How Restaurants Are Making More Money Off of Customers
With food prices at uncomfortable levels right nowconsumers are carefully weighing each potential trip to a restaurant. Those businesses, in turn, are finding strategies to keep people coming through the door, experimenting with promotions and tweaking their overall approach. But one method that’s actually working out for some chain restaurantss is a marketing strategy called barbell pricing. Even if you haven’t heard of it, you might have already experienced this model without realizing it.
What is barbell pricing?
As explained by trade publication Restaurant Business Online, barbell pricing is when a restaurant lures you in with promotions deals while simultaneously pushing higher-end items. Denny’s has been employing this strategy this yearand Red Robin is also making moves toward this model by offering a $10 meal promo while also promoting its higher-end Cheese Lovers burgers, priced at over $15 per burger.
What this does is draw in multiple types of customers. Lower-income diners, who are most impacted by inflation, come in for lower prices, while customers who might be less affected by rising food costs are drawn in by the allure of premium items, which they are willing to spend extra to get. Plus there’s always the old-fashioned upsell: Once you’re in, the restaurant has the opportunity to convince you to upgrade from lower-end items to fancier ones on the spot. Or tack on some drinks. Or maybe dessert.
Traditional across-the-board discounts (“All entrees half off!”) don’t necessarily make sense for large chains, as those price cuts guarantee that the restaurant will net less money per bill no matter what. In the case of barbell pricing, the customers dropping money on the costly items can offset the purchases of price-conscious patrons who have only come for the discounted items.
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If it feels manipulative, understand that it’s not a new concept. Deal seekers will forever remain a constant in the dining landscapeand for every one of themthere’s someone else (sigh, me) willing to impulsively upgrades on the spot—so it makes sense that restaurants have figured out how to cater to both simultaneously. Fast food chains like Taco Bell are in on barbell pricing too, by offering a $2 Cravings Menu and a $6.49 Double Steak Grilled Cheese Burrito.
It’s sort of a mixed bag for corporations, however. Restaurant Business Online reports that Chili’s has decided it’s more worthwhile to offer fewer discounts, a strategy that results in less foot traffic but nets the company a higher overall profit. The next time you’re out to eat, looking for the best deals, keep a close eye on what’s actually being offered on the value menu. The choices might be restrictive by design, in an attempt to push you toward the more expensive stuff.
