More restaurants are experimenting with "dynamic pricing," which involves altering menu prices in response to demand.
More restaurants are experimenting with "dynamic pricing," which involves altering menu prices in response to demand. (Photo : by SAUL LOEB/AFP via Getty Images)
Users of ride-sharing services such as Uber or Lyft are used to these firms raising their rates during periods of high demand or traffic congestion. However, in order to encourage users to plan rides during slower times, ride sharing costs may decrease, which will keep drivers busy.
The same holds true for lodging and flights. It is far more expensive to book travel or lodging around the holidays than it is thereafter, when demand declines. Now that online ordering and menu digitalization are becoming more common, dynamic pricing is beginning to appear in restaurants, which may annoy some patrons.
Conversely, businesses claim that it helps them maintain a balance between supply and demand while allowing patrons to take advantage of special offers during off-peak dining hours.
The Controversy and Challenges Surrounding Dynamic Pricing in the Restaurant Industry
When the fast food business Wendy's stated it will be experimenting with dynamic pricing in its locations starting in 2025 using digital menu boards, it made headlines and drew controversy. The news was interpreted by customers as meaning they would pay more during busy hours. Conversely, Wendy's stated that the modification was made to make it easier for them to alter their menus and provide customers with special offers when business is sluggish.
The emergence of delivery applications and QR-code-accessible digital menus has simplified the process for restaurants to adopt dynamic pricing.
According to a recent podcast, Colin Webb, the co-founder and CEO of Sauce, a dynamic pricing engine that assists restaurants in using data to boost online sales, "you're starting to see restaurants take that same step" that retail and taxi businesses made when they went online.
Nevertheless, when it comes to implementing dynamic pricing, restaurants are trailing other businesses.
In order to keep their patrons happy, restaurants have been hesitant to adjust their rates in response to demand. According to Zagor, this is partly because consumers have a stronger emotional bond with food than they do with other products.
In the restaurant business, dynamic pricing has sort of always been around; supper menu items are usually more expensive than comparable dishes served at breakfast or lunch.
Jan stated that although customers might not enjoy dynamic pricing, they are limited in their options when it comes to booking hotels and flights. She said that with restaurants, it might not be the case.
Dynamic pricing may increase sales for companies while giving customers ways to save money.
Look for sales on food goods during slower periods, such as bad weather, or off-peak hours, such as between 10 a.m. and 12 p.m. or 3-5 p.m. If you don't like the costs at a particular place, you may also decide not to go there.
