DQ Juan

For this week’s assignment I had the opportunity to interview a General Manager that works in the hospitality industry, specifically in the restaurant business who focus in casual dining, by a company that owns over 700 locations within the United States and over 10 locations internationally.

What is the pricing objective?

After discussing different options to select from the list of pricing objectives, the individual mention that in the past the company was solely focus in market share profit but, not too long ago was sold to a new owner who focuses on maximum current profit.

How sensitive are the company’s target customers to changes in price?

I was explained that when the company increases the price to their menu items, it is such a small change, meaning from 25 to 40 cents and it doesn’t happen constantly, that normally the customer doesn’t even noticed for which the answer to the question was low sensitivity to price changes.

Do they have some target segments that are less price sensitive than others?

The answer was yes. This corporation divides its restaurants into 5 different price tiers which is going to be determine by the location of the establishment and also the average income in the area. Additionally I was told that for example if two locations offers the same menu options with a 3 dollar difference, a technique to offset the cost of the product in the area would be to provide a slight less portion, that way quality is still being offered maintaining profit in the sale.

How much consideration does the company give to competitors’ prices when setting their own?

As mention in the beginning we are discussing a casual dining restaurant which in this particular one, there is multiple competition in the surroundings of this location, and a lot of consideration is given to the competitors to be able to maintain clientele. For example one trend they being focusing on, is the “take out” platform. Creating a joint venture with companies like UBER EATS and DOOR DATCH, the restaurant has being able to increase their take out sales by 100%, this way finding differentiation from competitors offerings being able to continue the flow of sales and maintaining their customers. Also to do this they rely on what the restaurant calls “Seasonal Promotions”, in which records the company maintains providing previous year sales and guest count, to mention some of the relevant data, that is given to financials analyst, allows them to predict when sales would be low throughout the year and to increase them and being able to maintain staff, that without customer traffic would quit for the lack of sales, this promotions are created where the core menu is kept intact but they emphasize in specific options. Doing this clientele is maintained and the restaurant doesn’t have to incur in more costs training new personnel.

What method of pricing do they use to arrive at the final price for the customer?

After concluding with the interview and getting all the insight about the way they do business and their marketing strategies it is my understanding that they use markup pricing. Regardless of the marketing strategy they rely on throughout the year, fixed costs are always consider and I was mention that since they are the leader buyer of certain product in the industry they have acquired contracts with fixed pricing on their product being able with this to maintain competitive prices to their target market and remain in business for many years.