Introduction

The pricing strategy of a company helps to meet the satisfaction level of the customers because it describes how the products and services of an organization would be consumed. For attaining this paper, Rainforest Café is selected as a case organization. It is a restaurant chain. It is owned by Landry’s Inc. Rain Café forest’s main source of revenue is local tourism. Rain Forest Café serves a variety of seafood, pizzas, and pasta (rainforestcafe, 2021). This paper describes the pricing strategy of the company with the help of its short-term and long-term business objectives.

Nature of the Business

Rainforest Café is a hospitality establishment. It’s an interesting spot to buy and eat. The café is suitable for the whole family because it is adventurous, partly contains restaurant qualities, and is entertaining. Every day is an adventure at Rain Forest Café (rainforestcafe, 2021). This Café is available for the customers to perform group activities such as social gatherings or birthday celebrations.

Objectives

The Rain Forest Café aims to grow its market share in the concerned target market in the next few years. This will be accomplished by an unshakable dedication to customer service and addressing client needs. The goal for the next five years is to keep the same level of dedication. They claim to provide food at reasonable pricing to the guests. The café’s friendly service is one of its primary unique selling points.

Approach to Pricing by Rain Forest Café

Rain Forest Café is dedicated to building long-term client relationships. As a result, the cost of food items has remained low. With the help of this process, Café attracts customers to its products and services (rainforestcafe, 2021). As a result, the company enhances its competitive advantage.

Existing Pricing Strategy

Rain Forest Café’s pricing approach is geared toward maximizing customer strength. This can be accomplished by lowering the prices of food goods. the target market for the café is families who always look to find a welcoming environment before the selection of a coffee cafe. Rain Forest Café uses a competitive pricing system. It sets lower prices for its items based on the prices set by competitors (Kaplow, 2013). The company also believes that daily coffee consumers can be not influenced by introducing coupons or discount programs. Because pricing will have a direct impact on the Rain Forest Café’s profitability, it’s critical to get it right.
The pricing strategy of the café reflects the combination of key expenses and charges for the coffee (Wreden, 2005). Apart from the principal expenses of the café, the style of the café is vital to appeal to the target market. The café’s location is also important for the café’s competitive advantage.

Menu pricing Strategy

This strategy of the café is also effective as it facilitates the café to influence the profitability of the company positively. The food items must be priced by the menu. It is critical to identify the food products that will be presented on the menu while determining the menu’s price. The price strategy will be determined by the condiments available on the menu (Vashisht, 2005). There will be a different fee for fries, sand witches, and salads that helps the customers in the selection of food with the coffee. The cost of the items on the menu is computed based on the menu ordered by customers. This is the starting point for food costs. Aside from that, fixed and variable costs must be determined to determine the price of food items (Guffey and Loewy, 2021). For different customers, the café offers a different menu that helps each target customer’s in ordering products as per the choice.

Flexible Pricing Strategy

The pricing strategy of the café is based on the flexibility nature which allows the management to adopt the changes in the price variables at any stage of business or at any time. They determine the prices based on the fee required to break even. Supply chain management of the café is critical to the company’s performance (Hurriyati et al., 2020). The company has established a supply network. This has aided the organization’s expansion. The corporation has a flexible pricing strategy, which allows it to raise the food price as needed to maximize profit. The high profit has been exhibited as daily specials, which will design the prices that will improve the café’s sales, by ranging the profit in small increments.

Business Plan for Next 5 Years

Pricing Strategy Objectives

The pricing strategy’s goal will be to increase the company’s revenues as much as possible. It will increase the organization’s profitability. People of various ages will frequent the coffee shop. The coffee shop’s sales will increase as a result of this. Rain Forest Café has chosen a flexible pricing policy. To increase sales margins, they can use a value-based pricing strategy.

Pricing strategy target

The goal of the pricing plan is to maximize the café’s sales. This can be accomplished by providing high-quality food at competitive pricing. However, if the café’s sales drop during the lean season, the pricing of the food products can be raised (Vashisht, 2005). Even if the price of the food increases, the café shop’s sales will not decrease if the food is of high quality. The menu features one-of-a-kind dishes ranging from seafood to quirky desserts.

Implementation of Value-Based Pricing

To optimize profitability, Rain Forest Café can use a value-based pricing approach. To define the target pricing for the food goods, they can conduct comprehensive research and customer analysis. To reach the widest possible audience, the corporation must price food items based on comprehensive research. The company’s method for determining the output level, products, and price that will earn the most profit is called profit maximization. Various businesses do not use a pricing strategy based on the value of products (Jong, 2009). It’s utilized to find as many buyers as possible who are willing for paying for the food and coffee.

Pricing strategy based on Right Customers and Right Market

Price lowering cannot be the organization’s primary tactic for reaching out to a diverse group of clients. However, the practice is based on a more in-depth examination of the actual consumer base. To increase profit margins, the coffee shop can boost prices. Customers that value the meal for the quality it provides will continue to patronize Rain Forest Café. It is possible to keep the demand curve inelastic. A little change in the price of food goods can significantly enhance the profit margin (Mahadevan, 2015). However, the café can only raise the price of certain parts of the menu. The pricing of the food items will also fluctuate depending on the current market values.

Price for Communication and Product Versioning

Instead of boosting the price of the entire menu, Rainforest Café could raise the price of select drinks and sizes. The rise in the price of food goods must be communicated to clients to alter their impression. The increase in the price of food goods could be based on a study of client willingness to pay for the product. The increase in the cost of a food item must not appear small.

Conclusion

From the above discussion, It concluded that the company has adopted two types of pricing strategies based on the long-term and short-term objectives of the company. These strategies help the company to meet not only the demand of the customers but also increase the profitability of the company. These pricing strategies also allow the company to make certain applicable changes if any external, market variable like demand, price of raw materials of the supply chain has been changed.

References

Guffey, M. and Loewy, D. (2021). Business Communication: Process & Product. Cengage Learning.
Hurriyati et al. (2020). Advances in Business, Management and Entrepreneurship: Proceedings of the 4th Global Conference on Business Management & Entrepreneurship (GC-BME 4), 8 August 2019, Bandung, Indonesia. CRC Press.
Jong, H. (2009). Innovation and Strategy of Online Games. Imperial College Press.
Kaplow, L. (2013). Competition Policy and Price Fixing. Princeton University Press.
Mahadevan, B. (2015). Operations Management: Theory and Practice. Pearson Education India.
rainforestcafe (2021). Rainforest Cafe Homepage. https://www.rainforestcafe.com/
Vashisht, K. (2005). A Practical Approach to Marketing Management. Atlantic Publishers & Dist.
Wreden, N. (2005). Profit Brand: How to Increase the Profitability Accountability and Sustainability of Brands. Kogan Page Publishers.