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QSR: The End of Fixed Prices

Surge pricing known from Uber & Co. – demand-oriented dynamic prices – is now also finding its way into the quick service market. More and more QSR chains adjust prices on their digital signage screens based on demand. Technically it’s simple, but whether guests will accept it remains the question.

With the introduction of digital signage in quick service restaurants (QSR), the focus was on easy menu changes and animated content. This was followed by real time data driven inventory signage with connecting the digital signage platform to the QSR restaurant management system in order to hide menu items that are no longer available.

Now comes the next stage with dynamic price display: Like gas stations or ride services such as Uber, American QSR chains are now relying on data-based surge pricing. Depending on demand, visitor frequency, weather and many other variable factors, the prices for burgers & Co. change many times throughout the day.

As the trade magazine QSR reports, tests are currently being carried out at small and large QSR chains in North America. According to one restaurant operator, the aim of dynamic pricing is to “ensure the right price at the right time for each sales channel in order to optimize a restaurant’s profitability and the guest experience.” Also known as personalized pricing.

One in three QSR restaurants changes prices hourly

According to a LinkedIn survey conducted by the trade magazine QSR among 274 restaurant operators, 35 percent of respondents change prices hourly. Around a quarter change them daily, around a sixth weekly, and another quarter only change prices monthly.

The dynamic pricing test runs are considerably easier in North America, where 80 percent of guests order in the drive-thru and via app. Whether via the license plate or the app, QSR operators recognize their customers via both channels, as well as their preferences and visit frequencies. In Europe, McDonald’s & Co. hardly know any of their customers, with the exception of the few app users.

Dynamic pricing put to the test

Fast casual QSR Noodle & Company reports in the trade magazine NRN about its experiences with digital menu boards and dynamic pricing. The company is currently equipping its 368 restaurants with intelligent digital menu boards for USD 10 million. In the run-up to Christmas, twice as many vouchers were sold with targeted digital signage advertising as in restaurants without screens. In addition, the restaurant chain is now optimizing prices and product range “more precisely and surgically” thanks to the digital signage menu boards connected to the backend.