In the restaurant industry, you can’t be afraid to change and adapt to your customers’ needs and wants. Most restaurants do a good job of this by regularly updating their menus to include seasonal ingredients, removing old items that haven’t been selling well, or simply modernizing the menu copy. But not enough people give their menu pricing the proper attention. By using tools like dynamic pricing, you can give your pizzeria an edge against your competition.
What Is Dynamic Pricing?
If you walk into a restaurant and get handed laminated menus that look like they’re straight from the ‘90s, chances are they don’t use dynamic pricing. This is the process of regularly adjusting the pricing of your products to match the current level of demand for them.
Whether you offer pizza, pasta, or seafood, demand for your menu items isn’t always going to be steady. There are certain times that are naturally going to be busier than others, and your pricing should reflect this. This is called dynamic pricing, and has many great benefits for a restaurant.
Dynamic Pricing vs Happy Hour
Right now you might be asking yourself, “Isn’t this the same thing as doing a happy hour?” Well, not quite. Happy hours usually start at 4 or 5 pm and continue until around 6 or 7 pm. But these are times that your pizzeria is already very busy, whether you offer a happy hour or not. And since happy hours offer popular products (like wings or alcoholic beverages) at a temporarily reduced price during busy times, it is in many ways the exact opposite of dynamic pricing.
When following the practices of dynamic pricing, your product price should rise during busier times and lower during slower times. The aim is to maximize profits, while steadying customer traffic throughout the day.
The Advantages of Dynamic Pricing
As a pizzeria, the vast majority of your sales are going to be during lunch/dinner hours and weekend nights. Outside of these time periods, you’re typically lucky to get even a third of the orders that you handle during these rushes.
So how do you get people in the seats or clicking the ‘order now’ button during these slow times? Through dynamic pricing! By temporarily lowering the prices of certain menu items during non-peak hours, you can more easily entice people to buy your food. This will help drastically increase your revenue per available seat hour (RevPASH), especially during normally dead times.
In addition to creating more sales during slower hours, using dynamic pricing can also help you increase the sales numbers of a particular menu item. If you use an Item Summary report, you can see a detailed breakdown of how well each item is selling. If you see that sales of your cheesy breadsticks are down lately, try dynamic pricing. Pick a day or a few hours each day where the cheesy breadsticks are $1 less, which should help boost sales for this particular item. This is a much different strategy than making specials for whatever items are your most profitable, which is what many pizzerias do.
Static pricing can cause your restaurant to stall. Instead, switch to using dynamic pricing and reap the benefits of higher RevPASH, busier non-peak hours, and more well-rounded menu sales. But before you go ahead setting new prices, even temporary ones, make sure to use the SpeedLine Sales Mix tool to ensure you’re still making optimal profits while accounting for any changes in customer demand.
Posted on Mon, Mar 08, 2021 @ 08:03 AM.
Updated on March 8, 2021 @ 4:26 PM PST.