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gardless, and Wendy's eventually walked back its initial comments. And while memories of that de- bacle would likely have faded with time, years of inflation have made prices a permanent hot-button is- sue. Most recently, grocery stores have been accused of price-gouging by using digital price tags to change prices instantly. That comes even as grocery inflation has slowed to nor- mal levels in recent months. As such, many restaurants are apparently choosing to steer clear of dynamic pricing, and understand- ably so. They have enough work to do to repair their value perception with consumers, and throwing dy- namic pricing into the mix is not go- ing to help. Even though it can offer benefits to consumers in the form of lower prices at certain times, the optics outweigh the reality, as it so often does. It’s a shame, because restaurants need all the help they can get right
now. Costs are up, traffic is down, and even the slightest edge can make a difference. Kamlani said that by adjusting prices by 5% to 10%, Juicer helped customers boost their third-party delivery sales by 10% to 15% on average. And, he added, customers didn’t seem to mind. It’s not as if restaurants would be going out on a limb. Dynamic pricing and surge pricing are al- ready widely used in other indus- tries, from airlines to ride-sharing to concert tickets. Even third-party delivery apps use a form of dynam- ic pricing to calculate their delivery fees, and they continue to post re- cord numbers. No one likes it, but they live with it. And yet for restaurants—a fa- mously difficult, low-margin busi- ness—the technology has been deemed off-limits by some. It’s yet another example of the double stan- dard that gets applied to restaurants
where tech is concerned. Still, there is a future for dynam- ic pricing in restaurants. And it may come down to managing percep- tions. Kamlani said it needs a new name, for one, and I agree with him. “Dynamic pricing” smacks of corporate-speak; there’s a sense that the slick language is hiding something sinister. You can see why consumers made the connection to “surge pricing,” which, at the very least, is honest about itself. Better yet, maybe dynamic pric- ing doesn’t need a name at all, free- ing restaurants to be more creative with pricing without tying them- selves to an unpopular concept. “I firmly believe had Wendy’s just not said anything and they had just quietly implemented daypart offers, the consumer would have loved it,” Kamlani said. Instead, it may have set dynamic pricing back a bit.
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OCTOBER 2024 RESTAURANT BUSINESS
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