Menu Pricing Psychology Flashcards

What does the term 'menu mix' refer to in restaurant management?

Answer: The proportion of each menu item sold relative to total sales

Menu mix (or sales mix) describes what percentage of total orders each individual item accounts for, which directly impacts overall profitability.

A 'bundle' pricing strategy (e.g., burger + fries + drink combo) is effective because it:

Answer: Obscures individual item costs and raises average check size while delivering perceived value

Bundling hides the individual price of each component, making the combined price feel like a deal even when the margin on the bundle is higher than individual items.

What is 'dynamic menu pricing' as seen in some modern restaurant apps and digital menus?

Answer: Adjusting prices based on demand, time of day, or inventory in real time

Dynamic pricing adjusts menu prices algorithmically based on factors like peak hours, remaining inventory, or current demand, similar to airline or rideshare surge pricing.

When a restaurant places a box or graphical callout around an item with no price increase, research suggests this action:

Answer: Significantly increases orders of that item by drawing visual attention

Visual isolation through boxes or callouts increases an item's order rate by making it stand out from surrounding text, without requiring a price change.

What is the 'contribution margin' of a menu item?

Answer: The selling price minus the variable cost (food cost) of producing the item

Contribution margin is selling price minus food cost, representing the dollar amount each unit sold contributes toward covering fixed costs and generating profit.

Why might a restaurant intentionally price a premium wine option at an extreme price point on its beverage menu?

Answer: To use it as an anchor that makes mid-range wines appear more reasonably priced

An extremely high-priced anchor wine shifts diners' price reference point, making $60 bottles seem moderate in comparison to a $200 bottle listed at the top.