Top 10 Customer Complaints of 2012: #7 – Overpriced

We are moving right along on with our countdown of the Top 10 Customer Complaints of 2012 for Restaurants! As a refresher, check out the previous posts for #10, #9, and #8 and let us know your comments!
Next up on our countdown:

#7 – Overpriced

As a business owner, working with customers who feel your items are overpriced can be very tricky. In comparison to some of our other entries in this countdown, such as #8 – Order is Wrong, an obvious mistake does not need to occur for a customer to feel like something is overpriced.
Any customer can visit your wonderful establishment with perfect acoustics (which you now have after following our advice on our Complaint #10 – Too Noisy), wonderfully updated and swank decor (see #9 – Decor Needs Updating), order a meal that tastes great (with nothing missing, see #8 – Missing Items), receive wonderful service, and still feel cheated after paying the bill.
These days, with many consumers already feeling price sensitive in the current economic climate, the consequences of customers feeling that your establishment is overpriced can have damaging effects.
For starters, many customers simply won’t return to your establishment and will tell their friends that your business isn’t worth the money, both offline and online. Some will even go so far to post on Facebook or write a Yelp review and take off stars for price. Seeing “food was okay but not worth the price!” on review sites is fairly common. Potential new patrons will see these reviews and pass on visiting your restaurant. In severe cases, having just one customer say your restaurant is overpriced can have a shared community effect where even more customers begin to question their bill totals. Check out these examples of low Yelp reviews for one business experiencing this – notice both were posted within the same week!

Reviews like these will not just be seen by potential patrons, but also lower the overall Yelp rating of the business.
Over time these effects can lower your overall Yelp rating. We already know a star on Yelp translates to a 5% – 9% difference in revenue.
And remember, all of this can happen even though your atmosphere is great, the food is cooked to perfection and served correctly, and the service is impeccable! Frustrating isn’t it? 
So What Can You Do?
  1. First and foremost, price your items well. Most consumers visit multiple restaurants per month. If you assume your average customer dines out just once a week, understand that s/he walks into your establishment with at least 50 new price comparison points in the recent year. So chances are, your average customer will notice if you price something 2x or 3x the average for your type of dish. The same goes for liquor. In a given region, consumers have a range of prices for particular beverages such as a cocktail. If you find yourself hitting the $18+ range for a specialty cocktail, make sure that cost is justified by the quality of ingredients and the novelty of the drink. Wine can be an especially tricky areas as many restaurants markup bottles between 2x – 4x, and this can vary by region. Do your homework and see what your customers’ expectations will be. If you are looking for a place to start, search for articles such as: Cracking the Code of Restaurant Wine Pricing.
  1. Subtly explain your price to your customer. One of the easiest places to do this is in your menu as consumers pay attention to descriptions. If you have a spaghetti dish and are charging $20+, a pleasant description that highlights key quality ingredients will help justify your pricing.
  2. Consider service and atmosphere appropriately. It’s commonly understood that restaurants can charge more for attributes such as views, location, decor, stellar service, and other features of your establishment. Make sure you are leveraging these aspects of your business by highlighting the care you’ve taken to make the overall experience special. 
  3. Educate your servers. Service is a huge component to your customers’ experience and provides great opportunities to casually account for your pricing. Customers often ask questions about particular dishes and the answers and descriptions provided by servers can help mitigate issues with the pricing. For example, your server can mention that the clams are from a batch you woke up at 4am to purchase directly from the fisherman. 
  4. Avoid surprise costs. The last thing a price sensitive customer wants to see are unexpected charges such as refills and the illusive “table fee” at the bottom of the receipt. If you employ unconventional billing strategies or have extra fees, make sure the customer knows early on. Another common source of customer anger is the non-priced “special” that costs 30% more than your typical menu dish (we even saw a case of a 100% difference!). When they see your menu, customers have certain expectations about the price range of off menu specials. If your specials prices stray significantly from this, make sure to mention it ahead of time and explain about the dish well so customers understand your pricing. Avoid an unpleasant surprise. 
  5. Don’t be afraid to ask, “Why?”! If a customer communicates a meal or item is overpriced, ask him/her to say a bit more about why. In addition to resolving your customer’s sentiment, this is critical to avoiding this with future customers. Perhaps an ingredient or preparation method could be added to a menu item or perhaps one server just isn’t delivering the customer service your patrons are paying for. Sometimes the diner is out of town and used to different price levels (you can sometimes pick up on that through accents). Whatever the reason is, find out why, and address it as soon as possible.
All in all, pricing can be a sensitive subject for both consumers and owners. There are no solutions that provide an absolute correct answer. Be aware of price perception of your customers and make changes when the market warrants. Make sure you use OwnerListens to provide your customers an anonymous, private, and direct channel of communication so you know immediately when a customer feels like something is overpriced. Sign up now if you haven’t already.
Owners – have tips for how to deal with customer concerns with overpricing? Tell us in the comments section! 

Consumers – give feedback with the OwnerListens app if you want to share your feelings about an establishment’s pricing and would like a response from the owner!

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