No matter the political opinion of the recent election, the current and future administrations will be closely monitored now and for the foreseeable future especially as it impacts the foodservice and hospitality community. The current economic climate has required restaurants to explore options that balance rising operating costs with diminishing consumer spending. Inflation has impacted restaurant menus and consumers’ willingness to spend dining out rather than eating at home. This makes increased menu prices an unappealing option for restaurant owners—but rising costs must be accounted for.
In an effort to accommodate the rapidly adjusting market, many business owners have considered dynamic pricing as an option. However, consumers are suspicious and perhaps don’t understand the fluctuations in dynamic pricing—and why. After Wendy’s received backlash over dynamic pricing earlier this year, other restauranteurs are wary of implementing the strategy with their own menus. After Wendy’s negative press around dynamic pricing, Juicer, a tech company known for delivery-based pricing, announced they’d move away from dynamic pricing as well, reports Nations Restaurant News (NRN).
Instead, the company opted for competitor-based pricing tools, “in the wake of the value wars,” says Ashwin Kamlani, cofounder and CEO of Juicer. “This new tool uses AI to grab pricing information and special offers from competitors within a two-mile radius and offers up pricing solutions for operators,” writes NRN, which means, even as prices increase based on market trends, restaurants can still be competitive with other businesses in the area.
Further, “Juicer is not the only company testing out different pricing tools based on variables other than traffic and demand. WookAI is a restaurant technology startup that offers pricing suggestions and real-time adjustments based on exact supply chain costs,” explains NRN. Which demonstrates that, businesses are still using a dynamic pricing model—pricing changes that adjust according to trends—but the point-of-focus is more palatable for the consumer. If businesses are making adjustments they can explain, such as competitive adjustments or supply chain costs, the consumer accepts what they can more easily understand.
So, as NRN suggests, dynamic pricing really needs a rebrand. “To me, dynamic pricing is just automated pricing that changes based on data,” says David DeSantis, cofounder and CEO of WookAI. “Planning prices proactively with good strategic information is the responsibility of all upper-level management at any food service organization.” Educating consumers on pricing models is a useful way to control reputation and response with quick and steep pricing changes during this challenging economic climate.
Working with a restaurant consultant from National Restaurant Consultants to engineer your menu is doing exactly this—making micro adjustments based on trends, both broadly and within your own restaurant environment. Then, our restaurant consultants organize your menu items in a way that makes sense to consumer ordering and spending patterns. It creates an easy-to-understand picture for both business owner and consumer, and this process allows for minor adjustments that account for pricing changes on food items and operations.
Richard Weil, owner and principal of National Restaurant Consultants believes, “Dynamic pricing challenges have been well documented. The alternative approach in utilizing technology or having operators and managers in tune with customer inputs as well as staff. This provides much-needed information for owners and management to make informed decisions about pricing adjustments.”