OPERATIONS
Dynamic pricing a divisive subject at
National Restaurant Show With the Wendy’s debacle still fresh in operators’ minds, some are firmly opposed to demand-based menu pricing. Others say its time has come. I s dynamic pricing a smart in- BY JOE GUSZKOWSKI SENIOR EDITOR RESTAURANT BUSINESS
cremental revenue driver for restaurants? Or is it just a good way to make customers mad? Both sides of the debate were represented at the National Restaurant Association Show in Chicago this weekend, where re- al-time, demand-based menu pric- ing was more than just a hot topic for some. “It’s a scary topic,” said Patric Knapp, VP of operations for sev- en-unit Bobby’s Burgers by Bobby Flay, referencing the widespread backlash that hit Wendy’s earlier this year after it said it might test dynamic pricing. Knapp said Bobby’s is steering clear of dynamic pricing because of how guests might react. “It’s going to deter a customer who knows what your prices are,” he said. And it doesn’t take long
A cardboard cutout of Chowly CEO Sterling Douglass challenges Show-goers to a debate.
for one disgruntled customer to go viral. “Social media is a different environment than it was 10 years ago,” Knapp said. For 30-unit Mason’s Famous Lobster Rolls, which is aiming to make lobster accessible to the masses, dynamic pricing is not a good fit, said CMO Alefiya Dhilla.
“We’re not looking to be the fast food of lobster, but we are com- petitively priced,” she said. With its lobster rolls selling for around $20, Mason’s has little wig- gle room on price if it wants to maintain that reputation. “People are gonna say it’s too expensive,” said CEO and founder Dan Beck. Research on consumer percep- tions of dynamic pricing has had mixed results. According to a sur- vey by the National Restaurant As- sociation, 61% of people feel very or somewhat favorable toward it. But another survey, by tech sup- plier HungerRush, found that 81% would either change their dining hours or avoid a restaurant alto- gether if it used dynamic pricing. Proponents of dynamic pricing argue that consumers already ac- cept the practice when booking
“ It will happen because it needs to for the business to succeed.”
— Sterling Douglass of Chowly, on the future of dynamic pricing
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National Restaurant Association Show 2024
PHOTO CREDIT: JOE GUSZKOWSKI
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