Marketing the Pricing Strategy for Big Mabel\'s

Marketing

The pricing strategy for Big Mabel's Chicken and Waffles will be in line with other similar businesses. Though food trucks are able to deliver meals quickly, they compete more with casual dining or even fine dining restaurants in terms of their market. The pricing, therefore, does not compete with quick service restaurants. The pricing strategy therefore will reflect a few different objectives. The operating hours are limited, so it is important to drive volume. For many customers, this might be an impulse purchase, as the lack of fixed location makes it more difficult for customers to target Big Mabel's as a destination. So the pricing strategy has to be volume-friendly. Typically in the restaurant business, 3x ingredient cost is common. For a food truck, 2.5x is probably fine as a starting point, subject to adjustment on the basis of prevailing demand conditions.

There will not be any specials, with respect to pricing. This is because the appearance of the truck at a given location is special enough. Also, food specials are going to be used to entice and attract -- for example one day we could have an oyster po'boy special, another day we could have a breakfast opening with shrimp and grits. The idea is that the pricing is attractive enough, as are the food offerings, that special deals will not be needed to entice people. If you need to be bribed to eat fried chicken and waffles, you are truly a deviant human being.

There will not be price discrimination at Big Mabel's. Perfect price discrimination is illegal anyway. Imperfect price discrimination could be used in this business, by changing the prices charged at different locations. However, consumer awareness is going to be high, especially given what we expect to be a strong social media presence. Price discrimination such as charging more at stadiums or to late night revelers in the entertainment district, might be an effective means of leveraging differences is price elasticity among different client groups, such a practice carries with it poor optics. Further, price discrimination works best when different customers do not realize they are subject to it, or when they accept it (i.e. senior's discounts). In the social media age, information about price discrimination would surface quickly, and is not likely to be accepted -- it would carry negative optics.

Demand is expected to be around 20 meals per hour, with about 5 hours of operation per day. Given this, the pro forma income statement is as follows:

Big Mabel's Chicken and Waffles

Pro Forma Income Statement

Revenue

360000

COGS

144000

Gross Profit

216000

Overhead Expenses

60000

Operating Profit

156000

Taxes

46800

Net Profit

109200