Menu Price Optimization in Quick Service Restaurants

The company was a large quick service restaurants chain. They wanted to optimize menu prices to drive margins without impacting guest count.

Industries: Quick Service Restaurants, Franchised Operations

Services: Price Elasticity Modeling, Pricing Performance, Price and Promo Optimization

Data: Size: > 1TB, 10+ Tables; Cleanliness: 9 out of 10

Business Challenge

Faced with rising food and labor costs on one hand, and ever-increasing competition on the other, the company was looking for ways to raise price without losing guest counts and market share.

Keenalytix helped the client by developing and implementing an advanced menu price optimization model providing recommendations for each item in each market.

What We Did

Focused executive manager working on annual financial report

Solution Development

The engagement focused on developing and thoroughly testing the right menu price optimization model to reconcile the conflicting objectives of margin and traffic.

The model heavily relied on the client’s own sales, pricing and promo data. It also leveraged additional third-party market-level data about competition and demographics.

Group of business people working together, brainstorming in office

Solution Implementation

The solution was a two-step approach. First, a highly accurate predictive model of demand provided price elasticity values for each item. It allowed the client to start segmenting its menu items based on sensitivity to price. Second, an optimization algorithm generated the price recommendations.

Results

The business tested the recommendations for a few weeks. The test restaurants all reported significantly improved margins with little to no loss in guest count.

The client then expanded the recommendations to its entire system. The rollout also provided an opportunity to train store managers on pricing best practices.

Real Results. Proven Success.

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