Building A Dynamic Restaurant Pricing Strategy

Business, Restaurants, Trends

Gone are the days when dynamic restaurant pricing was as simple as marking up your cost of sales and ensuring that the selling price was within a pound of your competitors.

In an increasingly fierce competitive environment, with higher rents and staff costs restaurants have little option but to focus on tactically driving revenue.

These days achieving the full potential of your investment in a restaurant or a pub, lies in management’s ability to market and manage every available moment, as a unique product.

In order to get it right business models are based on niching and restaurants need to know exactly who they are targeting and how to engage with them. No more scattergun – ‘one menu reaches all’ approach here.

True, historically there has been a degree of dynamic restaurant pricing and all of these are forms of dynamic pricing:

  • Happy hour from 5-7
  • Cheap ‘pre-theatre’ meals (so you are in and out by 7PM)
  • Lunch vs dinner (cheaper vs dearer)
  • Prix fixe Fixed price special vs flexible menu a la carte
  • Two for one meal with this leaflet (mailed at times they know demand is slack)
  • Children eat for half price (even though they take a whole seat and often portions are not much smaller)
  • Half-price wine with every meal on Tuesdays, and so on

Revenue management is all about manipulation of price in relation to day-to-day demand and supply. Restaurant owners wrongly assume that price can only be manipulated through increasing or decreasing it.  This is not true and there is a host of other strategic levers at hand to maximise net revenue by guest and by the volume of customers served.  Restaurant revenue management strategies are as diverse as the many different types of restaurants!

Harrogate restaurateur Paul Rawlinson, owner of Norse restaurant has recently gone as far as introducing a revenue management system similar to that of hotels and airlines. The restaurant changes prices based on time, day of the week and demand, as was recently reported in the Caterer 

Whilst this approach is unlikely to be suitable for the majority of restaurants, those willing to blaze new trails in the way they are pricing will stand out and have better chances to grow and succeed.

Call Lucienne or Jeremy for an informal chat if you would like further advice on driving restaurant revenue.



Would you like to know more?

Download our latest White Paper entitled “Why Return on Hotel Investment Can Significantly Underperform” or contact me, Lucienne Mosquera (Managing Director) for an informal conversation about your Investment.