Microsoft Word 2007 ichrie conference Proceedings Final-Final 06-06-07. doc

 
2007 Annual International CHRIE Conference & Exposition 
337
USING PRICE-SENSITIVITY MEASUREMENTS TO ESTABLISH MENU PRICING: A HONG KONG 
BUFFET RESTAURANT EXAMPLE 
Carola Raab 
William F. Harrah College of Hotel Administration 
University of Nevada Las Vegas 
Las Vegas, Nevada, USA 

Karl Mayer 

William F. Harrah College of Hotel Administration 
University of Nevada Las Vegas 
Las Vegas, Nevada, USA 
and 

Yen-Soon Kim 

William F. Harrah College of Hotel Administration 
University of Nevada Las Vegas 
Las Vegas, Nevada, USA 
ABSTRACT 
Setting the correct price for hospitality products is a crucial management task that has a major influence on 
a firm’s profitability. In general, there has been a lack of academic interest in the field of pricing. The restaurant 
industry typically establishes prices by marking up a certain cost percentage, or by gut feel and trial-and-error 
methods. This study demonstrates how restaurant managers can use a simple survey method to measure customers’ 
price sensitivity, which can assist them in setting prices that represent value to their customers. Price-Sensitivity 
Measurement is illustrated in this study by using data collected from a Hong Kong buffet restaurant. The study’s 
results reveal price ranges that represent value for dinner buffet customers.