Maintaining a competitive edge is necessary to survive in today’s fast-paced restaurant industry. While understanding your customers’ desires and your restaurant’s unique selling points is important, analyzing your competition is also a critical part of the equation for success. Assessing your restaurant menu prices in the context of the local market creates opportunities to maximize profit and increase customer traffic using calculated pricing tactics and marketing strategies.
The latest technology makes keeping track of your competitors’ menu prices easier than ever. However, if you don’t know the most effective ways to employ that data, you might not use the information to your full advantage. That’s why in this article, we’re going to dig into some of the best ways to stand out in a crowded market and boost revenue using market price analytics.
Strategic Menu Price Raises
Raising menu prices has become the norm over the past few years, especially as inflation and supply chain complications have increased food costs and other operational expenses. A National Restaurant Association study shows that in 2022, restaurant menu prices jumped by over 8%. And with 73% of restaurants stating they plan to raise prices in 2023, it’s safe to say that menu pricing dynamics will remain a major concern throughout the industry.
As menu prices continue to rise, restaurants must become increasingly calculated about how far they push costs onto the consumer. Competitor pricing analytics offered by F&B Insights is one of the most effective tools available for determining the price ceiling of specific menu items. Using a consolidated platform to check on local market prices combined with AI-powered analysis of POS transactional data, it’s easier to see which items you should raise prices on and by how much. And with automatic price change alerts, you’ll have more confidence in your pricing decisions knowing you’re using the most up-to-date information.
For multi-unit Fast Casual and Quick Serve Restaurants, implementing a dynamic pricing strategy that requires critically assessing the price-raising tolerance of various items across a portfolio of restaurant locations is especially important–and exponentially more difficult. Manually tracking competitor menu prices for individual items at every location is nearly impossible and a waste of time that could be dedicated to higher-value tasks. Instead, using F&B Insights to provide insight into market fluctuations allows for faster, more strategic decision-making that will create serious impacts on the bottom line.
Targeted Value Offerings
According to research, 81% of restaurant customers would be more likely to change up dining plans if they were offered a deal. So for restaurants looking to grow their customer base, competitor price analysis allows them to more efficiently identify opportunities for offering similar menu items at a lower price than the competition. After determining competitors’ top-selling items and establishing their own item costs, restaurants can develop similar menu offerings priced to target budget-conscious customers.
These value offerings can stand as permanent fixtures on the menu or appear as daily, weekly, or monthly limited-time offers. Implementing a targeted value offering strategy alongside strategic price raises on specific menu items can create an effective balance that allows restaurants to both capture market share and boost profit margins.
Enhanced Marketing
Understanding your competitor’s pricing can make a significant difference in your restaurant’s ability to attract new business and keep your brand in the mind of existing customers. After analyzing the menu item prices of the competition, restaurant owners can improve the value proposition in their marketing campaigns to highlight a unique value. By showcasing menu items priced lower than similar offerings by the competition, a restaurant could focus its marketing messaging on its desire to provide budget-friendly value. If competitor price analysis reveals that a restaurant has certain menu items that are priced the same or higher than their competitors, the restaurant could create ad campaigns expressing a focus on quality ingredients and sourcing.
More Effective Loyalty Rewards
Offering more effective loyalty rewards is one of the best ways to help retain customers and build brand value. A Harvard Business study found that a 5% increase in customer retention can raise profit by 25–95%. That’s why restaurants need to explore all options for encouraging repeat business. Using F&B Insight to perform competitor price analysis can help restaurants capture market share by identifying rewards that target will target a specific segment of a competitor’s customer base. Also, by keeping up to date on competitor value offerings, restaurants can avoid losing traffic by providing their current customers with equally competitive incentives.
Final Thoughts
Staying ahead of the competition while dealing with the challenges faced by modern restaurants isn’t easy. Hopefully, these strategies provide insight into the revenue-boosting possibilities of establishing a calculated understanding of your competition’s menu prices. To amplify the power of these strategies, make sure to check out F&B Insights’ competitor analysis software with AI-driven menu price suggestions and instant price change alerts.
