The Pros and Cons of Using Dynamic Pricing for Restaurant Menu Boards

The Pros and Cons of Using Dynamic Pricing for Restaurant Menu Boards

The Pros and Cons of Using Dynamic Pricing for Restaurant Menu Boards

  • On June 23, 2023

Big and small players in the restaurant industry are constantly seeking ways to stand out from the crowd, optimize revenue, and enhance the customer experience. One innovative strategy that has popped up in this space is dynamic pricing for menu items. For restaurants striving to compete with the big hitters in the industry, incorporating dynamic pricing may complement your existing operations if you’ve recently invested in digital menu boards.

In this blog post, we’ll dive into what dynamic pricing entails for restaurant menu boards and explore the pros and cons of adopting these strategies. Whether or not you choose to go down this road is ultimately up to you. But if you do decide on it, Keyser Digital Signage is here to help.

Understanding dynamic pricing for restaurant menu boards


At its core, dynamic pricing involves adjusting menu prices based on a variety of factors. These include customer demand, time of day, days of the week, seasonality, or market conditions. The idea behind this approach is similar to what we’ve seen in other niches like the travel industry, where prices fluctuate based on specific parameters.

So how does it work in a fast-food setting? Let’s break down some different strategies that restaurants with digital menus might consider implementing:

Peak hour pricing

Ever been caught in long lines during lunchtime at your favorite fast-food joint? That’s because demand typically surges during peak hours when everyone flocks into town for their daily sustenance. To capitalize on this rush and maintain high service standards at busy times while maximizing profits, restaurants can raise their prices ever so slightly at peak periods hence increasing revenue without necessarily overloading staff members.

Happy hour discounts

While happy hours might be more synonymous with bars than fast food outlets, you can still leverage this time-based sales tactic to drum up business. Digital menu boards make it easy to advertise these promotions and quickly change back when non-discounted prices resume. This approach works great in tandem with peak-hour pricing, allowing restaurants to get creative and test out different strategies.

Seasonal pricing

Seasonality is a significant factor in food service. Ingredient availability and demand often shift throughout the year. Businesses might proactively adjust menu prices based on these fluctuations. Think ice cream in summer or hot soups in winter. They can ensure products are priced profitability and enticingly according to real-time market conditions.

Dynamic specials

Deploying dynamic pricing tactics like limited-time offers or timed discounts creates a sense of urgency that encourages customers to purchase before they miss their chance. FOMO is real, so use it to your advantage.

Day part pricing

Most people are familiar with dayparting, or using different menus for breakfast, lunch, and dinner. After all, traditional restaurants have embraced this concept for years. Timely price adjustments reflect different cost implications for ingredients between meal times. They might incentivize customers to visit at those specific periods.

For example, offer customizable combo meals (e.g., “Lunchtime Special” priced differently from “Dinner Deal”), so diners have an array of choices.

Pros of dynamic pricing for restaurant menu boards

Implementing dynamic pricing strategies isn’t mandatory by any means – as businesses ultimately determine whether doing so would be beneficial or not. If you’re currently weighing the pros and cons, here are some advantages to consider:

Increased revenue opportunities

Imagine this scenario: It’s lunchtime, and your quick-service restaurant (QSR) is packed with customers ready to order. With the power of dynamic pricing, you can adjust your prices based on demand, leading to higher profitability and a more effective bottom line. Not only does this give you a chance to capitalize on peak times, but it can also help make up for slower periods during off-peak hours. 

Ability to adjust prices based on demand and seasonality

Take advantage of market demands by using an algorithm that dictates price changes. It could be set to follow factors such as time of day, local events, or even weather conditions. For example, a restaurant could benefit from increased demand before or after a concert with higher prices.

Higher profitability through optimized pricing

Analytical tools integrated with point-of-sale (POS) systems allow restaurants greater control over their profit margins. First, they must track sales patterns and analyze customer preferences in real time. They can then make data-driven decisions about which items warrant price increases that improve overall profitability.

Enhanced customer experience

The pandemic has forced many businesses to adopt online ordering platforms to keep up with changing consumer behavior. Dynamic pricing offers these platforms the ability to serve personalized prices tailored specifically for individual customers. It makes each one feel valued and appreciated.

Increased transparency and trust with customers

Implementing clear explanations on digital menu boards regarding fluctuating prices fosters trust among patrons. They may appreciate being informed about what impacts pricing. By offering an open line of communication, restaurants can take the necessary steps to ensure customer satisfaction.

Provide opportunities for customers to buy at lower prices

Off-peak discounts are a win-win for customers and restaurants – they get more business during slow times while their patrons enjoy exclusive savings. Dynamic pricing strategies present a way to provide these perks without relying on coupons or special promotions.

Improved operational efficiency

Gone are the days of manually changing menu items and prices. Digital signage makes it easier than ever before to keep menus up-to-date and maintain consistency throughout multiple locations. Plus, restaurateurs can use real-time data insights about customer behavior to make smarter decisions on the fly.

With simplified menu updates and price adjustments, digital signage streamlines the process of adjusting menu boards with dynamic prices, making it simpler and more time-efficient than traditional methods. Say goodbye to labor-intensive chalkboard updates; it’s time to embrace technology.

Cons of dynamic pricing for restaurant menu boards

Although dynamic pricing offers many benefits, there are some drawbacks that restaurateurs should consider if they want to implement this strategy. These are probably not deal-breakers, but they’re worth noting.

Potential customer dissatisfaction

While some customers welcome fluctuating prices, others may feel that they’re paying an unfair rate compared with off-peak times when products might be priced at optimal rates. This negative impact on loyalty could affect repeat business if not properly addressed by the restaurant’s management team.

Maintaining transparency is critical to avoid spreading this negative perception. A delicate balance must be struck between generating higher profits through increased prices without alienating customers who might not fully understand why they suddenly face higher-than-normal food costs during certain time periods or circumstances.

Implementation challenges

As with any business strategy, the process of implementing dynamic pricing techniques comes with its fair share of challenges. Franchisees and restaurant groups might not allow individual locations to utilize dynamic pricing, meaning the choice is simply unavailable.

Technical requirements and costs

Dynamic pricing schemes require significant investments in digital menu boards, along with sophisticated POS systems and analytic tools that can handle real-time data analysis. This may be a deterrent for some restaurant owners who are hesitant or unprepared to invest time and money in new technology.

Introducing a new system can also be challenging for staff accustomed to traditional methods. They will need additional training on operating newly implemented technology for it to be effective.

Complexity in maintaining pricing consistency

Managing prices across multiple platforms, such as digital menus, websites, mobile apps, or online marketplaces, could introduce complexity in keeping all marketing materials consistent. Maintaining seamless consistency could become a challenge without an accurate database system synced across all channels – both online and off.

Tips for implementing dynamic pricing on restaurant menu boards


If your restaurant comes to the conclusion that the pros outweigh the cons of dynamic pricing, the next step is implementation. Here are several steps you can take to ensure a smooth transition.

Work with an experienced digital signage provider 

A company like Keyser can help you successfully implement a dynamic pricing strategy. One of the critical aspects when considering incorporating this approach into your restaurant operations is finding a reliable provider that understands your needs.

As an experienced partner in digital signage solutions, we know how crucial it is for businesses to stay agile. You can always start with a simple digital signage solution. Later on, if you decide to adopt a dynamic pricing strategy for your restaurant menu boards or even virtual brands, we will be with you every step of the way. From consultation and installation through support down the line.

Set clear pricing rules and guidelines

Climbing onto the bandwagon without proper planning spells trouble. Dynamic pricing requires setting transparent criteria such as time-based rates or adjusting prices based on ingredient cost fluctuations. Furthermore, remember to guide your employees through these changes. Their understanding of the policy will be essential to maintain a successful change management process. 

Utilize data analytics and customer insights

Data-driven decision-making should be at the core of your dynamic pricing strategy. This information lets you analyze menu items’ performance, customer preferences, and other critical factors. These could all influence the appropriate prices to charge at any given time.

For instance, sparkling water might be more popular on weekdays than on weekends. If so, a happy hour pricing model during the week can drive sales considerably higher.

Communicate effectively with customers

No one likes surprises when they reach the cashier and see different prices from what was initially posted on the menu board. Keyser’s digital signage solutions can help you keep customers informed in real-time. High-quality visuals are essential in conveying these changes without inciting confusion or frustration among patrons. So, take advantage of the power of your digital menu boards and ensure clear communication with your audience.

Additionally, consider running promotions or loyalty programs simultaneously, as they can ease customer perceptions about occasional price fluctuations. They also contribute to spreading goodwill about your brand.

Monitor and evaluate the effectiveness of dynamic pricing

As with any significant business change, measuring results is crucial! By utilizing analytics data provided by Keyser’s systems or other sources, you’ll be able to track how effective your pricing strategies have been over time. Armed with this information and feedback from both staff and patrons alike, necessary adjustments should be made to further optimize profitability moving forward.

Since reaping benefits from dynamic pricing isn’t guaranteed in every scenario, lessons learned will shape future actions taken toward improving revenue-earning potential across your fast-food businesses.

Learn more with Keyser Digital Signage

Dynamic pricing for restaurant menu boards can be both an opportunity for increased profits as well as a challenge if not implemented correctly. Proper communication planning and utilization of data analytics open up vast potential within food service environments.

Choosing competent providers is often the determining factor in whether your new pricing strategy will be a success. Work with digital signage experts who genuinely understand what it takes to make such a campaign successful without alienating loyal patrons.

Whether you decide to implement dynamic pricing in your fast-food business or not, it’s crucial to know that Keyser is the partner who will stand with you. Don’t hesitate to contact us for further guidance, and let’s start a conversation about this exciting possibility today.



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