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You’ve probably seen menus at seafood restaurants where prices change based on the market price. That’s because food cost fluctuates due to supply, demand, and seasonality of ingredients. This is a basic form of market-based pricing, where external factors influence pricing decisions.
Dynamic pricing adjusts menu prices in real time based on demand, location, or customer behavior. So, you can apply dynamic pricing to items that customers are willing to order and pay a premium price for, at a given time.
With minimum wage hikes, restaurant surge pricing can balance rising labor costs with consumer expectations. Instead of increasing menu prices, they can strategically adjust pricing to remain profitable without losing customers.
Surge pricing is directly linked to increases in demand. In periods of high demand, the scarce goods are more valuable, and companies can increase their prices.
– Arnd Vomberg, Professor, Digital Marketing and Marketing Transformation, University of Mannheim Business School, Germany
All-in-one POS systems help automate these pricing adjustments. They track demand fluctuations and update prices accordingly.
Here are some benefits that surge pricing restaurants reap:
63% of consumers are willing to pay a small fee to offset costs. But only 21% accept increases above 3%. This shows that food & beverage pricing strategies with small, calculated adjustments work better than drastic price hikes for surge pricing restaurants. Here’s how:
Bartaco, in the Eastern US, raised “to-go” prices by 5-10% during weekend peak hours. Then, it lowered them on slow weekdays. Consequently, it saw a 4-6% increase in revenue per month through app-based sales.
This way, many brands are now adopting time-based pricing to charge higher prices during peak demand. A restaurant POS system automates price changes based on real-time demand. No need for manual updates.
Restaurants grouping multiple locations based on shared characteristics see 85% efficiency gains. So, restaurants adjust prices based on their specific location. This regional pricing strategy works similarly to segmented pricing.
McDonald’s menu for 994 S, Preston Road, Celina, a rural town in the US
McDonald’s menu for 160 Broadway, New York City
For example, McDonald’s charges different prices for the same menu item in New York City compared to rural towns. POS reporting can show bestsellers by region. Accordingly, you can tweak your menus and increase revenue dramatically.
Puesto in La Jolla, California, raised prices by 8% during peak hours but lowered them by 20% during slow hours. The result was a 12% sales boost! The demand-based pricing model adjusts prices based on real-time demand. Similarly, Taco Bell’s "Happier Hour" and Dunkin’s Happy Hour offer deep discounts during off-peak times.
On the same lines, quick service restaurants near sports stadiums often increase prices on game nights. Or, they use geo-fencing promotions to offer deals when customers are nearby.
Premium pricing aligns with value-based pricing. Customers are less price-sensitive when they feel valued. Adding premium elements, like truffle sauce on fries or cheese in sandwiches, helps justify price increases while making the dining experience better.
Shake Shack introduced white truffle burgers and fries at a premium price, leveraging luxury ingredients to justify the cost. This taps into value-based pricing while attracting customers willing to splurge.
Menu pricing can also differ based on occasion. Customers may want an affordable meal during a quick office lunch. But they may be more open to higher pricing for a family-friendly experience at the same quick service restaurant chain near home.
This approach overlaps with personalized pricing and bundle pricing on combo deals. After all, it offers tailored pricing for regular customers. For example, Panera’s Unlimited Sip Club is a subscription-based model where customers pay a monthly fee for unlimited drinks.
Discounts for frequent diners and premium menu pricing for one-time customers encourage repeat visits. POS systems track loyalty data and automate personalized discounts.
Whether it’s adjusting prices based on demand, optimizing for peak hours, or introducing personalized pricing, technology makes it all seamless. Here’s how you can make the most of it:
A handheld POS system can automate menu management with real-time price adjustments. For example, if a particular dish is selling out quickly, the system can increase its price while lowering prices for slower-moving items.
Traditional menu boards limit flexibility. Digital menu boards allow restaurants to change pricing easily. No hassle of reprinting menus! Wendy’s, for instance, is investing $20 million in digital menu boards to experiment with AI-powered pricing in 2025.
Physical menus become outdated quickly with fluctuating costs. QR code menus allow restaurants to update prices instantly without added printing costs. They also provide room for personalized offers, such as special pricing for repeat customers.
Dynamic pricing is no longer just for airlines and ride-sharing apps. Restaurants are now adopting it to stay competitive and profitable. To make dynamic pricing work, you should:
OneHubPOS makes it easy to integrate automated pricing adjustments into your restaurant’s workflow. Stay ahead of market changes. Maximize profits. Keep customers happy. Do it all with a single POS system. Schedule a demo today!
Justina John, Marketing Associate with expertise in Digital Marketing, Content Creation, and Social Media Strategy. Skilled in enhancing brand visibility, driving customer engagement, and executing impactful marketing campaigns to support business growth.
