Optimizing Menu Pricing: A Restaurants Case Study
The CompanyA top-tier national casual dining restaurant chain
The ChallengeThe top restaurant brand had tested price increases in some locations, but there was significant internal debate about the effect on guest count, trading behavior, and ultimately profitability. The client understood that the increase was likely to work better in some restaurants than in others but was unsure of which restaurant characteristics drove program success.
The SolutionManagement used APT’s Test & Learn™ software for a detailed analysis of the price increase. In spite of the decrease in guest count, APT software determined that profits actually increased overall. Furthermore, the client learned that price increases sustained improved returns for months after their launch. Test & Learn™ also revealed item-level effects of the price increases, and identified the characteristics of restaurants likely to respond particularly positively or negatively to certain price increases. Impressed with these detailed results, management initiated continual monitoring with Test & Learn™ to adapt with each menu cycle.
The ResultsTest & Learn™ analysis of pricing changes created over $20MM in incremental profit in only one year. The restaurant chain continues to target price moves by item and location with Test & Learn™.
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