Dynamic Pricing for Restaurants: What Is It and Should You Try It?

You often encounter dynamic pricing when booking a hotel, a flight, or a hired car. These industries can practice different prices for each day of the week or even hours of the day, depending on several factors such as perceived value or market demand.

Have you offered happy hour menus or a combo menu? Then you have tried dynamic pricing at your place without noticing.

Dynamic pricing for restaurants is not yet a very popular pricing strategy in the industry, so, if you try it, you get to stand out from your competitors.

In this article, you will learn about the benefits of dynamic pricing and strategies for implementing it at your restaurant without alienating your customers:

What is dynamic pricing?

Compared to the usual static pricing, where you have the same prices on the menu at any given moment, dynamic pricing implies changing the prices according to market demand.

Dynamic pricing for restaurants can mean both lowering the prices and increasing them.

What is an example of dynamic pricing in restaurants?

Let’s say you monitor your sales for a month, and you notice you have fewer customers on Monday and Tuesday. You can lower the prices on these days to attract more clients. As long as you factor in a profit margin for every dish, you will still notice an increase in sales, even with decreased prices.

What are the benefits of dynamic pricing for restaurants?

Dynamic pricing can help you achieve a steady profit in the ever-changing restaurant industry, where ingredient prices can be increased in a short matter of time, food trends come and go, and competition is at an all-time high.

Here are the benefits of dynamic pricing for restaurants:

• You remain competitive: there are many other restaurants in your area, so you need a great strategy to convince people to choose your business. Offering lower prices for the same menu items can persuade clients to order from you and not your competitors;
• You increase sales during slow periods: every restaurant has some days and hours when they don’t receive many orders. You can persuade people to buy your food by implementing a price drop only during slow periods;
• You won’t be affected by external factors: what if this year there is a sudden drop in olive production and the price skyrockets when one of your main dishes relies on olives? You can up the price to make up for any change that is not in your control.

When should you use dynamic pricing at your restaurant?

Because dynamic pricing for restaurants is still a new thing for your clients, you should try it with some precautions in your establishment. Especially for price increases, take it slow, and maybe make the portions smaller, so you don't scare your clients away.

Here are a few situations when dynamic pricing will help your restaurant thrive:

• Lower your prices during holiday slow times: people usually spend the holidays at home, with family and friends, not relying on restaurants for food. You can tempt clients to order by implementing several irresistible promotions such as 20% off the whole menu, free delivery, or a 2+1 deal;
• Increase your prices during tourist season: if you are in a high tourist area and you are very busy during the tourist season with no free tables, you can increase your menu prices. This way, you can make more money during this period to help you coast by when there are no more tourists and you have to lower your prices again;
• Practice higher prices for high-demand delivery hours and vice-versa: first, you will need an online ordering system with a reports module that allows you to monitor your sales by days and hours. After you identify the periods when you sell the most, you can slightly increase the prices to get a bigger profit. Likewise, decrease the prices when you get no sales;
• Adapt your prices according to ingredients cost: use pricing methods for restaurants that start with the cost of goods sold, meaning the price you pay for ingredients before preparation. If an ingredient suddenly becomes expensive, so will the menu item. If you don’t want to upset your clients, choose to be transparent, and let them know on social media that you had to increase the price because said ingredients can only be bought at a very high price now.

How can you easily add dynamic pricing to your restaurant menu

Some restaurants would like to try dynamic pricing, but they find it too tiresome. When will they have time to rewrite the menu and reprint them? Not to mention the money they will waste and constantly changing up the menu.

The solution is simple: let go of your printed menu and opt for a QR-code one. You can generate one in a matter of minutes and only have to print the code ones. Afterward, place the flyer with the code on every table and you are set.

Furthermore, changing a menu item’s price shouldn’t be a chore that takes up a lot of time. With the menu creator embedded in the online ordering system from GloriaFood, you can modify any price in a few clicks.

You just need a few free seconds, and the changes will be immediately visible in your online restaurant menu.

Changing the menu prices isn’t the only way to implement dynamic pricing for restaurants. You can also do it by adding promotions to your menu. Clients won't be able to resist a 10% off all pizzas, a free dessert for every order, or a meal bundle deal.

You can also take advantage of our online ordering system to set up a variety of promotions in seconds:

The great part about this promotion module is that you can set up a promotion to only be visible to certain clients or only on certain days or specific hours. This way, you can make the restaurant deal available only during slow periods.

Final words

Owning a restaurant often implies changing things up and adapting to new factors in order to remain successful. Dynamic pricing for restaurants can help you remain competitive and increase the number of orders for slow periods.

You must give it a try to see if it is a good fit for your business. Remember to start slow (promotions are great for beginners) and also keep your clients in the loop so you don’t push them away with a sudden price change.