Study Reveals Consumer Resistance to Dynamic Pricing in Restaurants

The research, involving 260 participants from the U.S. and U.K., split subjects into two groups: one primed with questions about airline ticket purchases to establish a dynamic pricing context, and a control group asked about vacation-related topics. Both groups were then tasked with ordering from identical online restaurant menus.

Key findings from the study showed that participants exposed to the dynamic pricing context demonstrated increased focus on menu prices, suggesting heightened concern about cost. In contrast, the control group spent more time examining photos and menu item descriptions. Moreover, those in the dynamic pricing group ordered smaller portions and spent an average of 3% less than their counterparts in the control group.

Dr. Philipp Laqué, RMS Managing Director for Europe, emphasized the significance of these findings: ‘Our research reveals that even subtle indicators of dynamic pricing can lead to reduced spending, a heightened focus on finding good deals, and ultimately lower customer satisfaction.’ This insight comes at a critical time for the restaurant industry, which has been exploring dynamic pricing as a potential solution to rising costs and reduced consumer tolerance for price increases.

The study’s results suggest that while dynamic pricing has proven effective in industries such as travel, hotels, and events, its application in restaurants may face considerable challenges. As the industry looks toward 2025, RMS predicts ongoing difficulties for fast-food brands and restaurants amid economic pressures and evolving consumer expectations.

To address these challenges, RMS recommends consumer-centric approaches that prioritize transparency and value. Strategies such as value-focused promotions, occasion-based price differentiation, and thoughtful menu engineering are suggested as alternatives to safeguard profits and build trust in an evolving market.

The implications of this study extend beyond individual restaurants, potentially influencing the entire food service industry’s approach to pricing strategies. As consumers become increasingly price-sensitive, restaurants may need to reconsider their adoption of dynamic pricing models to maintain customer loyalty and satisfaction.

For those seeking more insights into dynamic pricing and alternative profitability strategies, RMS has made available its latest Revenue Stream episode, featuring industry experts and analysts discussing these critical issues.

As the restaurant industry continues to navigate economic uncertainties and changing consumer behaviors, the findings of this study underscore the importance of balancing innovative pricing strategies with customer perceptions and satisfaction. The challenge for restaurants moving forward will be to find pricing models that optimize profitability while maintaining consumer trust and loyalty in an increasingly competitive market.