Restaurant price increases are no longer the exception – they’re a reality for nearly every hospitality business today. In the U.S., menu prices at full-service restaurants jumped 4.4% year-over-year (as of July 2025), while wholesale food costs remain over 36% higher than before the pandemic. In the U.K., restaurant and café prices have surged 8.2% over the past year alone.
For restaurants, this creates a tough balancing act: higher operating costs on one side, more price-sensitive guests on the other. Today’s diners expect not just quality food, but also fair pricing, transparency, and trust.
And that’s exactly what makes price increases so complex: They're not only a financial necessity, they’re a communication challenge.
So, how can you raise your prices without losing your guests? In this article, we’ll share nine practical strategies to help you implement price increases with confidence, strengthening guest loyalty as you do so.
Setting prices for restaurants, catering services and buffets requires more than just intuition – it requires accurate data. When costs rise and margins shrink, urgent action is needed.
After all, the average profit margin in the restaurant industry is already extremely small, usually ranging from 3% to 5%. This makes it even more important not to raise prices arbitrarily, but to do so in a targeted and transparent way. The key is thorough calculation.
Modern software solutions such as FoodNotify allow you to create recipes and automatically calculate the current cost of goods. This enables you to plan and gain an overview of important key figures such as sales, contribution margin and sales volume, and optimize your management in the process. You can then easily identify where a price adjustment would be sensible and necessary from an economic point of view.
Restaurant groups across the industry say they would need to raise menu prices by up to 30% just to stay profitable in the face of rising costs. But blindly increasing prices across the board? That’s rarely the right move.
Not all price increases have the same impact. A flat hike might confuse or deter guests – especially in a price-sensitive climate. Instead, focus on a smart, data-driven approach.
But what constitutes a 'too much' price increase? In the restaurant industry, an increase of 5–10% is considered acceptable, especially if it is well justified and communicated to the target group.
Consider psychological price thresholds
Even the smallest price differences can have an impact, particularly with à la carte orders. Restaurant price psychology shows that an increase from $13.80 to $14.40 is much more noticeable than an increase from $16.10 to $16.80, for example. Additionally, fractional amounts, such as $9.89, are more appealing than rounded amounts, such as $10.
Make conscious use of price thresholds and set your prices just below round amounts. Also, avoid making prices seem too expensive and design your menu in such a way that your customers perceive the prices as fair and consistent.
Strong dishes, strong margins
Provided the quality is good, a classic dish that is particularly popular with your guests can cost a little more. Signature or best-selling dishes allow you to adjust prices without significantly affecting demand.
However, avoid increasing the prices of the most expensive dishes on your menu. These are considered a psychological reference point. If these prices remain stable, your guests will be more accepting of price increases elsewhere.
Change doesn't have to be obvious
For example, a price adjustment does not necessarily mean that the prices on the menu have to increase. Sometimes, making a small change to a dish can help.
The way your guests consume has changed. These days, service, quality and fairness are more important than low prices. At the same time, costs are rising in almost all areas. From a business perspective, therefore, price increases are necessary to secure the long-term survival of your hospitality business.
#1: Announce price increases
Although you are not legally obliged to announce price increases as a restaurateur, you should always do so early and proactively. This allows your guests to budget accordingly and demonstrates respect and fairness.
Ideally, you should announce price changes at least four weeks in advance. For this purpose, you can use various communication channels, such as your newsletter, social media posts, or brief menu notes. It is also advisable to have a personal conversation with regular guests, for example during their next visit or via email.
#2: Be honest and transparent
In Germany, the planned reduction in VAT in January 2026 is creating new expectations. While this is country-specific, it reflects a broader challenge: when tax changes or inflation adjustments occur, many guests expect lower prices – even when your costs are still rising.
VAT reduction for restaurants: What to expect in 2026
Honest and transparent communication is now more important than ever. Your guests only see the price on the menu, not the increased energy, personnel or purchasing costs that burden your hospitality business daily.
Therefore, explain to your guests why a reduction in VAT does not automatically lead to lower prices, for example. You could mention that you pay fair wages, secure regional supply chains, or invest in sustainable measures. This will demonstrate that your pricing decisions are made consciously and responsibly, rather than arbitrarily.
#3: Price adjustment as part of an overall update
Price changes are less noticeable when they form part of a visible update to the restaurant. Instead of raising prices discreetly, combine the adjustment with something new, such as a redesigned menu, seasonal highlights, or minor visual changes to the ambience.
Psychologically, guests will perceive the change as added value rather than a straightforward price increase. This combination has a positive effect, especially in today's climate where price sensitivity is high.
Such changes will be noticed quickly by your regular guests in particular. They will react more positively if the innovations are valuable, noticeable and well communicated.
#4: Fine-tune portion sizes
Does a higher price necessarily mean smaller portions? Maybe not. Often, reducing portion sizes slightly is enough to reduce costs. As long as the quantity, quality and price ratio feel right, your guests will hardly notice the difference.
The so-called 'Goldilocks principle' can help with this. It states that people usually prefer what is 'just right'. In other words, not too much and not too little. This can also be put to good use in the restaurant industry.
Even if you change the portion size, your guests' culinary experience should remain the same or, ideally, be even better.
#5: Keep price-sensitive dishes stable
Not every price increase has to affect everything. In fact, a differentiated pricing strategy is most effective in the hospitality industry. Many of your guests will already be familiar with popular dishes such as salads, pasta and schnitzel. These dishes are perfect as price anchors.
Your guests will use these dishes to judge whether your overall pricing is fair. A Cornell University study also shows that price anchors significantly influence decision-making. If some familiar prices remain stable, higher prices for other dishes will be more readily accepted.
By deliberately not increasing the prices of these dishes, you demonstrate sound judgement, thereby strengthening confidence in the entire menu.
#6: List additional services separately
Not all of your prices need to be included in a total package. Transparency pays off, especially for extras that not all guests use. Side dishes, sauces, dips, and other special ingredients can be charged for separately instead of being included in the main price.
This approach has several advantages:
Adjusting your menu's pricing structure accordingly, you can improve your margin and give guests the feeling that they control the price. This is an important psychological factor in the restaurant industry.
#7: Regular price monitoring
Many restaurants leave it too long before adjusting their prices, resulting in larger price increases. This catches guests off guard and can quickly lead to mistrust or rejection.
It is therefore better to implement regular, small price increases than to surprise your guests with one large increase. Studies confirm that guests often perceive several small price increases as less dramatic than one large increase. This is particularly true when the adjustments are communicated transparently.
Digital tools such as FoodNotify can automate recipe costing in the catering industry with just a few clicks, providing a clear overview of where action is needed before profitability is affected.
#8: Properly train your employees
Even the best communication is of little use if it breaks down at the point of contact with guests. As the first point of contact for guests, your team plays a crucial role in determining how guests perceive price adjustments. Guests are more likely to accept changes if they are clearly explained by service staff.
It is also important to provide regular training for your team rather than just a one-off session. By continuously involving your employees, you will help them to develop long-term confidence in dealing with sensitive issues, such as pricing.
#9: Make use of your guest's feedback
Price increases are not a one-way process. Involve your guests, especially after changing your prices. Ask for feedback instead of waiting for complaints. Show your guests that you value their opinions. This fosters a sense of closeness and trust, showing your guests that they can contribute to shaping their experience.
Ask your guests specific questions about new dishes, portion sizes and perceived value for money. General questions such as 'Was everything OK?' tend to be of little use. Taking your guests' feedback seriously shows them that your relationship with them is as important to you as sales. This is exactly what creates loyalty, even when prices have risen.
Well planned, but still failed? To make sure it doesn’t come to that, be sure to avoid these five classic mistakes when raising your restaurant prices.
Price increases are commonplace in the restaurant industry today, driven by economic necessity rather than calculation. Ultimately, it’s not the increase that matters, but how you implement it – and how professionally you communicate it to your guests.
With clear calculations, honest communication, and genuine added value for your customers, price increases can not only be accepted, but also viewed positively.
Use digital tools such as FoodNotify to automate your calculations and always keep track of your figures, from cost of goods to contribution margin. This way, your next price adjustment will be a real step forward for your business, rather than an obstacle.