It surprises no one to see them on airlines, ticketing platforms, or transportation services like Uber or Lyft, but dynamic pricing remains rare in restaurants. Or not. The philosophy of floating rates, designed to adapt to context and fluctuations in cost and demand, is also finding its way into the hospitality industry. Spaniards and foreigners. Of course, it has not yet reached its weight in other sectors, but it is already leaving some interesting examples.

There’s an important question in the background: Does a restaurant have to charge the same price for steak for lunch on a Tuesday as on a Friday night, regardless of stock or demand? And if it is decided not to make them, who will the changes benefit?

What is dynamic pricing? If you usually fly or have tried to buy tickets for the Oasis tour, this is probably something you’re more than used to. “Dynamic prices” are nothing more than fluctuating rates that adapt to factors such as demand, competition, market, availability or external factors. They are not fixed tables. They are changing. In real time or at intervals.

In fact, there are companies that use artificial intelligence to create what they call “algorithmic dynamic prices” that automatically update based on certain variables. As a strategy, the system has advantages and disadvantages.

“Rush hour” dishes? The concept may surprise you, but the reality is that dynamic prices have reached bars and restaurants. More precisely, they have been trying to break into the industry for a while; this is a particularly interesting business area for the companies tasked with making them possible on a technical level. After all, there are tens or tens of thousands of places to drink and eat in Spain. INE counted around 244,500 restaurants, food stalls and drinking establishments in 2023. This is not counting other related categories.

In 2021, EFE detected a “starting movement” in the implementation of dynamic prices in the hospitality industry, with major restaurant groups interested in the model. Proof that there are people convinced of its possibilities is that there are already companies dedicated to providing technical support to bars and restaurants.

From theory… to the cards. More precisely, dashboards where customers can control price fluctuations. Newspaper A few days ago I published a report in which I cited four accommodation establishments that implemented systems of more or less dynamic rates: a restaurant in Madrid, two establishments in Granada and a nightclub in Seville. The capital is Wll St. The business, located in Madrid, is a good example of how the strategy works.

The store features a large, illuminated screen reminiscent of the New York Stock Exchange, with its menu, price indicators, and red and green arrows revealing variations and variations. “Prices fluctuate every five minutes depending on market supply and demand, schedules and season,” a message on the panel states. EPE explains that the amount the customer pays is the amount that appears when the order is placed. In another nod to Wall Street, the organization is also considering the possibility of a “crash,” a “sudden decline.”

But… Why? In addition to being a way of differentiation and a commercial hook, dynamic prices today also offer some advantages for bars and restaurants. This is at least noted by proponents of the model, such as the firm Deliverect, who insist on flexibility that is difficult to implement with traditional fixed price tables. Is the attendance at the hall low? Discounts may be offered. Too much influx? They are raised to maximize profits.

“If a new restaurant with dynamic pricing opens nearby, the location may change its prices quickly to remain competitive, which may discourage customers from going to the new restaurant,” Deliverect says in an article on dynamic pricing. The system touts the ability to “respond quickly to market changes” or stimulate demand.

Not everything is gold. The system is not infallible. And not just because its implementation may be more or less complicated for a small hotelier; This has already encouraged specialist companies to take action and offer their services. Deliverect admits that the system faces certain “challenges”, such as possible negative reactions from customers to a price list that may not be the same yesterday as today.

Not to mention that adopting a dynamic model requires a much larger investment than a traditional rate card: it requires transparency, constant checking and adjustment. Despite these drawbacks, the company assures that dynamic pricing can be “valuable” for restaurants in a “saturated market.”

30% more profitability? Dynameat, which claims to use artificial intelligence to “adapt” the “dynamic menu” according to each scenario, taking into account parameters such as stock, number of customers, flexibility or the success of each dish, has a profitability of 30%. “During peak demand, it allows you to reduce your menu to only show dishes that are less elaborate, more appealing to the customer, and provide greater margin.”

beyond spain. Spanish restaurants aren’t the only ones trying dynamic pricing. like media Wall StreetJournal or the CBS News network also replicated this practice across the pond at locations across the United States. The digitalization of menus and the increase in online orders are helping this change. For example, Sauce Princing, a Los Angeles-based firm that offers services to automate dynamic pricing, cites the example of one of its customers: the California restaurant chain Sitio.

Sitio opted to reduce its tariffs by 10% to 20% during less peak hours and increase it by up to 8% during busier periods. The result, he explains, was a 12% overall increase in revenue. When converted into cash, it would be approximately $72,000 per year; this is an amount relating to “orders that would otherwise not be received”. Another San Diego business, Cali BBQ, was secured in March TWSJ variable prices allowed the chain to increase its monthly shipments.

“When the kitchen dies”. His philosophy is not much different from that of celebrities happy hourAlthough it is much more complex, it has been used in bars for years. “When the kitchen is dead, we’re willing to take a dollar or two off a product to keep it running and the staff employed,” they explain. The reality is that the promise of dynamic prices, the ability of those prices to stimulate demand during off-peak hours and adapt to spending or inventory needs, has caused the model to gain traction in other sectors beyond the hospitality industry. Recently the BBC mentioned supermarkets using them or stores in the Netherlands with updatable electronic labels.

Lesson from the Wendy case. Just because the proposal has advantages and is theoretically attractive does not mean that it will be easy to translate it into practice. The American chain knows this well. fast food Wendy’s. At the beginning of the year, it announced that it wanted to offer dynamic pricing and “advanced features” based on artificial intelligence in 2025. All of this was accompanied by a million-dollar investment in digital billboards to recommend products and present different offers to customers. Not everyone thought it was good.

There were also those among their customers who commented that this change would have a negative consequence for their pockets: more expensive burgers during peak hours, precisely when more people demand their products. After intense criticism on the networks, Wendy’s was forced to explain that its executives’ words had been “misinterpreted” and that although prices could be adjusted in any direction, the cap currently in place would remain.

“Open and transparent communication”. In an article written by Speech Analyzing the Wendy case, Ted Rogers School professor Omar H. Fares insists that what happened proves that dynamic pricing strategies must be accompanied by two important requirements: “clear communication and transparency.” This last value is what they are missing in the consumer organization Fairer Finance. “It is difficult for the consumer to make informed decisions. They are designed to make profit as easy as possible.”

Pictures | Anne Nygård (Unsplash), K8 (Unsplash) and Toa Heftiba (Unsplash)

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