Episode Transcript
[00:00:00] Speaker A: What's going on everybody? Chip Close here, host of the Restaurant Strategy podcast. We're in the middle of a 10 episode arc where I'm talking crazy ideas, ways to rethink, to step outside the box for the way that we run things, the way we run our restaurants. Because I think the restaurant of a hundred years is not going to be the restaurant of 100 years from now. We have to be willing to iterate and evolve again. Sharing all these crazy ideas today. My crazy idea, it's crazy that we are not more fully embracing this idea of dynamic pricing. We're getting get really deep into it. On today's episode of Restaurant Strategy. Don't go anywhere.
[00:00:36] Speaker B: There's an old saying that goes something like this. You'll only find three kinds of people in the world. Those who see, those who will never.
[00:00:43] Speaker A: See, and those who can see when shown. This is Restaurant Strategy, a podcast with.
[00:00:49] Speaker B: Answers for anyone who's looking.
[00:01:07] Speaker A: Hey everyone, thanks for tuning in. My name is Chip Close and this is Restaurant Strategy. Two episodes every week, all meant to help you level up to build a more profitable and sustainable business. Wrote a book. It's called the Restaurant Marketing Mindset.
[00:01:19] Speaker C: I coach, I run a mastermind program.
[00:01:22] Speaker A: Called the P3 Mastermind. I also host two live events every single year. The next one is coming up. The P3 Profitability Summit happens in Fort Worth, Texas October 2025. The event is capped at 100 people at the time of this recording. We have less than 30 tickets left and you gotta get there. If you are serious about running a more profitable restaurant, about getting more time back in your day to do the things that are important to you, then you need to be there. In Texas. It's a two and a half day event and I promise you will not regret it. We sell out this event every single time we host it. The way you get involved is to go to chipclose.com C-I P K L O S e.com, click the button that says Summit or you will find the direct link in the show. Notes.
[00:02:08] Speaker C: What's the food cost for your third best selling entree? You don't know. With Margin Edge you could know instantly. Margin Edge is a complete restaurant management software that I like to recommend to all of the P3 members, all the clients I work with. Why? Because it helps them improve profitability.
With Margin Edge you just get to snap pictures of your invoices as they come in and you get real time.
[00:02:30] Speaker A: Data in every area of your business.
[00:02:33] Speaker C: You can see play costs in real time you get daily P Ls. Your inventory count sheets are automatically updated. It saves you a ton of time and lets you make informed decisions. So I got a client, P3 member, gather brewing down outside of San Antonio. They started using Margin Edge a month after they joined my program. And within one month of them bringing on Margin Edge, their food costs went from 38% to 28%. It was incredible savings. That's 10 points that dropped straight to the bottom line. There's a reason I recommend Margin Edge to so many of the P3 members. It's because I know it works. If you're interested in learning more or you want to see how Gather brewing went from 38% to 28% food costs, head over to Marginedge.com chip. There's an incredible video there that talks about their story, talks about their journey with the platform. Again, margin edge.com chip see a really great see a really great story about the folks at at Gather Brewing. Go do that now. Of course, that link is in the show notes.
[00:03:34] Speaker A: Okay, so we're talking all about crazy ideas, right? Every summer I do this 10 episode arc revolving around a different theme. This year I'm talking about crazy ideas. The crazy idea to me is why we are not more fully embracing dynamic pricing. So let's get into it. Dynamic pricing has gotten a lot of crap over the last little while. But man, man, we do this already even in the restaurant setting and we're gonna talk about other industries but even in the restaurant setting, how many times do you have crab claws or lobster claws or scallops and you just put MP MP means market price. Depending on the price that day, you change your price that day depending again on what you paid for. So you pay for a certain amount, you charge a certain amount, you pay more, you are gonna have to charge more. We've been doing it forever. So don't pretend like you don't know what it is. And in a more targeted techn.
Airlines have been doing this for decades. Hotels have been doing this for decades. We can go on and on and on. Certainly you fill up your gas tank every week and that price is different every single day. That's why they have giant signs there. You can keep track of the price of gas.
Dynamic pricing is a part of everyday life. And to say that restaurants shouldn't be a part of it is absolutely crazy. The reality is simple supply and demand.
There are two or three days out of our seven day week where there is more demand. Friday night, Saturday night, Sunday brunch, there is more Demand for our product. Why would we not charge more for that product? It's just like real estate. If you want to be in the middle of Times Square, there is more demand to be there. Now, from a retail perspective, it's because there's more foot traffic, because it's the center of Manhattan, it's the center of the United States, certainly the most trafficked area in this country.
So the demand is high to be there, and so rent is high.
When there is high demand, you charge accordingly, and that's okay. There's a restaurant, Alinea, out in Chicago. So fancy, fine dining, three Michelin stars. But their experience, they do a tasting, tasting menu only. And to go and experience that tasting menu on a Wednesday is cheaper than to go experience that tasting menu on a Saturday.
It's just inevitable. The prices change because they know less people want to go out of their way on a Wednesday night because it's a school night, they got work the next day, they got to get a babysitter, whatever it is. So the restaurant says, well, if you'd be willing to do this for less, we'd love to have you. And for certain people, they're like, nope, can't do it. I gotta go on Saturday. We're gonna celebrate our anniversary on Saturday. But other people are like, I really wanna experience this. And, man, there's an opportunity for us to do this and save some money.
We can reinvest that money in a nicer bottle of wine or whatever it is they're willing to go, right? So it's a win. Win.
The people that are willing, or I should say the people that are unwilling to go on a less convenient night will pay top dollar to go on a Friday or Saturday night. The people that are willing to be flexible will get that experience for cheaper. So even in the restaurant level, this happens. So what does this mean for you, for the average restaurant? Because let's be clear, Alinea is nothing. There's nothing average or ordinary about Alinea. Alinea is top level, high level, right?
So for you guys, how do you do this? It might even be something as simple as going into your POS system, replicating, right, literally duplicating your dinner menu. And you have one menu that's for Friday, Saturday, Sunday night, and another menu that's for Monday through Thursday. There's no reason why you can't increase your prices anywhere between 5 and 15% for those nights simply because you have more demand.
More people have the time and want to go out on a Friday or Saturday night. So they have to pay for that luxury for the privilege of dining when everybody else wants to dine, right? Or the other way around. Maybe you make a big deal and you lower your prices 5 to 15% on the weekdays to try to entice people there. Here's the thing. You can either use this as a marketing opportunity. You can talk about it, or you can very quietly do it and not talk about it. There are benefits to talking about it. If you want to try to convince people to come in on Monday through Thursday, you can just let people see this, right, and observe it themselves. Just like Alinea, Lydia doesn't talk about their dynamic pricing, but when you go in to book a reservation, it becomes obvious. You're like, oh, the menu is either 385 or 485, man. Okay, so you can use it as a marketing opportunity, or you can just observe the natural demand that exists for your restaurant and price it accordingly. The same thing with drinks. There's no reason why you wouldn't, you know, you don't. You don't have to keep the drinks the same price. It's the same thing that a nightclub does. So a nightclub charges, I don't know, right, $20 for a. For a vodka soda, right? But then they get some fancy DJ that they fly in to spin for the night. That $20 drink becomes $26 or $28.
It's inevitable they do it. And they've been doing this for, I don't know, 50 years.
Certainly, I observed that 25, 30 years ago. It's just a trick they use. There's nothing to say you don't do it. Or if you've got live music, right, and you spend extra to get this national act to come in and perform, there's nothing to say you can't raise the price of your drinks by a dollar or two to help cover the fee that you're paying this band. It's okay when which. This band has helped drive demand and gotten more people in the room.
It's okay for you to charge a little bit more.
They're not going to be upset. They want to be there to see this band. They are locked into this experience. And if they want a couple drinks, they got to be willing to pay a little bit more. Now, when we start bringing technology into place, there are tools out there that will allow you to do this for your to go food, right? There are things that would change your pricing in real time, not just preset nights of the week, you know, which you could very easily do, but that would change in real time based on the demand flow. That's possible as well. Technology is helping us do this in real time. But the bottom line is that more people want to be with us Friday, Saturday, Sunday than at any other point in the week. And we are constantly complaining about these razor thin profit margins and our need to capture more revenue. This is a very real way to simply capture more revenue, to increase by as much as 5 to 15% or.
Or more. I mean, look at the example of Alinea. It's 385 versus 485. That's a sizable increase to dine on these premium nights. There's nothing to say you can't do it. It is a tool available to you if you choose to do it. Simply by saying, well, that's never been done before is not the reason not to do it. Number one, I hope I've dispelled that, that consumers are used to this. Certainly when they book airlines, when they book a flight, when they book a hotel, they're used to this. When they go fill up their gas tank, they are used to this. They will get used to this in the exact same way, just like they got used to us passing along the 3% fee for credit cards, which by the way, again, the gas stations have been doing for, let's eyeball it at 40 years.
Just because it's not the way it has been done doesn't mean that's the way it can't be done.
So be willing to be bold, be willing to be smart.
Will you continue to serve our people in profound ways? They come to us because they want to get taken care of. You are very good at taking care of people.
You got to take care of yourself. And this is a tool that we can use to take care of ourselves. So again, that's another crazy idea. I don't think it's that crazy and I think it's crazy that we have. It hasn't gotten more widespread adoption. But I promise you, as soon as it has, everyone is going to do it. Certainly in the next five years, we are going to see, I believe everyone do it. Because when technology makes it really easy to do, when it's not a manual process, it's going to be obvious and it's going to be.
It's going to be widespread. Everyone's going to do it. So again, 10 episode arc. These are shorty episodes meant to spark ideas. Crazy ideas. That's my crazy idea. Dynamic pricing again. One final reminder. The P3 Profitability Summit happens in Fort Worth Texas, October 2025. We cap the event at 100 people. As of this recording, we've sold 74 tickets. So if you want to be there, there are less spots left. Go click the link in the show notes and check out tickets. Two different levels of tickets. Both are great. Both give you access to full the two full days of education, Q and A panel discussions, breakouts, speaker sessions. Tons of great content. All meant to help you level up. It is highly tactical, actionable. They are playbooks and scripts, things that you can bring home to your restaurant and apply right away. I promise you, you do not want to miss this event. It sells out every single time. Come join me in Texas. Appreciate you guys.
[00:12:43] Speaker C: Thank you very much.
[00:12:43] Speaker A: I will see you next time.
[00:13:05] Speaker B: Sam It.
