Competing restaurant

L

little bit of r & r

Knows what a fatty is.
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I have been running a bbq trailer in a town since April and tomorrow a new bbq restaurant is opening. I went and got a menu yesterday and the prices seem low he is charging $9 Half slab $17 full slab he has a sandwich and 2 sides for $7 am I missing something on pricing because I don't see how he will stay in business. He has 1/2 chicken with 2 sides and bread for $8
 
That could be the place is smal only has 6 tables or so he has to turn tables over fast in order to make any money
 
They won't make any money but they'll make up for it in volume...........LOL!
 
Now you just have to wait for him to close and make an offer on the place. If he is the only one working there. He may be able to make it, but I doubt it. The prices are low, even if he has volume, you cannot make money if you don't charge more than your costs.
 
Maybe he won the Mega Lottery and needs a total loss for his taxes??? :mrgreen:
 
All you can do is set your prices based on your costs. With a permanent location, I have to believe their costs will be higher, unless they have a connection for supplies and meat, which I doubt. You know your costs and how much you can make at those prices. Keep your prices where they are and focus on a quality product.
 
Maybe he not paying much rent and have low overhead. Time will tell
 
I would suggest eating there and seeing what quality they are serving. Could be a lot of precooked or prepackaged items. If that's the case just keep your quality up and you will retain your customers.
 
I don't know didley squat about restaurants, but I have a friend here in town who owns a Mexican restaurant.
Excellent product and moderate prices for the quality.
A new joint was opened a couple of years ago that had prices so cheap he was obviously not gonna make money.
A mutual friend said he intended to take the business from the original one and force him to close. Then he would jack up his prices as the only game in town.
And, there was quite a few customers who went for the cheapo prices even thought the quality was marginal.

What the new restaurant owner did not count on was the "deep pockets" of the first restaurant's owner.

In about 6 months the new restaurant was "Kaput" and the original one is booming! 8)

Just a side story.

TIM
 
You can't worry too much about the other guy, you have to set your prices based on your costs. If you aren't gonna make money you might as well sit at home and watch TV. Good food will bring business in.
 
He's probably doing the lost leader grand opening pricing. Many will try it but when the honeymoon is over most will realize good food is not cheap and you should do even better if your Q is good. Know your costs, your market and your competitors.
 
The lost leader game is a big loser, just like giving away product. Any restaurants arc is a tendency to lose money over the first 6 months to a year. You will always get a big flurry of business at the opening. Perceived value is the game, give more than what you charge, but, charge enough to make money. The value is in service, taste and consistency.
 
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