Is restaurant value engineering a better way to consider restaurant profitability?
We look at restaurant value engineering and how it can help you increase the amount you take home each week. This podcast series will provide clear examples of simple steps to increase restaurant profitability.
Restaurant value engineering is a new concept of restaurants. In this episode, we will introduce the concept of value engineering and apply it to the catering industry. We discuss what restaurant value engineering is, how it is done, and how you can start to see business components that you can better manage until you can increase the value of the product.
What is restaurant value engineering?
We define value as the value we think something deserves. This is the price a person is prepared to pay for it. For example, if your restaurant is located in the middle of the Swiss Alps, the value of bottled water is slightly lower compared to somewhere on the equator, and the value of bottled water is much higher, especially if your restaurant is the only one selling bottled water cafeteria. There is always a value you want to consider, subdividing the kinds of people who might enter your restaurant.
Another good example is AccorHotels, their goal is to be able to provide it to everyone. Some people who are looking for a hotel are looking for something. Many people will have a budget, so how do you get the right balance of value and provide customers with a price that is beneficial to the company at a price point you can provide. Accor came up with a strategy, they have a brand in each of the 5 stars. For non-competitive brands, the difference is very obvious.
- One Star-F1 Hotel
- 2 stars-ibis
- 3 stars-Mercure
- 4 stars-Nobu
- 5 stars-Sofitel
Therefore, for each type of customer, they have a hybrid solution, which is not for individual customers, but for the individual circumstances of these individual customers
Restaurant value engineering definition
A restaurant is a just-in-time manufacturing company that employs a range of skills from a often short-lived labor force with time- and temperature-sensitive inputs to provide products to meet dynamic and changing customer needs. In short, it highlights many of the problems you encounter when trying to run a restaurant, but it also highlights your opportunities to create value for your customers. The area we want to explore is the difference between the price you create and the value of the product to your customers. We will look for ways to reduce the cost of the items we produce and increase people’s value to the items.Either make things cheap and / or Raise the price we can charge for them.
Fine dining is one of those industries that require a lot of value engineering to create real high value. You can take many things from high-end restaurants and apply them to your restaurant to increase the value of the perceived experience. Many places in high-end restaurants have expensive products, and you will have to argue about the value of it. It is usually an argument between the owner and the chef, arguing about the cost of the menu. Labor costs are also high, and the cost per table or seat is much higher than the cost of an ordinary restaurant.
What is the difference between menu engineering and value engineering?
As we all know, menu engineering is a multi-disciplinary method to maximize menu profits. Value engineering regards menu engineering as an integral part of the process, but has a broader scope and is supplemented by experience engineering. You must determine what your customers are actually paying.
Please stay tuned for our next episode. We will go through 10 simple and quick examples of restaurant value engineering, hoping that they can provide you with ideas for increasing restaurant revenue and increasing customer value.
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