For years casual-dining restaurateurs have carefully avoided the $20 price tag for entrées, letting menu items’ costs inch toward—but rarely pass—that unofficial ceiling.
But now operators nationwide are pushing prices past the Andrew Jackson mark, offering higher-end items that can drive sales while still presenting an image of value to customers.
A tiered pricing plan is growing in popularity, says Guillermo Pernot, executive concept chef at Cuba Libre in Philadelphia and in Atlantic City, N.J., at the Tropicana Hotel.
“Customers are seeking quality,” he says, “and they are willing to pay a little more for it.”
One of Cuba Libre’s most popular dishes, he says, is salmon with a rum-honey glaze with summer squash, a star-anise tomato sauce, pickled mango and grape tomatoes for $24. Dinner entrées at the concept range from $18 to $27.
P.F. Chang’s serves a $20 sea bass marinated in oolong tea, then broiled and served with sweet ginger soy, baby corn and spinach. Carino’s Italian Grill offers a prosciutto-wrapped filet for $21.50 in central New Jersey. That item is priced at $19.95 in many other parts of the country.
Darden Restaurants’ Olive Garden chain offers an 18-ounce Tuscan T-bone steak brushed with Italian herbs and served with Tuscan potatoes and bell peppers, which is priced at $24.50 at a location on Sixth Avenue in Manhattan, where high real-estate prices often force menu price increases. Still, that item flirts with the $20 mark elsewhere in the country, where it is priced at $19.50.
Darden’s other concepts also have taken the leap. Bahama Breeze in Las Vegas has a $21.99 8-ounce, aged center-cut filet mignon served with garlic mashed potatoes and fresh broccoli. Similarly, the flagship Red Lobster features mixed seafood platters at various prices around $20.
Brinker International’s Maggiano’s has a filet, $20.95, and Macaroni Grill has a Boursin Filet priced at $19.99. As of February, Maggiano’s even offered a pasta dish that was more than $20—a full order of lobster ravioli for $21.95.
“Casual-dining has to go to multitier pricing, and this is the opening wave,” says Malcolm Knapp, president of Malcolm M. Knapp Inc., a New York-based foodservice consulting firm. “It’s a quality product. There’s a significant mass of people who can afford this quality.”
Knapp says the roots of this pricing are in quick service.
“You saw it first in fast food,” Knapp says. “In 2003, a lot of the major fast-food chains upped their quality, improving the ingredients for a higher demographic and older people. That starts putting pressure right up the food chain.”
He cited Jack in the Box offering sirloin burgers and McDonald’s offering Angus burgers as signs of this trend.
Knapp also notes that between 1997 and 2002, the check average range that showed the most rapid growth was $15-$20.
“You can see the movement,” he says. “With more of the [baby] boomers in the empty-nester period, they want better [quality items].”
According to the Bureau of Labor Statistics, 26 percent of households had incomes of $70,000 and more pretax, not including capital gains, in 2004, the latest year for which data is available. Additionally, people spent 40 percent of each dollar on food-away-from-home.
“Clearly, casual-dining, which has lost customers at the bottom end of the income stream to energy costs and medical costs, have to get more of these [higher income] folks in during the week,” Knapp says. “They are going to put out items that appeal to them. With these prices come better quality. They’ve maintained the value equation. Some items lend themselves to that, like steaks.”
The move toward more sophisticated preparations is evident in the prosciutto-wrapped filet at Carino’s Italian Grill. The 8-ounce beef tenderloin is wrapped in prosciutto and served with sautéed green beans and a side of pasta or Asiago mashed potatoes.
Depending on sauces and ingredients, items can easily reach the $20 level.
“There’s a lot of dining upgrades out there,” Knapp says, “and these casual-dining guys have to match the gap.”
In addition, he says, customers see casual-dining chains upgrade their physical plants with remodels to go with a higher-quality menu items.
“Ruby Tuesday is going more toward a Houston’s [chain] model,” he says, and to go with that new look is a menu that offers a “triple prime burger.” Houston’s is an upscale-casual chain owned by Beverly Hills, Calif.-based Hillstone Restaurant Group that has about 30 units.
At The Cheesecake Factory, shrimp and steak items have often approached $20, says Howard Gordon, senior vice president of business development and marketing for the chain, aligning it with higher-end casual-dining chains.
“You’ve seen two sets within casual-dining, the T.G.I. Friday’s and Red Lobster and Chili’s, and upscale-casual dining, such as P.F. Chang’s,” he says.
Still, Gordon says, operators must walk a fine line when they raise prices.
“When you go over $20, some people may begin to question the value equation,” Gordon says. “What’s the threshold when someone thinks you are too expensive?”
The 200-item Cheesecake Factory menu passed $20 for steaks years ago, he said, but about 185 menu items still remain below that mark. While the items that are popping above $20 are luxury-linked items such as steak and lobster, “not everyone wants to have a steak every day,” Gordon says.
The $20 mark has been a sensitive point, Gordon says. “We’re not white tablecloth, but no matter what level of casual-dining you are, guests are looking for value.” he says. “So there’s a certain level of pricing that they just won’t pay. They know when they go out to eat that they are going to pay more for a steak, so that’s an area where pricing can be higher. People understand that. They understand that you get what you pay for.”
Gordon says pricing is always at top of mind for The Cheesecake Factory. “We take a look at whether we can purchase better and if we are using products better,” he says. “Are we efficiently running our line to not have waste and not having food coming back?”
Pricing should not be the sole restaurant concern, Gordon adds.
“When guests walk in, they are looking for an experience,” he says. “Value is one of the items of that experience, but if someone in the party didn’t have a good time, the experience isn’t there.”