Pricing and Promo Performance in QSR

The client was a large national QSR. They needed an effective and accurate way to measure the impact of their quarterly price increases and monthly promotions.

Industries: QSR

Services: Price Elasticity Modeling, Pricing Performance.

Data: Size: > 3TB, 10+ Tables; Cleanliness: 9 out of 10

Business Challenge

To counter the adverse impact of inflation on its food, paper and labor costs, the company started taking quarterly price increases based on a price optimization model.

In order to ensure that the quarterly increases were giving the expected results and growing restaurant profitability, the business wanted to develop a systematic way to track its price increase effectiveness. Keenalytix helped the client by developing and implementing a custom solution based on state-of-the-art impact assessment models.

What We Did

Solution Development

The initial phase of the engagement focused on finding the right class of model to accurately measure the client’s Pricing Performance.

Not only did we need to accurately capture pre- vs. post-increase effects, but we also needed to isolate the price increase itself from other price changes (namely, promotions and coupons) that happened at the same time.

Solution Implementation

The solution was to adapt a class of models widely used in other disciplines (such as economic policy), called difference-in-difference. These models allowed us to accurately measure the impact of the price increase, both direct (price elasticity) and indirect (cross-elasticity and products substitution).

Results

The business got an accurate and systematic solution to help it track the impact of its quarterly price increases. It gained so much confidence in the results that the model was eventually extended to also measure promo effectiveness.

Armed with its price optimization model and price effectiveness tracker, the business can now confidently take quarterly price increases and driven franchisee profitability without losing guest count.

Real Results. Proven Success.

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