Ch 6: Food & Beverage Pricing Methods

About This Chapter

If you have an upcoming food industry test and need to improve your knowledge of food and beverage pricing methods, take a look at this convenient study guide resource. Though a series of short lessons, you'll be able to quickly study and solidify your understanding of these concepts.

Food & Beverage Pricing Methods - Chapter Summary

Study this chapter to examine several pricing methods in the food and beverage industry. Our expert instructors help you understand the differences between objective and subjective pricing methods in food and beverage operations. You'll also define other food pricing methods, such as the highest price method and simple markup price method, and reinforce your understanding with short self-assessment quizzes. The chapter is designed to help you:

  • Differentiate between objective and subjective food pricing methods
  • Explain the reasonable price, highest price, loss leader price and intuitive price methods in subjective pricing
  • Outline several objective food pricing methods, including simple markup price, contribution margin price, ratio price, simple prime costs and specific prime costs methods

9 Lessons in Chapter 6: Food & Beverage Pricing Methods
Test your knowledge with a 30-question chapter practice test
Subjective vs. Objective Food Pricing Methods

1. Subjective vs. Objective Food Pricing Methods

In this lesson, we will briefly summarize the differences, advantages, and disadvantages of subjective and objective methods of food pricing in a restaurant setting.

Food Pricing: Reasonable Price Method

2. Food Pricing: Reasonable Price Method

Establishing food prices is an important activity that requires research, calculations, and evaluation of the market. The reasonable price method is one way many restaurant managers use to determine prices, although it has many flaws.

Food Pricing: Highest Price Method

3. Food Pricing: Highest Price Method

In this lesson we define the highest price method of food pricing and look at an example of how this subjective approach is applied in a restaurant setting.

Food Pricing: Loss Leader Price Method

4. Food Pricing: Loss Leader Price Method

In this lesson, we will review what the loss leader pricing method is and how it can be used to generate profits in the restaurant industry; despite the paradoxical situation of selling some items at a loss.

Food Pricing: Intuitive Price Method

5. Food Pricing: Intuitive Price Method

For the restaurant owner who is willing to take risks or who wants to avoid lots of calculations, the intuitive price method offers a technique for planning the prices of menu items. In this lesson, we will see how this works in a practical setting.

Food Pricing: Simple Markup Price Method

6. Food Pricing: Simple Markup Price Method

In this lesson, we will look at three different forms of simple markup pricing and show how these objective methods can be used to determine appropriate prices for restaurant menu items.

Food Pricing: Contribution Margin Price Method

7. Food Pricing: Contribution Margin Price Method

In this lesson we will review how the contribution margin pricing method can be used to set menu prices when the owner wants to account for how each item contributes to the expenses and profit of a business.

Food Pricing: Ratio Price Method

8. Food Pricing: Ratio Price Method

In this lesson, we will briefly review how restaurants can use the ratio pricing method to calculate menu item prices that adequately account for costs of food and restaurant operations while still meeting profit goals.

Food Pricing: Simple & Specific Prime Cost Methods

9. Food Pricing: Simple & Specific Prime Cost Methods

This lesson covers how to set menu prices using two different objective pricing methods: the simple prime cost method and the specific prime cost method. Formulas and example calculations are provided for each method.

Chapter Practice Exam
Test your knowledge of this chapter with a 30 question practice chapter exam.
Not Taken
Practice Final Exam
Test your knowledge of the entire course with a 50 question practice final exam.
Not Taken

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