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What Restaurants and Uber Could Soon Have in Common

We all know restaurant profit margins are razor thin, and one of the biggest enemies of a profit is an empty seat.  Restaurateurs have gotten crafty with solutions; some restaurants use a negative consequence to help incentivize diners to show up, like charging a penalty for last-minute reservation cancellations.  Others use more time-honored tactics, like happy hour deals.  But a new method is being utilized – surge pricing.  Actually, think of it more like anti-surge pricing.

The principle of surge pricing is simple – charge higher prices when demand is high and vice versa.  However, customers are typically averse to paying premiums (remember when Resy up-charged for prime reservations? Yeah, they stopped, because it wasn’t working.)  So, restaurants are starting to implement what may be better defined as “smart” or “dynamic” pricing. 

Now, of course, offering discounts when business is slow isn’t a ground-breaking development.  Early Bird deals have been around forever, but they don’t exactly have the hippest connotations.  Thanks to some new apps, restaurants can offer deals less overtly to capitalize on the emerging smart pricing trend. 

TasteBud is an app that matches customers with restaurants offering roving discounts.  TasteBud prides itself on being discreet.  Users choose a restaurant from the app, pay full-price at the restaurant and receive a rebate.  Participating restaurants then have access to data on how the promotions are working. 

Two more apps don’t just focus on filling seats, but also on another serious profit-killer – food waste.  Gebni not only offers time-sensitive deals, but also ingredient-specific deals.  Restaurants can identify dishes or individual ingredients to promote, and Gebni users can cash in on the savings.  The app Feedback boasts a smart pricing algorithm to help restaurants determine where they can cut costs while also promoting sustainability. 

Restaurateurs, such as Alinea co-owner Nick Kokonas, are big proponents of smart pricing.  He’s been implementing it since 2011 and believes that the practice can help a restaurant survive tough economic times or especially slow nights.  In 2014 on Super Bowl Sunday, he offered sports-averse patrons a 35% discount on normal prices and reservations increased from 30 to 74.

Smart pricing may prove to be more than just a trend, since it’s mutually beneficial to the restaurant and the customer, and who doesn’t love a win-win?


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