Why Copying Your Competitor's Prices Could Be the Most Expensive Mistake You Make
By Benjamin Sawyer
There is a conversation that happens in independent hospitality businesses across the UK with such regularity that I could set my watch by it.
A Wetherspoons opens nearby. And within a week, the owner of the independent pub, bar, or café down the road is sitting at their kitchen table, looking at their menu, and wondering whether they need to drop their prices.
They don't. In fact, they need to do the opposite.
But I'll come back to Wetherspoons.
The Pricing Problem Nobody Talks About Honestly
Most independent hospitality operators have a pricing problem. The majority of them don't know it.
It doesn't always look like the same problem. Sometimes it's underpricing, charging less than the business needs to survive because the owner is afraid of what customers will think or, because they've looked at what the place down the road charges and matched it without asking why that number exists. Sometimes it's overpricing relative to the experience being delivered, charging premium prices without the quality, the service, or the atmosphere to justify them. And sometimes the prices themselves are roughly right, but the operator has no idea whether they are, because they've never sat down with their actual costs and worked it through.
All three are common. All three are expensive. And all three share the same root cause: pricing by instinct rather than by calculation.
The Number You Need to Know Before You Set Any Price
Your food cost percentage is the foundation of every pricing decision you make. If you don't know it, you cannot price properly – full stop.
Food cost percentage is simple in principle: it's the cost of the ingredients in a dish expressed as a percentage of the price you charge for it. A dish that costs £4 to make and sells for £14 has a food cost of roughly 28 percent. A dish that costs £6 to make and sells for £14 has a food cost of nearly 43 percent. Same selling price. Entirely different financial reality.
Most well-run independent venues aim to keep food costs between 25 and 35 percent, depending on their concept and positioning. Some run higher with good reason. But the point is not the number itself; the point is knowing your number and understanding what it means for the health of the business.
Here is what I see again and again in independent venues: an operator who genuinely doesn't know what their food cost is. They know roughly what they paid for the chicken. They have a vague sense of the portion size. They looked at what the restaurant nearby charges for a chicken dish and set their price somewhere in that neighbourhood. And that is the entirety of their pricing process.
The problem is that the restaurant nearby might have a completely different cost base. They may have higher-volume supplier relationships that give them better purchasing terms. They may be running a simpler kitchen with lower labour costs. They may be losing money on that dish and don't know it either. Copying their price tells you nothing useful, because you're not copying their cost structure, only their number.
Labour Is the Half of the Equation Most People Ignore
Food cost is where most operators start when they think about pricing. But in most hospitality businesses, labour is the largest cost, and it is almost entirely absent from the way independent operators think about their menu prices.
Your wage costs – kitchen, front of house, and management – will typically account for somewhere between 20 and 35 percent of your revenue in a well-run venue. In a poorly structured operation, the cost can be considerably higher. And unlike food cost, which moves roughly in proportion to how much you sell, labour cost is largely fixed in the short term. You can't halve your kitchen brigade because Monday lunch was quiet.
The implication for pricing is direct: if you price your menu as though your only variable cost is food, you are building a business that will look viable on a busy Saturday night and quietly bleed money every other day of the week.
Effective pricing accounts for food cost, labour cost, and the overhead burden – rent, rates, utilities, and insurance – that sits above all of it. The question is not, "What can I charge for this dish?" It is "What do I need to charge for this dish, across the volume of covers I realistically expect to do, for this business to make money?" Those are not the same question, and most menus are built on the first one.
The Wetherspoons Problem
Back to the conversation I mentioned at the start.
When a Wetherspoons opens near an independent venue, the almost universal instinct is to compete on price. You look at the £8.99 mixed grill or the £3.49 pint and start wondering whether the menu needs to come down.
This is a catastrophic mistake, and here's why.
Wetherspoons operates on a scale, a supply chain, and a cost structure that an independent venue cannot replicate and should not attempt to. Their buying power, their centralised operations, their stripped-back service model – all of it is engineered to deliver volume at a price point that makes no sense for an independent to match. You will not win that fight. You will simply destroy your margins by trying.
The right response to a Wetherspoons opening nearby is not to compete. It is to differentiate. And differentiation, in this context, means one thing: going more premium, not less.
Not overnight. Not in a single dramatic price increase that shocks your regulars. But deliberately, at pace, and with the quality and experience to justify it.
Because here is what Wetherspoons cannot offer, at any price: genuine hospitality. A landlord who knows your name. Food that was cooked this morning by someone who cares about it. A room that has a soul. An atmosphere that wasn't designed by a corporate committee. A genuine local.
These things have value. Significant value. And a meaningful proportion of the people who walk through your door after a Wetherspoons opens will be precisely the customers who walked into the Wetherspoons once and decided it wasn't for them. They are looking for what you offer. The question is whether you're pricing it in a way that signals its worth.
The independent venues that survive and thrive next door to a Wetherspoons are the ones that made a clear choice: we are not that, and we are not trying to be that. We are something different, and we charge accordingly.
The ones that don't make it are usually the ones that tried to split the difference.
What People Will Pay More For
There is a deeply held anxiety in independent hospitality that customers are primarily motivated by price. That if you charge more than that place down the road, they'll go to that place down the road.
Some will. But the customers worth building a business around do not primarily choose based on price — they choose based on value. And value is not the same as cheapness. Value is the sense that what you paid was worth what you got.
A genuinely better experience – better food, better service, a room that feels cared for, and staff who seem pleased to see you – commands a premium. Not an unlimited premium, but a real and sustainable one. The operators who understand this are the ones who invest in the quality of the experience and then price with confidence, because they know what they're selling is worth it.
The operators who don't understand it either undercharge – eroding their margins while delivering quality they're not being paid for – or they price correctly but deliver an experience that doesn't justify it and then wonder why they're not getting repeat customers.
Pricing and quality are not separate decisions. They are the same decision, made consistently across every aspect of the business.
The Discounting Trap
One more thing worth saying, because it comes up almost every time the subject of pricing is raised. Discounting, whether through a promotional offer, a loyalty scheme, a group booking reduction, or simply caving when a customer pushes back on the bill, feels like good customer service. In reality, it is almost always a short-term fix that creates a long-term problem.
When you discount, you are not building loyalty. You are training your customers to wait for a discount. You are attracting customers who will leave the moment someone else offers a better deal. And you are eroding the margins that pay for the quality that justified your price in the first place.
If your prices are right – if they reflect your actual costs and the genuine quality of your experience – you should be able to hold them. And if a customer is pushing back on a price that is fair and justified, the answer is not to reduce the price. It is to make sure the experience is communicating its value clearly enough that the price feels obvious.
A Practical Starting Point
If you're not sure whether your pricing is working, here are three questions worth sitting with.
Do you know your food cost percentage for each dish on your menu? If the answer is no, that is the first thing to fix. Not because the number itself will solve anything, but because without it, every pricing decision you make is guesswork.
Do you know what you need to turn over each week to cover your costs – all of your costs, including labour and overhead – and make a reasonable return? If the answer is no, you don't yet have a financial baseline to price against.
And finally, are your prices set because they reflect the reality of your business, or because they reflect what someone else is charging? If it's the latter, you may be running someone else's financial model in your venue. Which is only a problem if your costs are different from theirs.
They almost certainly are.
A Final Note
Pricing is not the most glamorous subject in hospitality. But it is, in my experience, one of the most consequential. More businesses struggle or fail because of pricing errors – mostly underpricing, occasionally the wrong kind of overpricing – than almost any other single factor.
The good news is that it is also one of the most fixable. Once you know your numbers, pricing becomes a decision rather than a guess. And decisions, unlike guesses, can be made confidently.
Atelier Sawyer works with independent restaurants, bars, and cafés at every stage — from pre-opening planning through to turnaround and expansion. If your pricing doesn't feel right and you're not sure why, book a free consultation or start with our Hospitality Health Check.