Eateries Eye Dynamic Pricing

Following Wendy’s unveiling of a digital menu board that it said would offer discounts during slower times of day, more quick-service restaurants are seeking opportunities with dynamic pricing technology, reports The Wall Street Journal. 

Restaurants including San Diego-based Cali BBQ are using services that enable more frequent price changes based on demand and sales patterns, according to the report. Cali BBQ owner Shawn Walchef said that variable pricing capabilities attached to online orders for pulled pork sandwiches boosted profits by $1,500 per month since testing it in 2023.

“That’s very meaningful for a small business,” Walchef said. “I recommend it to every restaurant owner.” Cali BBQ has since expanded dynamic pricing capabilities to a $32 combo meal.

Restaurants are turning to dynamic pricing as a possible solution to boost sales and increase profits. Many eateries had to increase prices as labor, food, and operating costs rose during the pandemic.

The dynamic pricing strategy isn’t new, the practice is common in ecommerce, with rideshare services often employing it during busy times of day. Even in foodservice, the tool’s potential has been explored by national chains including Dave & Buster’s. In an investor presentation last year, Dave & Buster’s CEO Chris Morris said, “We’re going to have a dynamic pricing model, so we have the right price at the right time to match the peak demand.”

On the other hand, some chains are apprehensive of dynamic pricing strategies. Dine Brands, parent company of Applebee’s and IHOP, passed on the technology due to the price sensitivity of their customer base.

“We don’t think it’s an appropriate tool to use for our guests at this time,” said Dine Brands CEO John Peyton. Full Story (Subscription Required)