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Jan 2, 2014 11:29 AM

Restaurant Biz: Optional Up-Charges for Higher Quality Alternatives

I have a friend who helps run a suburban shopping-strip Italian restaurant/pizzeria. It's a family place, nothing fancy, and they also serve really great beer. The guy's into great food and beer, but the place uses this awful canned red sauce, because economics won't allow them to make it from scratch. The main owner is perfectly happy with this sauce - he's not about quality, it's more about status quo. But I know it quietly eats away at my friend to have to serve this sauce.

I'm going to propose an idea to him, but while it seems completely viable to me, my spidey sense tells me I'm missing a problem (compounded by the fact that just about no one does what I'm proposing). Can you help suss out the downside?

Here's the email I wrote (but didn't send yet):

I understand the economics of family Italian restaurants. It's impossible to make everything from scratch, even if you want to. You'd need to charge more than customers would pay. If you made really great from-scratch marinara, you'd need to raise prices. It's risky! But I thought of a way to sneak into it with no risk.

You know how some diners let you order real maple syrup for an extra buck? How about an option to add on "super-charged marinara" (to dishes, pasta, pizza, dipping for apps, etc) for an extra $3 or $4? It'd work like any other up-charged side.

Customers who like the regular sauce won't have to change a thing. But you'd be able to please customers who do care about the diff, so you'd be more versatile. The up-charges would be some nice income (it adds up!).'d have some really good sauce, which would be closer to the way I know you'd like to do it.

It's the same as what you're doing in the beer bar: offering Coors, plus an option for expensive beer for those who care. Choice is good!

If this worked, you could also maybe charge for super-charged mozz and other stuff. Customers (and your partner!) couldn't complain, because the guts of the restaurant wouldn't change. Unless, that is, if everybody starts up-paying for premium stuff. If that happened, you'd have lots of interesting options in terms of more creative and higher-quality choices.

I don't see any downside. This would guarantee at least some extra income, and allow you to please a wider variety of customers, and give the business a lot more versatility going forward.

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  1. "the place uses this awful canned red sauce, because economics won't allow them to make it from scratch."

    You have that ass backwards. They have bad economics because they serve crap. A decent homemade marinara costs no more to make than a bad canned one.

    4 Replies
    1. re: PotatoHouse

      I agree...if they were to use canned tomatoes, and im sure they would be, how much more would a few aromatics, maybe some inexpensive wine or broth and seasonings cost for a marinara?

      My issue would not be so much the ' nickle and Dime' thing as would be wanting to know whats so inferrior about the current sauce that they are offering a choice.

      1. re: PotatoHouse

        No, my ass is facing properly forward. Er, backward.

        The place prints money. Which is why the owner's complacent and doesn't want to change a thing.

        It's strictly a pride issue for the junior partner (I'm simplifying the relationship, but you get the drift), nothing more.

        1. re: Jim Leff

          Then he should probably get over himself if everyone else (including the customers) is happy. It's not about him and his pride.

          1. re: Jim Leff

            Lots of places that are successful for years don't want to change anything for fear of jinxing that success....if it ain't broke....don't fix it.

        2. The choice to use canned marinara may not be based on economics alone. They may not have the cooler space to support all of the ingredients required to make sauce from scratch but may have plenty of space in their dry storage for cans. There may not be enough stove space to let the scratch sauce simmer for hours. They may not have the manpower required to cut and chop all of the fresh ingredients.

          There are some scenarios where offering an upsell is a great idea that requires little to no extra space, cost, or effort. Selling a bottle of Dogfish Head 90 Minute IPA instead of a bottle of Coors is a great example. Making a consistent sauce from scratch each and every day just may not be a viable option in this case.

          3 Replies
          1. re: jpc8015

            They've got lots of cooler space. And the efficiency of the kitchen involves following long-established methods, which a critical mass of customers is ok with.

            This is a means for my friend to take pride, and to gingerly feel out the crowd's threshold for quality/price upticks without upsetting the cart to violently.

            1. re: Jim Leff

              You say in your response above that the place is doing quite well. Why change something and possibly disrupt the apple cart for pride?

              1. re: Jim Leff

                If the only issue is pride and a desire to offer a more culinary type sauce, I would not do what you suggest in your unsent email and risk disappointing the healthy base of loyal customers.

                I think what you suggest is risky. But creating entirely new offerings as specials or a chef's choice or specialty part of the menu where he can create what he'd like and test the customer response could satisfy his creative impulses while keeping the rest the way folks apparently like it.

            2. These type of premium charges are more typical at higher end restaurants -- e.g., a restaurant with a 3-course prix-fixe option where you can pick any app, entrée, and dessert, except that there is an upcharge for the foie gras app or soufflé dessert, etc.

              I can imagine a scenario at a pizza joint where there was a set price per topping of x, but the house-made sausage or fresh clams were 2x, for example. Charging extra for something as basic as a better tomato sauce, however, would be off-putting to me as a patron. And, as others have pointed out, the economics might not work anyway -- especially if the extra cost for the premium sauce resulted in only a few patrons ordering it, such that it would be difficult to recover the costs of the extra labor and ingredients involved.

              4 Replies
              1. re: masha

                Not a pizza joint (sorry, I wasn't clear). Nice sit-down restaurant doing pizza and pasta with waitress service. Not super cheap, but definitely not upscale. And doing perfectly fine. No economic imperative to take this step. Just a pride thing for my friend.

                1. re: masha

                  And unlike, say, beer, uneaten sauce can't be kept forever. And that IS wasting money. As has been written here, I think the friend needs to have a little talk with himself and just suck it up. Or move on. I have a chef friend who left his previous executive chef job at a pretty cutting edge place. Due to "issues." He's now working where I'm sure he's disappointed at how few options he has for doing innovative and better cooking. But that's his job. For now.

                  1. re: c oliver

                    I think that's the key.

                    If I went to a restaurant and they charged extra to add clams to the red sauce, I wouldn't blink. If they offered an upsell for the good tomato sauce, I'd think "What the $@$#! Their default is mediocre tomato sauce and you have to pay extra to get the edible stuff?" and I'd probably walk away without ordering.

                    Unless the whole key of the restaurant was that they had a selection of different sauces at different price points, for you to assemble a pasta dish - I know a chicken soup place like that, where there are different prices for regular, free range, black skin, and vegetarian chicken.

                    Even if it's not difficult to do, logistics wise, I think this would be a bad business decision, and likely to hurt the bottom line.

                    As it is - the restaurant is popular and is making steady money. The main owner likes things the way it is and doesn't want to change things. If this guy wants to do things differently, he probably needs to start his own restaurant, and take the risk himself.

                    1. re: tastesgoodwhatisit

                      This is where marketing comes in. You (probably) can't sell "the good sauce" at a higher price. However, "Mario's Nana's Special Sauce" or "Puglian-style Tomato Sauce" might pull in a little extra.

                2. As a customer, I would feel nickel-and-dimed if I was asked if I wanted the regular or super-charged sauce with every dish. I am thinking of how often my husband and I would encounter that sauce in a typical dinner -- calamari appetizer, eggplant parmesan, ravioli. Would the server ask, "Would you like regular or super-charged sauce?" with each dish? That would irritate me and make me feel like the standard sauce is substandard, even if I enjoyed it before. I wouldn't have a problem paying extra for a different sauce altogether, nor would I mind paying a fair price for a special featuring "our special small batch fresh marinara." I know that is not so rational, but consumers usually aren't.

                  1 Reply
                  1. re: Tara57

                    Good point. But probably 95% of customers are long-time regulars (it's a small town, and the place serves regulars). It's not a walk-in crowd, so there's some tolerance and good will built up.

                    Also, customers don't need the option rubbed in their faces. It can just be a quiet alternative for those who are curious, wealthy, or who've been quietly putting up with bad sauce for years wishing it'd be improved (sauce aside, the food's pretty good here). If it works, an interesting thing has been learned, and my friend can perhaps introduce other improvements. It's hard to propose improvements in a successful restaurant. That's what my proposal is trying to achieve.

                  2. I have trouble believing that the price difference between "awful canned sauce" and an acceptably tasty substitute costs so much as to justify a substitution charge.

                    2 Replies
                    1. re: jaykayen

                      Because the restaurant is successful, the majority partner has zero incentive to ever change/improve anything. If we're going to talk strict economics, status quo wins, and sauce never improves.

                      I'm trying to help my friend slide in an upgrade in a way that will pay for itself and not threaten the status quo too badly. Sneaky-like.

                      1. re: Jim Leff

                        If that business thrives due to long time regulars, you can't sneak it by them, they HATE changes, they go for reliability. Bad business idea.