Dynamic menu pricing or surge pricing

Dynamic pricing, also known as surge pricing or demand pricing, is a strategy where businesses adjust their prices based on factors like demand, competition, and cost fluctuations. In the restaurant industry, this can involve:

  • Time-based pricing: Offering lower prices during off-peak hours (e.g., lunch deals) and raising them during peak times (e.g., weekend evenings). This incentivizes customers to visit during slower periods, balancing demand and increasing revenue.
  • Demand-based pricing: Adjusting prices based on real-time customer reservations or online orders. For instance, a popular dish might have a slightly higher price during peak dinner hours compared to earlier in the day.
  • Inventory-based pricing: Lowering prices on items nearing their expiration to avoid waste and generate sales.

While not as prevalent as in other industries, early adopters are utilizing technology to implement dynamic pricing:

  • Indoor digital menu boards: Allow restaurants to update prices electronically, offering flexibility and immediate changes.
  • Drive-thru digital menu boards: When the drive-thru is full, increase prices

Dynamic pricing in restaurants is still in its early stages and faces some challenges:

  • Customer perception: Consumers may view frequent price changes as unfair or confusing, potentially harming brand image.
  • Transparency: Ensuring clear communication and transparency about pricing models is crucial to avoid customer dissatisfaction.

It’s important to note that many restaurants already use elements of dynamic pricing without explicitly calling it that. Examples include happy hour specials, prix-fixe menus, and market-price items. While not always real-time, these strategies adjust prices based on factors like time of day and ingredient costs.

Whether dynamic pricing becomes widely adopted in the restaurant industry remains to be seen, but it’s an evolving strategy with the potential to both benefit restaurants and influence customer behavior.

Dynamic pricing is implemented with digital menu boards with an integration with the point-of-sale system (PoS). Pricing schedules can be setup in the PoS and the menu price changes happen as a result of the PoS pushing new prices based on time of day, surges, or other factors.

Menuboard Manager® integration with PoS system makes it easy to implement. Contact us today for a demo!

Starbucks Drive-Thru Menu with Dynamic Pricing

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