--News Direct--
A new behavioral study led by Revenue Management Solutions (RMS), a leader in restaurant tech solutions, revealed that consumers perceive dynamic pricing in restaurants as unfair, leading to reduced spending and increased price scrutiny.
Key Findings from the Study
RMS researchers used cutting-edge eye-tracking technology to study how 260 U.S. and U.K. participants interacted with online restaurant menus under different conditions. Participants were split into two groups: one primed with questions about past airline ticket purchases (dynamic pricing context) and the other with vacation-related questions (control). Both groups were then asked to place an order from identical online restaurant menus.
The study tracked where participants directed their attention, using heat maps to highlight menu elements of interest and analyzing spending behaviors to reveal the impact of perceived price variability on menu decisions and overall spending.
Key insights include:
● Heightened Price Sensitivity: Participants from the dynamic pricing context group focused more on prices, suggesting heightened concern. Control group participants spent more time perusing photos and menu item descriptions.
● Reduced Spending: Those exposed to dynamic pricing ordered smaller portions and spent, on average, 3% less than the control group.
Dynamic Pricing: Opportunity or Risk for Restaurants?
In 2024, “pricing” became a key focus for restaurant operators facing rising costs and reduced consumer tolerance for price hikes. Dynamic pricing, which adjusts prices based on real-time demand, has proven effective in industries like travel, hotels and events. The study reveals that the practice causes resistance in the restaurant context.
“Our research reveals that even subtle indicators of dynamic pricing can lead to reduced spending, a heightened focus on finding good deals, and ultimately lower customer satisfaction,” said RMS Managing Director for Europe Dr. Philipp Laqué. “As restaurants explore innovative pricing strategies, maintaining transparency will be the cornerstone of building lasting customer relationships.”
Preparing for 2025
As the industry looks toward 2025, RMS predicts ongoing challenges for fast-food brands and restaurants amid economic pressures and shifting consumer expectations.
“Avoiding perceived unfair pricing transforms customer hesitation into trust and long-term loyalty,” said Laqué. “Our eye-tracking research shows consumers are deeply sensitive to perceived losses, which dynamic pricing can unintentionally evoke. By highlighting value and fairness, restaurants can address these concerns while driving profitability.”
RMS recommends consumer-centric approaches like value-focused promotions, occasion-based price differentiation, and thoughtful menu engineering to safeguard profits and build trust in an evolving market.
For more firsthand insights into dynamic pricing and alternative profitability strategies, tune into RMS’ latest Revenue Stream episode, featuring revenue management experts Dora Furman, Alfonso Delgado, and Sherri Kimes, Bloomberg analyst Michael Halen, and hosted by Alicia Kelso of Nation’s Restaurant News.
About Revenue Management Solutions
For 30 years, Revenue Management Solutions (RMS) has partnered with restaurant brands to deliver actionable insights and data-driven solutions to boost sales, streamline costs and maximize profitability. Its AI-powered solutions support 150,000-plus locations worldwide, empowering brands to confidently navigate challenges such as inflation and labor costs. Unlock the power of your data with RMS by visiting www.revenuemanage.com.
Contact Details
Center Reach Communications
Tracy Henderson
+1 720-989-3530
tracy@centerreachcommunication.com
Company Website
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