cawacko
Well-known member
Anyone have experience with this yet?
Surge Pricing Is Coming to More Menus Near You
Restaurants experiment with technology that can move prices up and down based on demand and staffing; ‘a little sales boost to offset our costs’
If you are hungry for barbecue on a Saturday night this month, a delivery of a pulled-pork sandwich from Cali BBQ could cost you around $18.
Or you could hold off a few days and order the same sandwich delivered on a weekday afternoon for around $12.
Restaurants like San Diego-based Cali BBQ are experimenting with a form of the dynamic pricing long used by airlines, hotels and ride-hailing services. Technology providers are pitching services that enable restaurants to change prices weekly or monthly, increasing or slashing the cost of a taco or sandwich between a few quarters to several dollars, depending on demand and sales patterns.
The small changes can add up for restaurants seeking more sales, though operators must weigh the potential gains with the risk of upsetting inflation-weary consumers.
Shawn Walchef, Cali BBQ’s owner, said that variable pricing attached online to the pulled-pork sandwich boosted the four-unit chain’s $30,000 in monthly delivery sales by $1,500 since the company began testing it in early 2023.
“That’s very meaningful for a small business,” Walchef said about the sales boost. “I recommend it to every restaurant owner.” Cali BBQ has since expanded the technology to a $32 combo meal.
Dynamic pricing—charging higher rates at peak times and dropping them at slower ones—has become commonplace in industries such as e-commerce, and mobile apps have made it easier for companies to study consumers’ buying and browsing and quickly adapt. Rising costs in recent years have led more retailers to implement it.
Restaurants are experimenting with the technology as the industry looks for ways to boost sales and increase profits. Many restaurants increased menu prices as labor, food and other costs have soared since 2021. Prices for food eaten away from home in January were 30% higher than in the same month in 2019, according to Labor Department data.
Wendy’s drew public scrutiny after the burger chain said in a mid-February earnings call that it was looking to test dynamic pricing. The chain said it would invest around $20 million in its U.S. restaurants to install digital menu boards by 2025 that could suggest items to customers and present different offerings depending on the time of day.
Inflation-fatigued consumers protested the possibility of surge pricing hitting their burgers, and Wendy’s last week said it wouldn’t raise prices at the busiest times. New digital menus could instead allow the chain to offer discounts during slower hours, Wendy’s said.
Drew Patterson, co-founder of restaurant dynamic pricing provider Juicer, said restaurants need to reference “happy hour” and other known promotions when explaining variable pricing to customers.
“You need to make it clear that prices go up and they go down,” said Patterson.
Dozens of restaurant brands use Juicer’s technology to change their prices based on demand trends, with an average swing of up to 15%, Patterson said. Delivery services such as Uber Eats and technology platforms like Tock also allow restaurants to bump prices up or down.
Dave & Buster’s and other chains are dabbling with the technology to help spread out customer visits over a broader part of the day and better capitalize on rush periods. “We’re going to have a dynamic pricing model, so we have the right price at the right time to match the peak demand,” Dave & Buster’s CEO Chris Morris said during an investor presentation last year. The company declined to comment further.
Coastal cuisine chain Bartaco first started testing dynamic pricing for its app delivery orders last year, increasing to-go prices on its taco packs by between 5% and 10% during weekend peak hours and discounting them during slower weekday afternoons. Revenue from sales made through apps has been up 4% to 6% every month since the 31-unit chain started using dynamic pricing, and customers haven’t complained, executives at the Arlington, Va.-based company said.
“We look at it as a little sales boost to offset our costs,” said Bartaco Chief Financial Officer Levi Martin, who said the company is particularly struggling with app-related fees.
Other restaurants, particularly sit-down ones, are charging more for prime seats during peak hours. Gene and Georgetti, a historic Chicago steakhouse where Frank Sinatra once regularly dined, in late 2022 implemented dynamic pricing on two booths frequented by celebrity customers. Diners typically pay a $20 fee when they book the booths at busy hours, helping counterbalance the restaurant’s rising expenses, managing partner Michelle Durpetti said.
“If you are willing to invest, it guarantees you have a great experience and it’s been a positive addition to us,” said Durpetti, who said the restaurant gets a handful of the reservations weekly.
Some chains said they have no interest in the technology and fear further angering consumers livid over high restaurant prices.
Dine Brands, the parent of Applebee’s and IHOP, looked at the technology but passed because their customers are price sensitive, Chief Executive John Peyton said in an interview. “We don’t think it’s an appropriate tool to use for our guests at this time,” he said.
An estimated 61% of adults support variable pricing where a restaurant lowers or raises prices based on business, with younger consumers more in favor of the approach than older ones, according to an online survey of 1,000 people by the National Restaurant Association trade group.
While some consumers tend to resent surge pricing, as Wendy’s discovered last month, they like happy-hour discounts and other deals at slow times, industry consultants said.
“People know how much a small fry or burger costs,” said Matthew Tucker, head of the reservation platform Tock, which offers dynamic pricing options to the 7,000 restaurants that use its services. “If they mess with that formula, you have to be careful.”
https://www.wsj.com/business/hospit...ar-you-66a245f3?mod=Searchresults_pos1&page=1
Surge Pricing Is Coming to More Menus Near You
Restaurants experiment with technology that can move prices up and down based on demand and staffing; ‘a little sales boost to offset our costs’
If you are hungry for barbecue on a Saturday night this month, a delivery of a pulled-pork sandwich from Cali BBQ could cost you around $18.
Or you could hold off a few days and order the same sandwich delivered on a weekday afternoon for around $12.
Restaurants like San Diego-based Cali BBQ are experimenting with a form of the dynamic pricing long used by airlines, hotels and ride-hailing services. Technology providers are pitching services that enable restaurants to change prices weekly or monthly, increasing or slashing the cost of a taco or sandwich between a few quarters to several dollars, depending on demand and sales patterns.
The small changes can add up for restaurants seeking more sales, though operators must weigh the potential gains with the risk of upsetting inflation-weary consumers.
Shawn Walchef, Cali BBQ’s owner, said that variable pricing attached online to the pulled-pork sandwich boosted the four-unit chain’s $30,000 in monthly delivery sales by $1,500 since the company began testing it in early 2023.
“That’s very meaningful for a small business,” Walchef said about the sales boost. “I recommend it to every restaurant owner.” Cali BBQ has since expanded the technology to a $32 combo meal.
Dynamic pricing—charging higher rates at peak times and dropping them at slower ones—has become commonplace in industries such as e-commerce, and mobile apps have made it easier for companies to study consumers’ buying and browsing and quickly adapt. Rising costs in recent years have led more retailers to implement it.
Restaurants are experimenting with the technology as the industry looks for ways to boost sales and increase profits. Many restaurants increased menu prices as labor, food and other costs have soared since 2021. Prices for food eaten away from home in January were 30% higher than in the same month in 2019, according to Labor Department data.
Wendy’s drew public scrutiny after the burger chain said in a mid-February earnings call that it was looking to test dynamic pricing. The chain said it would invest around $20 million in its U.S. restaurants to install digital menu boards by 2025 that could suggest items to customers and present different offerings depending on the time of day.
Inflation-fatigued consumers protested the possibility of surge pricing hitting their burgers, and Wendy’s last week said it wouldn’t raise prices at the busiest times. New digital menus could instead allow the chain to offer discounts during slower hours, Wendy’s said.
Drew Patterson, co-founder of restaurant dynamic pricing provider Juicer, said restaurants need to reference “happy hour” and other known promotions when explaining variable pricing to customers.
“You need to make it clear that prices go up and they go down,” said Patterson.
Dozens of restaurant brands use Juicer’s technology to change their prices based on demand trends, with an average swing of up to 15%, Patterson said. Delivery services such as Uber Eats and technology platforms like Tock also allow restaurants to bump prices up or down.
Dave & Buster’s and other chains are dabbling with the technology to help spread out customer visits over a broader part of the day and better capitalize on rush periods. “We’re going to have a dynamic pricing model, so we have the right price at the right time to match the peak demand,” Dave & Buster’s CEO Chris Morris said during an investor presentation last year. The company declined to comment further.
Coastal cuisine chain Bartaco first started testing dynamic pricing for its app delivery orders last year, increasing to-go prices on its taco packs by between 5% and 10% during weekend peak hours and discounting them during slower weekday afternoons. Revenue from sales made through apps has been up 4% to 6% every month since the 31-unit chain started using dynamic pricing, and customers haven’t complained, executives at the Arlington, Va.-based company said.
“We look at it as a little sales boost to offset our costs,” said Bartaco Chief Financial Officer Levi Martin, who said the company is particularly struggling with app-related fees.
Other restaurants, particularly sit-down ones, are charging more for prime seats during peak hours. Gene and Georgetti, a historic Chicago steakhouse where Frank Sinatra once regularly dined, in late 2022 implemented dynamic pricing on two booths frequented by celebrity customers. Diners typically pay a $20 fee when they book the booths at busy hours, helping counterbalance the restaurant’s rising expenses, managing partner Michelle Durpetti said.
“If you are willing to invest, it guarantees you have a great experience and it’s been a positive addition to us,” said Durpetti, who said the restaurant gets a handful of the reservations weekly.
Some chains said they have no interest in the technology and fear further angering consumers livid over high restaurant prices.
Dine Brands, the parent of Applebee’s and IHOP, looked at the technology but passed because their customers are price sensitive, Chief Executive John Peyton said in an interview. “We don’t think it’s an appropriate tool to use for our guests at this time,” he said.
An estimated 61% of adults support variable pricing where a restaurant lowers or raises prices based on business, with younger consumers more in favor of the approach than older ones, according to an online survey of 1,000 people by the National Restaurant Association trade group.
While some consumers tend to resent surge pricing, as Wendy’s discovered last month, they like happy-hour discounts and other deals at slow times, industry consultants said.
“People know how much a small fry or burger costs,” said Matthew Tucker, head of the reservation platform Tock, which offers dynamic pricing options to the 7,000 restaurants that use its services. “If they mess with that formula, you have to be careful.”
https://www.wsj.com/business/hospit...ar-you-66a245f3?mod=Searchresults_pos1&page=1