Pricing | Interview

Reward regulars, dispense with gastro-hoppers

Dr. Tobias Maria Günter, expert for retail, consumer goods and system gastronomy at the strategy consultancy Simon-Kucher & Partners, advises against blanket price increases.
Simon-Kucher & Partners
Dr. Tobias Maria Günter, expert for retail, consumer goods and system gastronomy at the strategy consultancy Simon-Kucher & Partners, advises against blanket price increases.

Since a few weeks the gastronomy in Germany is allowed to receive guests again - but still under Corona-related conditions like the test obligation for interior rooms and limited capacities in many places. In plain language: Months of lost sales are followed by months of reduced sales. Price increases are therefore hardly avoidable. How do restaurateurs proceed without scaring off their guests? FOODSERVICE spoke with pricing expert Dr. Tobias Maria Günter (Simon-Kucher & Partners).

After a seven-month break, the gastronomy sector is now allowed to welcome guests again. Is a new strategy necessary now?
Basically, the topic of pricing is always hot. But currently there is hardly any way around it. During the past one and a half years, high costs have been incurred due to massive sales losses - the restaurateur doesn't just want to pass them on, he has to. But of course, the question inevitably arises: Will the guest go along with it? Is he now - in the breathing space of the crisis or after the end of the crisis - hedonistic and spends the money? Or do they no longer need the gastronomy at all? Thanks to Thermomix and Hello Fresh ...

How can price increases be implemented without alienating the guest?
Blanket price increases across the range are certainly not the right solution. Such a strategy never goes unnoticed by the guest. The art of pricing is to develop prices carefully - without scaring the guest away. This requires a price-psychological strategy: What is the function and role of the products? Which ones are ordered a lot? Which are iconic? If I increase the price of the bestseller, I have the greatest effect - but everyone notices. Diversionary maneuvers in product design are definitely allowed and advised here: One very simple way is to introduce a new menu at a new price. Basically, bundling is a good idea. Clever packages can be put together and the guest can be rewarded with an extra "on top" - for example a free dessert. Menus should be developed further and more emphasis should be placed on daily menus and special offers in order to be able to better control the use of goods. I think you can almost make the case: The guest may have forgotten certain prices altogether. Moreover, he does not itemize. He rather has a total budget in his head - I'm going to spend X amount of money today at noon. As a restaurateur, I need to know this expectation in order to be able to make better use of price willingness

What role can dynamic pricing play now?
Of course, the willingness to spend and therefore the appropriate pricing depends heavily on the occasion. Every restaurateur should ask himself how he can better adapt his menu to the occasions and times of day and design special products for the corresponding slots for business lunches or family visits, for example. In other words, "dynamic products" rather than "dynamic pricing". With flat-rate discounts - i.e. 30 percent on the entire bill at a certain time of day - the restaurateur simply takes a lot of turnover up front - and of course the all-important profit. On the other hand, a free dessert or the first drink "for free" is much less painful. It also goes down better with the guest: The host is giving me something.

What do you think about discount promotions to bring guests back to the gastronomy?
As long as it concerns qualified discounts, nothing speaks against it. Means: You should always reward only the good or loyal guest, for example with a comeback coupon. Attracting gastro-hoppers via couponing, on the other hand, is not really worth it in my view. Many retailers and restaurateurs go this route because it works quickly in the short term. But it is not sustainable. The decisive questions are: How can I increase the average coupon? How can I increase the frequency permanently? Of course, everyone likes to save money. But does the guest come because he saves or because he is a fan?

So the good price doesn't work as a permanent motive?
Probably not. You forget the price, I remember the quality. That's why I advise you never to turn the quality screw. The guest notices that very quickly. Competition has increased in the past. Stationary gastronomy now has more competition through delivery. Nobody is dependent on mediocre food and service.

Expert Dr. Tobias Maria Günter
Dr. Tobias Maria Günter is a partner in the global Consumer Goods & Retail Practice at Simon-Kucher & Partners and an expert in retail, consumer goods and system gastronomy. He advises companies worldwide on the development of specific solutions in the areas of pricing, assortment, category management, marketing, promotions and customer journey.