Like the travel industry, restaurant chains have access to advanced revenue management solutions, too. Can you afford not to consider using dynamic pricing?
After a rocky 2023, the industry is hoping that 2024 brings better revenue results for enterprise restaurant chains and finding the right pricing strategy is more critical than ever. With fluctuating market conditions and evolving consumer preferences, restaurant chains must adapt quickly and efficiently. Advanced revenue management solutions, such as JUICER, offer a way to navigate these challenges, providing detailed insights and data-driven strategies to optimize 3PO (3rd-party ordering) and maximize profitability.
Understanding the Impact of Pricing Strategies
Menu price changes can have significant repercussions on a restaurant chain's profitability. The key is understanding how such changes affect revenue, profit margins, and customer perception.
Imagine a 2% bump in incremental revenue for a large restaurant chain. It doesn't sound like much, but it is. For example, let's look at Jack in the Box. Total revenues in the fourth quarter of 2023 was $372.5 million. With a 2% increase, you are adding a cool $7.45 million.
Shouldn't everyone raise their prices 1%, 2% or 5% and just sit back and relax? Well, it's not as simple as that. There's a concept called price elasticity and it's important to test into an optimal price point. Price elasticity is a measure of the change in the demand for a product in relation to a change in its price. A few of today's AI-powered revenue management solutions use a combination of human expertise and advanced analytics to assess these impacts, offering a clear picture of the revenue and customer sentiment outcomes of pricing changes.
Let's take a walk...
The Role of Predictive Analytics
Predictive analytics analyze vast amounts of data – from past sales to current market trends, and external events like the weather – these systems can forecast the effects of various menu pricing decisions. This predictive capability allows restaurant chains to experiment with different scenarios, understanding the potential impacts before implementing any further changes.
Segmentation for Tailored Strategies
Every restaurant chain is unique, with varying customer bases, regional preferences, 3PO channels, and menu offerings. Revenue management solutions offer segmentation capabilities, allowing chains to customize their pricing strategies for different products, categories, and regions. This level of customization ensures that pricing decisions are not only data-driven but also contextually relevant.
This may sound complicated, because it is. When partnering with a revenue management provider, you should aim for a firm that keeps things simple with interactions that are designed to be straightforward and goal-oriented. Your partner should help you to demystify the options and customization. The aim of revenue management is to maximize value and unleash potential, so when going through the segmentation process and strategy, make sure you're working with a team of hospitality experts, not computer programmers.
Integrating Customer Feedback
In today's customer-centric world, integrating feedback into pricing strategies is essential. Revenue management solutions often include tools for analyzing customer responses, providing insights into how price changes are perceived and their impact on customer satisfaction and loyalty. Understand that if you raise your prices too far, 3POs will penalize your ranking in their app listings! For fine-tuning purposes, it's critical that you select a vendor who's team systematically analyzes 3PO rankings, customer feedback and sentiment, providing insights into price sensitivity and overall satisfaction.
Continuous Adaptation: The Key to Success
The restaurant industry is ever-changing, and so are the challenges it faces. The best revenue management systems offer continuous monitoring by experts and the flexibility to adapt to new data, menu entrants, and market trends. This ongoing adjustment ensures that restaurant chains can remain competitive and responsive to their customers' needs. Look for solution providers that have a high touch customer service capability so you can discuss prescriptive recommendations and next steps on a regular basis.
JUICER & bartaco: A Case for Dynamic Pricing
Among the options available, JUICER stands out as a comprehensive revenue management solution. JUICER uses real-time data analysis, adaptive learning algorithms, has talented customer service teams, and user-friendly scenario planning tools. The tech+human combination makes it a powerful asset for any restaurant chain looking to refine its pricing strategy.
Earlier this month, JUICER announced recently that bartaco , a 29-unit full-service restaurant chain, experienced a six-digit jump in delivery revenue in 2023 as a direct result of JUICER’s real-time restaurant revenue management solution. The announcement comes as the restaurant industry faces uncertainty surrounding current menu prices and their impact on consumer spending and loyalty.
“JUICER’s results are impressive given that for the first half of 2023 they were only managing delivery prices in 5 locations and with a very limited number of menu items,” said Scott Lawton, CEO of bartaco. “We’ve now implemented JUICER system-wide as they have demonstrated that their data-driven approach to menu pricing and measuring consumer price sensitivity is far more effective than our own methods.”
“We are so grateful for pioneer restaurant groups like bartaco that are willing to take calculated risks early on that will move the entire industry forward,” said Ashwin Kamlani, JUICER’s Co-Founder & CEO. “We delivered a 5x ROI to bartaco last year and results in 2024 are forecast to be significantly greater as we handle all menu items across all locations and in more channels.”
-- read the full story here.
+ +
For enterprise restaurant chains, the right restaurant pricing strategy can make all the difference in achieving success. Advanced revenue management solutions like JUICER provide the insights and tools necessary to navigate a complex pricing landscape. By harnessing these technologies, restaurant chains can optimize their pricing strategies, enhance customer satisfaction, and ultimately, drive greater profitability in an increasingly competitive market.
If you're curious about how you can add dynamic pricing flavor to your business, reach out to Popcorn GTM's partner, JUICER at hello@JUICERpricing.com, and start building an intelligent pricing strategy today!
