Following the VAT rise catering and hospitality businesses are faced with the challenge of increasing prices without upsetting and losing customers.
Some will invariably increase prices without any consideration to customer dissatisfaction, while the majority of businesses will look to accommodate their customers' best interests and have a strategy for a smooth and trouble-free transition.
One approach is to launch new products. It may sound like a lot of work at first, but actually, with a few simple steps you can create a fresh twist to (re-priced) products that your customers will love.
For example, if your cafe is currently offering two cup sizes – regular and large – rather than just altering the two prices, why not introduce a medium size and rename all three coffees; Primo, Medio and Maximo?
If you are using British, farm-assured Cumberland sausages, rather than calling the dish sausage and mash, say, call it British Farm Assured Cumberland Sausage & Organic Mash
Instantly the customer has three new products to choose from. The change in name options makes it harder for the customer to relate the products to previous prices, and also gives the customer a larger choice.
If you own a restaurant, consider reviewing your product descriptions to better convince the customer they're getting value for money. For example, if you are using British, farm-assured Cumberland sausages, rather than calling the dish sausage and mash, say, call it British Farm Assured Cumberland Sausage & Organic Mash. The customer perceives a better quality product and understands the associated costs, and so feels they are getting better value for money.
If you simply applied the 2.5% VAT increase, you should have ensured this was communicated to your staff clearly so they are ready to deal with unhappy customers. Update your tariff boards, check your menus, tills and receipts to ensure conformity and avoid confusion.
Whilst most customers will accept the VAT increase, to ease the pain by having a planned price increase strategy can only help to ensure that your customers will continue to come and enjoy your hospitality.
