Restaurant pricing strategies

THE CHALLENGE

Our client was facing structurally declining profits with significant sales associated with promotions and discounts. Our aim was to reduce discount investment while minimising cover (footfall) decline by identifying discounts to be immediately removed, phased out or adjusted. The challenge faced was fighting against industry norms of high discounting, balancing margin improvements with declining covers and tackling the problem with limited customer level data available.

OUR SOLUTION

Approach:
Understanding business background/context and analysing past performance (covers, sales, profits, discount types).
Analysing promotion performance, cannibalisation rates, profit delta and incremental margin methodologies.
Modelling promo removal impacts/scenarios and producing promotion phase-out calendar.

Key Recommendations:
Minimise investment in specific, poor-performing discounting channels by removing poorly performing and long-tail of discounts and re-engineering discount depths and mechanics to improve uplift and minimise margin loss/cannibalisation.
Promotional calendar with phase-out timeline.
Promotional strategy to minimise losses during Covid-19.

RESULTS

Immediate: Reduced discount investment by 42% creating a multi-million pound saving, which exceeded client target, and minimised decline in covers by 6%. Long term: Improved brand image and promotional sustainability