Setting profitable prices in the restaurant industry has never been more difficult. With rising food costs, increasing labor costs, and regulatory compliance costs, it’s crucial that restaurants price their menu items high enough that they can make a profit—but not so high as to lose competitiveness.
Making things even more complex, consumer food preferences are shifting, competition is intensifying, and new channels such as delivery and buy online, pick up in-store are emerging. So how can restaurants even stand a chance? Drumroll please…
Say hello to Strategic Pricing Analyzer
Our Strategic Pricing Analyzer uses the latest in AI and machine learning to synthesize point-of-sale (POS), economic, and competitive data sources to set prices that can help maximize profits while protecting sales growth and customer loyalty. Let’s break that down a bit:
- Sales, price, and cost data: The restaurant provides historical data on sales, pricing, and food cost by store, along with metadata, promotional calendars, and any business rules and constraints in the pricing and promotion processes.
- Tailored solution: We configure the pricing engine and recommendations portal to each specific restaurant, providing hands-on change management for easy and fast onboarding.
- Dynamic pricing optimization: We provide regular pricing recommendations leveraging machine learning based on the latest data.
- Clear oversight and control: Restaurant managers simply log in and review pricing recommendations in our interface, before finalizing pricing and uploading to their price management system.
How is it different than other restaurant pricing systems?
Glad you asked! Developed with one of the world’s leading restaurants, our tool is different from existing restaurant pricing solutions in four ways:
- We leverage internal and external data sources, using advanced analytics to predict future sales, and continually update recommendations based on actual sales activity
- We provide the process and change management to help this new approach work for your operators
- We provide ongoing support and insights through a team of dedicated in-market pricing advisors
- We share the risk and the reward—offering a flexible commercial model based on a percentage of the incremental profit generated
Oh! And did we mention that pilots can be launched within just a few weeks? And that full deployment can be reached within three to four months? By working quickly and efficiently, Deloitte Digital helps restaurants transform pricing systems into profit centers in just months.
Our restaurant pricing tool in action
As they say, the proof is in the pudding. So, let’s take a look at how Deloitte Digital recently worked with a leading restaurant chain to increase revenue.
We started by reviewing the current pricing process and defining business rules for recommendations. This allowed us to develop and tailor our Strategic Pricing Analyzer to suggest margin-maximizing price recommendations, while limiting negative impacts to check counts—which we rolled out to several thousand stores.
Our price recommendations align menu price with a consumer's willingness to pay, resulting in higher margins through optimized pricing, with little to no traffic decline.
To help ensure that you get the performance you anticipate, Deloitte Digital provides sales and profitability forecasts to track the performance of our recommendations.
On average, restaurants using the Deloitte solution achieve a 1-3 percentage point margin improvement that can translate directly into bottom line benefits.
Jean Chick, principal, US Restaurant & Food Service Leader, Deloitte Consulting LLP, supports clients through helping them navigate complex financial and operational issues while balancing change management and critical strategic considerations.
Georg Muller, managing director, Pricing Practice Leader, Deloitte Consulting LLP, helps clients develop and implement top-line margin improvement strategies in a variety of industries.
Evert Gruyaert, senior manager, Pricing Leader, Deloitte Consulting LLP, has deep experience in pricing and profitability management and helping his clients with profitable and sustainable growth.