What is dynamic pricing for restaurants and pubs?
Dynamic pricing is a way to manage costs and maximise revenue by changing prices based on real-time information. It’s about being flexible with your pricing structure, based on the situation. Pubs and restaurants who implement dynamic pricing in their business might decide to raise their prices during busy Friday nights, or offering discounts to loyal customers to reward them and keep them coming back.
Dynamic pricing is already common in other industries, like travel, but an increasing number of restaurants and pubs are starting to see the benefits too. And while the practice has been gaining a certain amount of notoriety in the media, if it’s done right, you might just be able to come up with a plan for adjusting your prices in ways that make sense for your business and your customers.
How does dynamic pricing work in hospitality?
At its heart, dynamic pricing is driven by data. By looking at things like how customers behave, when they visit, and what they’re ordering, you can use that information to adapt your prices in real time.
Here are three ways dynamic pricing is typically used in hospitality:
Time-based pricing
Some restaurants and pubs change their prices depending on the time of day or week. For example, you might charge a little more during Saturday evening rushes and offer discounts during midweek afternoons when footfall is lower. It’s similar to happy hour pricing but applied across your menu.
Demand-based pricing
This way of doing things is all about customer demand. Are you hosting a special event or expecting a big crowd on an upcoming bank holiday? You might decide to adjust your prices to reflect that higher demand, maximising revenue during peak times.
Segment-based pricing
Dynamic pricing doesn’t just mean increasing your prices, it can also be used as a way to reward specific customers. You might offer loyalty members discounted prices, or create deals for larger group bookings.
Why is it relevant to hospitality?
Hospitality isn’t one-size-fits-all, and your pricing doesn’t have to be either. Dynamic pricing gives you the flexibility to react to what’s happening in your business, whether that’s a busy bank holiday weekend or a quiet midweek afternoon. It’s not just about boosting revenue, staying competitive, filling tables when you need to and making sure your business works as efficiently as possible.
Key benefits of dynamic pricing for restaurants and pubs
Dynamic pricing in pubs and restaurants isn’t just about looking for opportunities to make more money; it’s about working smarter and adapting to what’s happening in your business.
Boost your profitability
The primary benefit is, of course, the ability to maximise your income and boost your profits. When demand is high, charging a little extra can make a big difference to your bottom line. And during quieter times, offering discounts can fill tables that might otherwise stay empty. It’s about making the most of every opportunity, every day.
Use data to make smarter decisions
Dynamic pricing works best when you understand your customers. Taking time to understand when they visit, what they order, and how demand shifts throughout the week can be really helpful. And this data doesn’t just inform your pricing; it can help you make more confident decisions about things like staffing, inventory, and promotions. You’ll be reacting to real patterns, not relying on guesswork.
Reward loyalty
Dynamic pricing can be a great way to show appreciation for your regulars. Offering discounts to loyalty members or deals for group bookings can help build stronger relationships and keep your customers coming back.
Stay competitive
The hospitality industry is evolving, and customers pay attention to businesses that evolve with it. Dynamic pricing gives you the flexibility to stay ahead, whether that’s responding to a busy Saturday night or tempting diners in on a quiet Tuesday. Charging prices that reflect what everyone else is charging at peak times gives you the flexibility to charge a little less through the week, which customers will appreciate.
Make the most of special events
Whether it’s a local festival, a big match, or school holidays, special events are your chance to shine. Dynamic pricing lets you maximise revenue during these times, covering extra costs like staffing or supplies, while still keeping things running smoothly.
Key challenges of dynamic pricing in the hospitality industry
As useful as dynamic pricing can be, it’s not always smooth sailing. The biggest issue is often how your customers are going to respond, so if you decide it’s right for you, it’s worth making sure you’ve put some measures in place to mitigate the potential downsides.
Managing public perception
Nobody likes surprises when it comes to pricing. News stories about peak-time pint surcharges show how quickly customers can push back if they feel pricing isn’t fair.
How to handle it: Be upfront. If your prices change at certain times, make sure customers know why. Whether it’s through clear signage or a note on the menu, helping people understand the reasoning - like extra staffing costs or higher demand - can go a long way.
Making decisions
Decisions about dynamic pricing rely on having accurate data, and for some businesses that can feel daunting. Tracking demand, customer behaviour, and sales trends might seem like a lot to handle.
How to handle it: The right tools can make a huge difference. Hospitality EPoS software with real-time price adjustments and analytics can simplify the process, helping you make smarter decisions without extra hassle.
Balancing customer expectations
Not everyone will love the idea of price changes, even if they’re fair. Striking the right balance between making adjustments and keeping your customers happy takes some thought.
How to handle it: Keep things balanced. Use dynamic pricing to create value, like offering deals during quieter times or perks for loyal customers, so people feel they’re getting something in return.
Keeping regulars on board
Your regulars are the heart of your business, and price changes could put them off if they’re not handled carefully.
How to handle it: Show your regulars you value them. Exclusive discounts, loyalty perks, or even just a quick heads-up about price changes can help keep those relationships strong.
How technology can help with dynamic pricing
Dynamic pricing doesn’t have to add another layer of complexity to your business. The right technology can help you make smart, informed decisions about your pricing without adding stress to your day.
1. Adjust prices in real time with an EPoS system
It’s Friday night, your restaurant is packed, and the chef’s special is flying out of the kitchen. With restaurant EPoS software that supports dynamic pricing, you can adjust prices in real time to reflect that higher demand, without any fuss.
A few days later, things are a little quieter than usual. Why not introduce a special offer to tempt walk-ins, or offer a lunchtime deal that fills those empty tables. It’s all about having the flexibility to react to what’s happening, so you’re never leaving money on the table.
2. Keep on top of stock with Purchase-to-Pay software
Ever had to scramble because you ran out of a key ingredient, or worse, had to throw food away because you over-ordered? That’s where hospitality procurement software comes in.
This tool tracks your stock levels in real time, so you always know what’s in the storeroom. If you’re running low on something important, you can tweak prices to slow sales down and make it last longer. Or maybe you’ve got extra stock to shift, and a special offer could help move it before it goes to waste.
3. Understand your customers with CRM tools
Dynamic pricing works best when it’s carefully and strategically planned, and that starts with knowing your customers. CRM software helps you track things like what your regulars order, when they visit, and even how much they’re likely to spend.
For example, if you know your loyal customers love a particular dish during big matches, you could adjust prices slightly to reflect its popularity. Or, if certain guests tend to dine midweek, a special discount could bring them back more often. It’s all about creating a pricing strategy that feels personalised, not random.
4. Plan ahead with confidence using analytics tools
When you understand the patterns in your business, pricing decisions feel a lot less like guesswork. Analytics tools give you a clear view of your busiest days, your top-selling dishes, and how events like local festivals or matches impact footfall.
Combine this with hospitality booking software, and you’ll have even more control. By tracking reservations, you can predict demand more accurately, spot opportunities to adjust your prices, and ensure you’re making the most of your available tables.It’s not about overcomplicating things - it’s about using what you already know to make smarter, more confident choices.
Ready to embrace dynamic pricing?
Despite the media controversy, we expect to see more hospitality businesses implementing dynamic pricing over time, and for good reason. In this article, we’ve looked at the potential benefits, and some ways to manage the challenges of a variable pricing structure.
Dynamic pricing can feel like a big leap, but with the right tools and strategies, it’s an opportunity to take control of your revenue, attract more customers, and make smarter business decisions. In addition to our industry leading hospitality CRM, our other solutions like EPoS software for real-time price adjustments, Purchase-to-Pay tools to manage costs, and booking systems to track reservations, can all help you implement a dynamic pricing strategy in your business.
Want to know more? Explore how our hospitality software can support your business and make dynamic pricing simple. Get in touch with us today, or explore further in our EPOS guide: Boost Profits with a Smart EPoS.