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Surge pricing is expected to ~surge~ in the restaurant industry.
You may have heard of—or even visited—Berliner Republik in Berlin, a pub boasting a “beer stock exchange” where the price of beer fluctuates based on demand. At this spot, the sky’s the limit for what you might pay to sip a popular brew during peak hours, making seats at the bar a must in the event a “stock market crash” tanks prices for a short period of time.
The German watering hole attracts tourists from all over the world—and, yet, its concept isn’t all that unique given more and more restaurants have adopted a dynamic pricing model as they contend with the elasticity of demand across the industry. Think of it like Uber surge pricing, but for food and drink—and chances are you’ve experienced it firsthand if you’ve ever been charged more for dinner at 7pm versus 5pm, or paid a fee just to secure a brunch reservation.
“I think restaurateurs are looking for ways to battle inflation,” says Trophy Brewing co-owner Chris Powers. Not to mention deal with labor shortages, supply chain issues—the list goes on… “The pros are you can steer customers to slower days, and you can make more money at busier times when your restaurant is in demand.”
The dynamic pricing model—which is expected to, well, surge in the coming years—has the potential to help restaurants thrive and maintain some control over their bottom line. “The purchasing aspect of the business we’re in right now is just so up in the air that it really does make sense to look to the future and see what kind of ways you can maximize revenue,” says Union Special owner/baker Andrew Ullom.
Though he’s quick to admit his own restaurant doesn’t have the capacity to set up dynamic pricing given its first-come, first-served system, “I think for restaurants on the reservation model and the dine-in model, it does make sense,” he shares. “At St. Roch or Crawford and Son, I think something like that could take hold. … It’s not a bad idea to take a stab at it.”
The flipside: For consumers already leery of surcharges and the feeling of getting nickeled and dimed to death, the demand-based concept may not take hold. “Guest perception could hurt business,” says Powers, “and dynamic pricing options are an add-on service with some POS.” Ullom notes previous attempts by some to add automatic gratuities or service fees onto tickets in Raleigh—“and that went over like a lead balloon,” he quips.
Ultimately, time will tell if—and when—the trend takes hold locally. As Ullom explains, “Raleigh’s market is still pretty tight-knit and still pretty small. I think everyone right now is doing everything we can to just get folks in the door.”
If it does gain traction, it’s crucial restaurants are upfront with customers about any changes in cost. “I have already heard of other places dipping their toes into it, and I haven’t heard many folks complain about it,” says Powers. “I think transparency of what is happening is very important and can help anyone considering dynamic pricing avoid angering any guests.” We’ll certainly prost to that.
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