Value-Based Pricing to Boost Restaurant Profit

Have you ever wondered why pricing is determined the same way across almost every QSR?The current methodology goes something like this:

Multiply Cost of Goods Sold (COGS) times three

Conduct some qualitative competitive research

... and that’s it, you have your prices.

What is so interesting about this methodology is that restaurants’ margins are extraordinarily thin, yet most restaurants do not think to approach pricing in ways that may be more valuable.

Value-based pricing uses an iterative data-driven approach

Recently, my company Gravy.ai decided to test this conventional wisdom against cold hard data to come up with what we call "value-based pricing."

The key difference between value-based pricing and the conventional cost-based pricing approach that you’ll see in virtually every QSR is that value-based pricing uses an iterative data-driven approach to understand what customers are willing to pay and then adjusts prices and create specials to maximize revenue and…