from APT's Restaurant Practice

Should Restaurants Change Prices by the Hour?

September 5th, 2012 | Posted by Casey Corman in Restaurants

Like an empty hotel room or airline seat, a restaurant table without guests is lost revenue. The New York Times recently reported that some restaurants are now introducing variable pricing models to capitalize on changes in demand elasticity by day and by hour.

“The restaurants’ premise is that a dinner at 8 p.m. on Saturday should simply cost more than one at 5:30 on a Monday. “Restaurants are catching up,” said Sheryl E. Kimes, professor of operations management at Cornell’s school of hotel administration. They are betting that consumers, used to paying extra for holiday-weekend flights, V.I.P. seats at the theater or umbrellas on the street after the first raindrop hits, will also pay more for their Friday-night dinners out.”

As restaurants explore variable pricing by day and daypart, executives will be faced with important decisions about how to choose the best pricing strategies. For example:

  • Does increasing prices on the weekend simply shift demand to other days?
  • Can we selectively increase the price of certain items during specific times?
  • Should we explore daily deals?

These types of questions present an exciting avenue for testing over the next few years.  Visit our website to learn more about APT’s pricing work with leading restaurants.

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