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Farewell to fixed prices in restaurants, ready for dynamic and intelligent prices

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I have to admit that this is an article that I wanted to write for many months, because when the issue arises prices in restaurants and I explain my vision, I always noticed faces of surprise among attendees, but also a certain conviction that it seems the future on this issue is well written.

It all starts when I ask for my opinion on whether They should raise or lower prices in a restaurant. To which I always reply that the key is not to raise or lower them, it is in successfully managing. And in a few years the technology will make an intelligent and dynamic management, personalizing them for every moment and every niche market.

To understand this approach, you must be assumed today Many restaurants no longer compete with other restaurants, but competing with other leisure services requiring customer presence.

Today people wonder whether they want to go to a theater, a sporting event, a music concert or have a fine dining experience. The restaurants are part of the range of leisure in which the client must deposit your enjoyment, your time and your money.

Except in the price of the restaurants

But when we analyze the price management of any event related to leisure, quickly we see that there is a common denominator that excludes only restaurants. And they all share a variability in price based on different factors.

For example, in theaters just not worth going to see a movie on a Wednesday to a Sunday even though the chair occupied can be the same, in theaters is not the same price near the amphitheater stalls or boxes even if the work performed is the same every day and for all attendees, in football stadiums the price is very different depending on who the opponent that week but the occupied seat may be the same and of course, hotels prices vary depending on many factors, mainly based on demand.

In all these cases, and many others sure you come to mind, the client has culturally accepted two fundamental elements, on the one hand Payment is always prior to the enjoyment of the service, and secondly the price varies, sometimes radically, depending on many aspects.

As well, This seems to us absolutely normal in all leisure services, only excludes restaurants, which generally Payment is then made to the enjoyment of the service and also the price is always the same.

If we analyze this scenario, You can easily guess that has been thus practically the last 80 years in the hospitality sector. With some exceptions, but in general it is true in most establishments.

But I am also absolutely convinced is that this will not be possible for the 80 next years, why hay un elemento que va a permitir una gestión ágil y eficaz de los precios that will unify the general culture of different leisure services, Also in restaurants.

Technology as a lever in restaurants

That key lever is called technology, it has enabled processes such as scrolling through a rental car with driver, such as Uber or Cabify is a completely digital process where pre-payment is made to the service, where the customer knows the price and even how long it will last service, plus the price depends on many factors, some as "smart" as weather, ya que no va al igual en muchas ciudades desplazarse en un coche de este tipo de servicios los días lluviosos que los soleados.

As well, allowing air travel to millions of people in recent years, in addition to an increase in supply, It has been the ability to access different rates through technological systems.

As well, My theory on price variability or smart prices, It is based on that in a few years technology will overcome these historical barriers and allow optimization and management access this variable by restaurateurs. Where prices that will access in restaurants will not be the same, or depending on the time that we go, or the day chosen, even in the situation of the table in the restaurant, and where in most cases the payment will also be anticipated.

The approach is based on three fundamental variables value. On one side, large technology companies are going to become connectors and facilitators needed to provide the technology that an absolutely simple and based way a great experience for the customer and the restaurant, allows you to access this new market. He thinks that behind all this is the possibility of "packetize" leisure services and make it a flagship product e-commerce, How long can you take Amazon to sell restaurant reservations with this model?

Moreover the restaurant can do a different pricing management, uno de los procesos más complejos que hay dentro de la gestión de un negocio de hostelería. Es posible hacer rentables turnos o días que no lo son, e incluso atraer a clientes con un precio diferente en aquellos horarios en los cuales no hay tanta demanda. This is also a good way to attract different niche markets.

As well is eliminated one of the major problems encountered many restaurants such as no-shows or the client does not go to the restaurant once you made the reservation. Technology eradicates this problem in an almost absolute way.

By last, the behavior of demand, where customers will be able to access restaurants today have very significant entry barriers, both capacity, and economic. Maybe not hours or days "Prime Time", but they can live their experience appropriate to the conditions that each guest can cope, just like in any leisure service.

Of course this price management will be influenced by many other factors, some as common as competition, cost structure, historical demand data, forecast sales or income. But others will be as innovative as the online reputation of the restaurant or digital prestige customer.

It seems clear that We will not pay the same for restaurants that have a great reputation online, against others who do not have, because in the end this component of trust allows the restaurant to raise prices against other, It is according to some studies that I have had access, even up 40%.

Restaurants can access markets or shifts that right now are not profitable for the establishment through managing smart price. Customers will have food service depending on your possibilities, Y technology will make possible the connection between the two needs.

But then there are some intangible components must not forget, as the bad image that looks like a restaurant is created when charges different prices to different customers for "supposedly" the same service or product, something that, allowing the insistence, It does not happen in any other leisure service, as I mentioned at the beginning of this article. And this is where I appeal to a cultural and generational change that technology will accelerate. It will bring value to both ends of the digital traceability, restaurants and customers, as already it happens in most of the shows for many years and is managed with absolute naturalness.

Of course, all must be under a professional and coherent strategy between price levels, adjusting tariffs to different times of consumption, the potential market, with a real right value proposition to different moments in demand. All this today would be a technically feasible process, but that technology will solve a fairly simple way, in the next years.

I would not finish the article without showing that I have no doubt that this system is not perfect. Change a model that takes into effect all life is always a risk, and generate other problems resulting from different management, we just have to ask hoteliers friends who have been doing quite a few years. But what I have clear, and what I would like to remove this article, is that technology will allow this type of management in prices and certainly This opens up new possibilities those restaurants who can anticipate and optimize this opportunity.

Farewell to fixed prices in restaurants, ready for dynamic and intelligent prices
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About the Author

Diego Coquillat

Director and CEO of DiegoCoquillat.com, teacher, consultant, lecturer and entrepreneur incorrigible. If you can not find it here, search near the sea. Passion for new technologies and restaurants ... passion for life.

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2 Comments

  1. Josep Mª Vallsmadella on

    Diego enhorabuena por tu articulo, y por difundir lo que ya vengo explicando en mis clases y libros desde hace mas de 15 years, y que por supuesto muchos de mis clientes (chains and restaurants) ya aplican.
    En efecto dinamizar los precios, partiendo de un sistema de análisis de demandas, ocupaciones, competencia y reputación es la vía para ganar mas dinero aprovechando todos los costes de oportunidad que te presenta el negocio.
    Un abrazo.
    Josep Mª Vallsmadella
    Profesor EUHT-Sant Pol y Basque Culinary Center

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