Using Data To Take The Guesswork Out Of Price Increases
Food is serious business. Now, on The Main Course, host Barbara Castiglia will invite insiders on the front lines of food to share their expertise, strategies, and forecasts for navigating the ever-changing restaurant industry.
Restaurants have had a tough time due to the COVID-19 Pandemic. Having to adjust constantly was challenging. But, having crucial data at their fingertips gave owners, managers, and restaurateurs essential insights into improving their operation.
“We look at the historical data of a restaurant, and based upon the data we see from their POS.” – Chris Norton
Giving insights to The Main Course Host, Barbara Castiglia is Christina and Chris Norton of Revenue Management Solutions, which helps the restaurant and retail industry identify profitability opportunities through data-driven analytics and tech-enabled solutions that optimize sales, menus, and a brand’s financial health.
“We look at the historical data of a restaurant, and based upon the data we see from their POS,” Chris said. “When prices change, when limited time offers have been added to the menu, when value propositions have been added to the menu board, we understand the reaction of the consumer based upon the historical data.”
Utilizing this data, they put it through their regression model, which helps them understand gross profit and sensitivities. This helps them understand the items on the menu board that are the most optimal to move in terms of increasing price so as not to affect guest counts. If a restaurant has a positive or negative guest count trend, the pricing they give to clients in terms of price additions will not affect that trend.
This gives restaurants the data to understand when they should raise prices on items and the optimal items to do so. This takes the emotion and guesswork out of how and when to raise prices. Then they analyze the data to see if the changes work.
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