Price alone won’t fix the sector’s biggest challenge; the key to ongoing success is understanding your value to customers.
The food and beverage sector is under pressure from three directions:
- Consumers are eating out less. They are trading restaurant visits for supermarket meal deals and home cooking as budgets tighten.
- Costs have risen sharply. Inflation across food, energy and people disproportionately impact the sector and margins are squeezed as a result.
- Price increases are creating a vicious cycle. Cost and volume pressures have led to higher prices which are pushing away value-conscious customers. This in turn means volumes and guest counts fall further, and the pressure to raise prices again intensifies.
Many operators recognise this vicious cycle. Loyalty programmes, limited time offers, lunch deals and meal deal bundles are all attempts to break it.
But tactics deployed without understanding what customers actually need risk solving the wrong problem. They can lead to discounting and margin erosion for customers who would have come anyway, or investing significantly in an initiative that won’t meaningfully move the value perception needle.
Is This You? A Quick Diagnostic
Before reaching for another tactical fix, it’s worth asking four honest questions:
- Do you know why customers choose you? If your answer relies on “food quality” or “atmosphere,” you’re describing outputs, not the underlying driver of the visit.
- Can you articulate a clear point of difference from your three nearest competitors? If the honest answer is “not really,” your value proposition may be harder to defend on price than you think.
- Have you invested in the customer experience but seen little impact on spend or frequency? If so, the gap may not be in what you deliver, it may be in what customers actually perceive.
- Are your promotional offers bringing in incremental customers, or subsidising visits that would have happened anyway? If you’re unsure, your promotions may be eroding margin rather than building loyalty.
If any of these land uncomfortably, the rest of this article is written for you.
The Opportunity: defining your value proposition
What you can charge depends on one thing: the value customers believe they’re getting. Before adjusting price, make sure you know what customers need, and they can see the value you are creating.
At Pearson Ham Group, we structure this challenge using our end-to-end Monetisation Framework, which moves through four sequential stages: Value Creation, Value Alignment, Value Capture, and Value Realisation. There can naturally be a focus on the “Realise” phase where value capture either succeeds or fails, but likelihood of success here starts much earlier in the monetisation journey.
Value Creation starts with understanding what customers truly need, the underlying, sometimes subconscious, drivers of their choices. Are they looking for convenience and effort reduction, control and personalisation, or a social connection? Answering this means looking beyond current menu and price points and considering the underlying motivations of customers.
Value Alignment is about how well customers perceive the value you deliver. Many operators invest in sourcing, quality and training but communicate this poorly. If customers don’t see the effort, it doesn’t support what they’re willing to pay. Alignment also means understanding how you compare to competitors on what matters most. If every operator claims “fresh ingredients” and “great atmosphere,” no one stands out. The businesses that thrive know their points of difference, and make sure customers know them too.
A Practical Starting Point
At Pearson Ham Group, we help food and beverage businesses map the gap between the value customers need and want, and the value they currently perceive. We call this Value Mapping. It combines customer research, competitive analysis and an evaluation of your own capabilities to pinpoint where the real opportunities lie.
The result of Value Mapping is more than a new price list. It’s a clear view of which needs to prioritise, where your proposition can be strengthened, and how to communicate value more effectively. This enables you to make pricing decisions backed by a proposition customers understand and are willing to pay for.
The operators who will emerge strongest are not those who hold their nerve on price. They’re the ones who understood their customers deeply enough to ensure their pricing, proposition and the price-value map are aligned
Ready to explore how Value Mapping could help your business? We’d love to carry on the conversation – get in touch.
