Casual restaurants charged about a dollar less last year for a la carte lunch entrees than they did in 2010, underscoring operators’ fear of midday sticker shock, according to data released by Intelliprice, a Boston-based research firm.
But the findings also indicate that full-service places tried to maintain margins by avoiding a sinking-tide approach to pricing. Instead of lowering charges across the board, they sought significant increases for add-ons, sides and desserts, and maintained the price of bundled bargain meals, which typically blend high and low-margin elements to ease the impact on profits.
They also mixed more high-margin elements into their priced-to-move arrays, instead of discounting a premium item like a steak. “There are more combos, sliders and sandwiches at $7 and $8,” said Intelliprice president Leslie Kerr. “Restaurants are providing more options at these prices because guests want them, and if these yield better margins for operators, everybody wins.”
“It’s a balancing act to identify areas where price increases are acceptable,” she added.
The data suggests that casual operators fear they’ll dampen traffic if lunch selections are listed on the menu for $9 or more. Kerr said the fear of cutting frequency was less pronounced at dinner, with entrees rising in price by an average of 41 cents. Still, she noted that dinner entrees typically rose by 72 cents in 2010.
Overall, menu prices for casual restaurants rose by 1.2 percent, though that average masks changes as dramatic as a 12.1 percent upswing for side dishes and the 10.4 percent drop for lunch entrees.