoid unnecessary losses. For more information on metrics you need to track when it comes to menu pricing, check out our complete guide to restaurant KPIs.
  
  
• Stable revenue: Your business must be able to create a solid revenue stream. With the right pricing strategy, you can ensure steady profit across your menu. This prevents your restaurant from operating at a loss.
  
  
• Competitive edge: Your pricing strategy also needs to factor in your immediate competitors. If your prices are comparatively too high, you may be encouraging customers to go to other businesses. 
  
  
• Customer satisfaction: A sudden price hike in your restaurant may alienate your customers. While it is important to ensure you are making a profit on each of your dishes, you must also ensure you create menu prices that your customers find reasonable.

7 types of menu pricing strategies

Here are seven types of menu pricing strategies that your business can rely on to achieve better profits.

1. Food cost percentage pricing

Food cost percentage is a simple but reliable metric to determine your menu pricing strategy. It most directly addresses how much profit you need to make to offset the cost of your menu items. By using this metric, your business can directly guarantee a base profit on each dish sold.

Food cost percentage represents how much your meals cost to make as a percentage of the revenue they generate for you. The best overall food cost percentage varies from business to business, but the commonly cited ideal is 28-35%.

Food cost percentage can be a foundational metric for your menu pricing. To price a dish based on food cost percentage, simply add up the cost of the ingredients that go into a menu item.

Then, determine your ideal food cost percentage for that item. You can then easily calculate how much you should charge for a dish.

2. Cost-plus pricing

A cost-plus pricing strategy factors in operational costs your venue is paying for, such as rent and staff wages, and adjusts your pricing accordingly. With a cost-plus pricing strategy, you add a fixed percentage to every dish on your menu to guarantee a profit. 

Using a cost-plus pricing strategy is a more comprehensive approach to menu pricing as it looks over your venue’s overall costs.

To calculate this pricing strategy, add your total food ingredients cost to a fraction of your total operations costs. You could do this by dividing your monthly operations costs by the number of dishes sold in that period.

Then, multiply the result to achieve your target profit margin.

Applying the formula: 

(Food ingredients costs + Operations costs per dish) x Target profit margin = Price of dish

A cost-plus pricing strategy needs the precise cost of food ingredients and overhead charges to be effective. With ResDiary’s analytics suite and quality integrations like Rotaready, AccessEPoS , and PowerEPOS, your restaurant can gather the necessary data to effectively implement a cost-plus pricing strategy. 

These integrations give you a more comprehensive understanding of various costs in your business, allowing you to set the right menu prices for success.

3. Competitive pricing

If your business is nearby many other restaurant brands, a competitive pricing strategy can help your business undercut your competitors. This can guarantee more revenue by attracting more diners and maximising covers, helping you build a loyal customer base in your locations. However, this comes at the expense of your profits.

According to our Beyond the Booking reports, 68% of diners in the UK and Ireland, and 62% of diners in Australia and New Zealand, plan to reduce dining out in 2025, are doing so due to a lack of disposable income. So, with less disposable income overall, competitive pricing may be the edge you need to secure more diners. 

The key to this type of pricing strategy is to analyse your competitors’ pricing and factor this into your own menu costs. Undercutting your competition by a small amount is often all that’s necessary for success with this strategy.

The downside of this strategy is the impact on your restaurant’s profit margin. By implementing competitive pricing, you will naturally reduce your profit margin. Consider restaurant sales forecasts and other data to ensure this is the right financial decision for your business. 

4. Penetration pricing

A new restaurant trying to establish a brand and build immediate customer loyalty can use a penetration pricing plan for speedy results. Penetration pricing offers menu items below standard market prices to attract more customers and position your business as a cost-effective choice.

This approach can cause your business to operate at a loss for a sustained period, but will likely attract a much larger quantity of diners to your newly opened business to introduce them to your brand. This means it is most suitable for restaurants with significant financial backing. However, if you set a precedent for low pricing, your newfound customers may not remain loyal if you raise prices to achieve more profits after your grand opening is over. 

To get the most out of a market penetration strategy, you will need to have an effective marketing campaign. This will enable you to reach your target demographic as effectively as possible with the critical hook of low prices.

ResDiary’s email marketing features and integrations with Silverstreet for SMS are a great way to spread the word about these low prices with new and existing customers.

Using Meta and Reserve with Google integrations, customers can easily make a reservation with your restaurant from social media and search results. Once you’ve attracted their attention with your low prices, they can place a booking in a frictionless way. This ensures more reservations for your business.

5. Premium pricing

With a premium menu pricing strategy, your menu prices are set higher than the industry standards to convey a sense of exclusivity. This helps to establish your business as a luxury brand that offers superior quality food and service.

While using a premium pricing strategy allows you to set your prices at much higher markups, the quality of the dish must reflect the higher standards that diners would expect from a premium brand, or they will be underwhelmed and this can have a negative effect on your brand reputation. 

However, even in a traditional restaurant setting that isn’t trying to position itself as a luxury brand, premium pricing strategies can still be used. This involves creating enticing special menus that use the higher prices. In fact, over 39% of UK and Ireland venues plan to use this strategy in 2025, according to our Beyond the Booking report. 

A premium pricing strategy can strengthen your restaurant brand as a top choice for high-quality dining. By consistently representing your brand as a fine dining venue through your marketing, customers will be more willing to pay a premium for your dishes

6. Dynamic pricing

With dynamic pricing, your business changes prices to capitalise on peak periods or offer more incentives during less popular seasons. Dynamic menu pricing also covers days with additional costs, such as Sundays and public holidays.

Dynamic pricing enables a business to control its pricing based on supply and demand. This has many benefits, including helping your venue stay ahead of competitors, keep up with industry trends, and make up for off-season periods.

To get the most out of a dynamic pricing strategy, you must have a marketing campaign that advertises seasonal specials and establishes your brand as the best choice of venue for summer or other particular times of year. 

Curious about how to make the most of your venue during the summer season? Check out our ultimate guide to summer to maximise your seasonal revenue.

Your venue can also host regular events to maximise the benefits of dynamic pricing.

For dynamic pricing to be effective for your business, you will need actionable insights into your peak periods. ResDiary’s table management system gives you access to vital booking data, such as the busiest days and which months have the highest reservation rates. You can also rely on our analytics suite to understand these concepts even more effectively.

By understanding your peak periods, you can more precisely implement a dynamic pricing strategy to guarantee consistent net profits. 

7. Prix fixe

A prix fixe menu pricing strategy is essentially a multi-course menu that is offered for a single price. With bundle pricing, you can combine some of your most popular menu items with your less popular ones. This guarantees a sale on all included products and reduces inventory waste. 

A prix fixe strategy can use food cost percentage or cost plus pricing across multiple dishes to secure a consistent profit on daily sales. This enables your business to achieve a better return on less profitable dishes. It also gives customers an option to sample different menu items, adding to their experience.

A prix fixe menu pricing strategy is used by two-star Michelin Restaurant and ResDiary customer, Dede at Customs House. Dede at Customs House focuses exclusively on offering tasting menus to give their customers a unique experience.

As they don’t use a standard menu offering, they rely on ResDiary’s promotions feature to allow customers to choose which prix fixe menus they want to book for. It’s all made easy as specific menus are included in their booking widgets, massively simplifying the process for customers.

By using quality table management software like ResDiary, Dede at Customs House is able to optimise their prix fixe menu strategy. Not only is each special offer clearly displayed in their booking widget, but ResDiary makes each reservation and menu selection easy to retrieve.

Ensure you get the most out of a prix fixe menu by using ResDiary’s promotion feature to create and highlight special set menus, tasting events, and other offers for customers.

Tips for successful menu pricing strategies

Your restaurant menu pricing strategy can be further improved by:

• Customer feedback: Customer feedback is vital to understand how diners respond to your pricing strategies. With ResDiary’s built-in email marketing features, you can automatically follow up with customers after bookings to request reviews and feedback.
  
  
• POS reports: By using data from your point-of-sales system (POS), you can review your sales, costs, and revenue to gain a better understanding of your business. This will help you adjust your menu prices as effectively as possible. With quality integrations like PowerEPOS from Triniteq or AccessEPoS, paired with ResDiary, you can turn your booking and point of sales data into actionable insights. For more information, check out our complete guide to POS reports.
  
  
• Menu engineering principles: Optimising your menu doesn’t just end at pricing. By using menu engineering principles you can be more tactful with your prices, make costs less obvious and entice customers into buying dishes they may not normally consider. Check out our guide to designing a restaurant menu for more. 

Run a profitable restaurant with ResDiary

No matter what your menu pricing strategy is, ResDiary’s booking management system has the tools you need to maximise your dish’s profits and showcase what makes your brand unique. 

With ResDiary’s comprehensive booking management system, you can streamline your daily operations while also creating and advertising special offers and events. You can also gather booking and customer data.

This enables you to create and fully leverage an optimised menu pricing strategy for your restaurant.

Book a demo with ResDiary and get the most out of your restaurant menu strategy today.