DATA AND ANALYTICS DRIVEN RESTAURANT PRICING

Menu Price Simulator Discovers $10M Opportunity

Opportunity

A $1B US quick-serve restaurant chain was using cost-plus pricing. They had a lot of customer and transactional data but did not know how to leverage it to optimize their pricing strategy. They wanted a tool that would let them estimate the effect of a price change across all the items on their menu.

Approach

We gathered, cleaned, and analyzed their data. We used advanced analytics to quantify elasticity at the store and product level, forecast product demand, and understand market basket purchase behaviour.
We developed a cutting-edge statistical model to forecast and optimize the effect of any combination of price changes across their entire product portfolio. This work was technically demanding, but we took great care to ensure that the client understood the process and how the model arrived at its predictions.

Outcome

The model helped the client understand the relationships between their various products and resulted in $10 million in incremental revenue. The model was so successful that I presented it as an invited speaker at the INFORMS Business Analytics Conference.