Fixed price menu solutions

Are fixed-price menus the path to profits?

In a follow up to our dining plan number crunching, we’ve cast our recipe cost calculator across dining in the entertainment industry.

The UK’s night time economy earns over £66bn in revenue and employs almost 8% of us. £13.9bn of that is generated through gaming and casino companies. Facing similar struggles to the retail industry (with 35% of spend now moved online) sit 152 so-called ‘land-based’ casinos. To reinvigorate the industry, the Gambling Act 2005 saw the government of the time allow bids for eight (very large) ‘super casinos’. However, by February 2008 this idea had been scrapped, mostly over doubts raised about realising any true community benefit.

The fight to regain a slice of takings saw the ‘land-based’ casinos carry over at least some of the ideas for increased ancillary spend. One brand chose Birmingham to trial the addition of outlet shopping, a hotel and IMAX cinema to attract replacement revenue per square foot. For a casino in Manchester, a tie-up with celebrity chef James Martin saw its 170-seat dining space appear on the Sunday Times Top 100 Restaurants in Britain.

Breaking even – Double or Nothing?

Away from the big-name open kitchens and tasting menus, how does the small to mid-size (out of London), venue promote itself in such a regulated environment? Answer; like any other business, with discounts and new customer offers.

Nowadays becoming a member before spending your first £1 is largely non-compulsory. Our research of the largest companies by estate size shows the most popular new customer offer is through the restaurant. We found the largest casino chain regularly deploys the following ‘welcome’ offer;

2 courses for £13.95 with a £5 free bet’

Accepting £5 as the cost per acquisition (‘paid’ for by the casino business) we used kitchen management software to trace any profit on this deal.

Take two courses from the casino’s common menu, which appears at many of the chain’s out of London sites;

Average Starter price £5 and Average Main price £12.40 = Average selling price £17.40

Removing 20% for VAT considerations, it becomes a sold at price of £13.92. We used our recipe calculator to price the ingredients of two dishes.

Chicken Wings £1 + Fish and Chips £4

This would produce revenue of £8.92 (before any overheads). At regular selling price, it would be possible to raise a modest profit at these prices. Even at the offer price of £13.95, after VAT it would produce a margin of £6.16. The recent and much-publicised inflation in the food ingredients market may explain how we found the same deal offered three years ago priced at £9.95.

Additionally, there is now ‘a supplement of £4 for all steaks and lamb and £2 for salmon‘.

Bonus: The markup on a mocktail

Because we’re responsible people, we’re adding a mocktail to our example meal. We’ve chosen;

White Peach ‘Mocheato’ = selling price £3.25

Removing 20% for VAT considerations, it becomes a sold at price of £2.60. Again, using our recipe calculator, we’ve determined the ingredients are costed as;

  • £0.62 30ml white peach cocktail purée
  • £0.25 200ml apple juice
  • £0.05 orange slice

At £0.92 per serve, over £1.60 in revenue can be gained – even selling at this below market price.

Caternet is saving money in food businesses across all industries, as commercial kitchens buy ingredients and cost recipes with live prices. See the other ways you can save time and money when you read what we do.

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James Waldron is Content Manager at Zupa

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