MRM EXCLUSIVE: Can Dynamic Pricing Be Done Right?

While two-thirds of guests say they would not dine at a restaurant that uses dynamic pricing, interest increases when the concept is framed as a discount offered through a membership for off-peak hours, according to the Summer 2024 Consumer Trends Report from Provoke Insights in collaboration with Modern Restaurant Management (MRM) magazine. In that case, more than half would be interested in joining a membership to receive discounted offerings. This is particularly relevant for urban residents, parents, and individuals looking to save money.

"Dynamic pricing has garnered a negative perception because patrons do not understand the benefits it provides. As a result, restaurants need to emphasize the benefits and promotions that this approach offers," said Carly Fink, President, Head of Research & Strategy for Provoke Insights. "For example, instead of emphasizing that prices increase during peak hours, restaurants should promote discounts on pricing during off-peak hours."

Among the findings:

• Only a third of Americans are aware of this pricing concept, with urban dwellers and parents more likely to be familiar with it. 
• Americans are still experiencing the effects of inflation whendining out, as most are noticing higher prices at restaurants.
• Those who are budget-conscious and Republicans are especially likely to observe these increases.
• It is important for restaurants to recognize that while inflation may not be increasing as rapidly as it was a year ago, customers are still feeling the financial impact of higher menu prices.

  

With so much talk of economic challenges, particularly around food prices,  people are still expressing optimism at a similar rate as last year.

"It makes sense, as inflation was also a concern last year as well," said Fink. "Consumers have adapted to more budget-conscious behavior in response to the price increases.. Brands should not say prices will increase during peak hours but focus on the positive aspect of lower costs during quieter times. People who are not familiar with dynamic pricing still are interested in sales and loyalty programs."

Provoke Insights conducted a 15-minute survey among 1,500 Americans between the ages of 21 and 65. The study was in-field in April 2024. A random stratified sample followed by weighting was used to ensure a high degree of sample representation of the U.S. population (household income, age, gender, geography, ethnicity, and children in the household). The sample was modeled to represent the latest US Census data.

Results based on this sample have a maximum margin of sampling error ± 2.5 percent at a 95-percent confidence level. Statistical differences between subgroups indicated in this report were tested at a 95-percent confidence level. Significances are indicated by call out boxes in graphs.

In this eighth-wave of the study, Provoke Insights evaluates Americans’ sentiment, shopping impulse behaviors, and trust in the media. Continual inflation, layoffs, the presidential election, and the rapid growth of AI have impacted Americans' attitudes, concerns, and spending habits.