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Will Dynamic Pricing System Work For Pub Restaurants? 🍸


Australia is home to roughly 6,000 pubs, with a significant number being small, locally-owned establishments that play an essential role in the Australian way of life. As the hospitality industry confronts increasing challenges, communities are rallying to preserve these vital town fixtures. Inspired by a trend in the United Kingdom, where a renowned chain of pub restaurants is leading the way in adopting dynamic pricing to ensure its survival, there is now a debate about whether this strategy could find success in Down Under, allowing these cherished hubs to adapt to the changing industry while remaining dear to their communities. 


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The challenge lies in the fact that implementing and maintaining dynamic pricing is a complex endeavour, and introducing it to customers can be even more challenging. If not executed correctly, pubs risk alienating their clientele and potentially driving away even more customers. The delicate balance between pricing adjustments and customer satisfaction requires careful planning and execution to ensure that the benefits of dynamic pricing, such as improved revenue, do not come at the cost of customer loyalty and trust.


In this article, we will explore the impact of introducing a dynamic pricing system in small pub restaurants. To begin, we examine a case in the United Kingdom where a pub chain is experimenting with dynamic pricing. Subsequently, we analyse the advantages and disadvantages of implementing this strategy in small pubs. Lastly, we offer guidance to small pub owners on enhancing their pricing strategies for increased sustainability. We argue that dynamic pricing can enhance revenue and profitability for small pubs, but mishandling it can result in customer alienation, trust erosion, and a decline in clientele.


At Value Culture, we believe that small pubs can achieve sustainability and success, even within their resource limitations, by prioritising customer-centric approaches and value-based pricing. By the end, you will know if you should implement a dynamic pricing approach to your pub. 


Can Dynamic Pricing System Improve The Profit Margins Of Pubs Restaurants In Australia?


The largest pub chain in Britain, Stonegate Group, is trying out dynamic pricing in their pubs. Customers were more than surprised to be paying 5 to 62 per cent more for a standard pint of beer during peak hours and weekends.  


According to the company, the price increase for a pint is applied when their venues experience higher levels of customer traffic. This measure is intended to offset the costs associated with tasks such as glass cleaning, additional staffing, the provision of plastic cups, and the presence of security personnel at the entrances.


Stonegate was unable to provide a specific timetable for when these price adjustments typically occur, as they vary from one pub to another and may be linked to different events. Nevertheless, they believe price increases are modest – generally less than £2 – and guarantee prices return to normal during regular trading hours.


Combined with Stonegate’s dynamic pricing strategy are value-based offers and promotions, such as happy hours, two-for-one cocktails, and discounts on food and beverages, which may vary based on the day and time of the week.


However, key customer feedback is that dynamic pricing in pub restaurants feels unfair and a bit like a gamble.


Some customers said the pub group is outright charging too much.  Other customers said that they don’t like not knowing what they are going to be charged at any given time. 


This is where a clear value offer and effective communication come into play. Stone Group may have introduced promotions and additional offers that enhance the customer experience, but the way these changes are conveyed is company-centric and all about their rising costs. 


Early days yet, and not sure whether these are just trials or definitive pricing changes. However, pub groups implementing dynamic pricing will want to clearly communicate key value messages to keep customers in the pubs instead of buying from bottle shops and drinking at home. This advice also applies to Australian publicans, as recent reports indicate that inflation is increasing the cost of visiting a pub.


Discussion On Dynamic Pricing System For Pub Restaurants In Australia


Dynamic pricing can boost revenue and optimise operations, but it must be balanced to avoid customer backlash and maintain a loyal patron base. Consider these factors carefully before deciding if it’s the right strategy for your small pub.


Pros of Dynamic Pricing System In Small Pub Restaurants


  1. Increased Revenue: Dynamic pricing allows you to maximise profits during peak times. For instance, on a busy Friday night, you can raise drink prices slightly, capitalising on higher demand.
  2. Optimised Inventory Management: You can reduce costs by discounting items that are about to expire. Imagine offering discounted food and drinks during happy hour to minimise waste.
  3. Competitive Edge: Dynamic pricing enables you to stay competitive. If a neighbouring pub offers a special deal, you can quickly adjust your prices to match or beat it.


Cons of Dynamic Pricing System In Small Pub Restaurants


  1. Customer Loyalty Risk: Frequent price changes can confuse and irritate customers. If they feel prices are unfair, they might choose to patronise a more consistent establishment.
  2. Negative Perception: Overuse of dynamic pricing may make your pub appear profit-driven rather than customer-focused. For instance, excessive price hikes during events can alienate regulars.
  3. Implementation Costs: Implementing dynamic pricing software and training staff can be expensive and time-consuming. This initial investment needs careful consideration.


dynamic pricing restaurants


If small pub restaurants opt for a dynamic pricing business plan, how can they minimise risks and maximise benefits?


By implementing the following steps, your small pub can strike a balance between value-based pricing and customer-focused approaches, ultimately mitigating risks and reaping the benefits of dynamic pricing.


  1. Customer Segmentation: Begin by segmenting your customers based on their preferences and buying behaviour. For example, identify regulars who visit during off-peak hours and occasional patrons looking for special deals.
  2. Value-Based Pricing: Tailor your pricing strategy to match customer segments. Offer value-based deals, like happy hours with discounted drinks, for price-sensitive patrons. Conversely, premium offerings can target those seeking a unique experience.
  3. Effective Value Communication and Marketing: Craft compelling marketing campaigns that highlight the value of your offerings. Promote your unique selling points, such as locally sourced ingredients or a cozy ambience, to attract and retain customers.
  4. Real-Time Monitoring: Invest in pricing software that allows you to monitor demand in real time. Adjust prices dynamically based on customer traffic, events, and inventory levels. For example, increase prices during a popular live music event and reduce them during quieter weekdays.
  5. Feedback Loop: Maintain open communication with your customers. Collect feedback through surveys or social media to understand their pricing perceptions. Use this input to fine-tune your dynamic pricing strategy and ensure customer satisfaction.


Why are value-based pricing and customer-centric strategies crucial for the success of small pub restaurants, whether they opt for dynamic pricing or not?


Value-based pricing and customer-centric strategies are fundamental for the success of small pubs, regardless of whether they choose to implement dynamic pricing. Firstly, value-based pricing ensures that customers perceive your offerings as fair and aligned with the experience they receive. By understanding what your customers value most, you can price your menu items accordingly. For instance, if your pub is known for its craft beers, pricing them competitively during happy hours can attract both value-conscious and beer enthusiasts, driving sales and loyalty.


Secondly, adopting a customer-centric approach is essential because it places the patrons’ needs at the forefront. When customers feel heard and valued, they are more likely to return and recommend your pub to others. This approach involves active listening to customer feedback, addressing concerns promptly, and personalising their experiences. For instance, if a regular customer expresses a preference for a particular dish, accommodating their request can create a strong sense of loyalty and repeat business.


Lastly, whether you implement dynamic pricing or not, these strategies provide a competitive edge in the saturated pub industry. They help build a strong brand identity and a loyal customer base. When customers feel that your pub understands and caters to their desires, they are less likely to be swayed by temporary pricing fluctuations or promotions offered by competitors. In a nutshell, value-based pricing and customer-centric approaches form the bedrock of a thriving pub business, enhancing customer satisfaction and long-term success.


Implications Of Implementing Value-Based Dynamic Pricing System In Pub Restaurants


Recognising the resource constraints of small community-owned pubs, it’s important to take a practical approach to implement dynamic pricing or any value-based pricing and customer-centric strategies.


Firstly, when it comes to limited resources, prioritise the most impactful initiatives. For example, focus on understanding your top-selling items and customers’ favourite choices to make targeted pricing adjustments. Instead of complex CRM systems, utilise cost-effective tools like simple spreadsheet databases to track customer preferences.


Secondly, when considering workforce limitations, invest in cross-training staff to multitask efficiently. Ensure that employees can assist with both service and understanding customer needs. Encourage team members to take ownership of customer relationships, fostering a more personalised experience even with a smaller staff.


By strategically allocating resources and maximising the skills of your workforce, small community-owned pubs can still make meaningful improvements in value-based pricing and customer-centric approaches while respecting their limitations.


Small- and medium-sized firm employees frequently have their hands full of workloads. But, our findings show that with the right set-up and pricing plans in place, incremental earnings gains can begin to occur in less than 12 weeks. After 6 months, your teams can capture at least 1.0-3.25% more margin using better price management processes. After 9-12 months, businesses often generate between 7-11% additional margin each year as they identify more complex and previously unrealised opportunities, efficiencies, and risks.


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Bottom Line


Small community-owned pubs in Australia embarking on the journey to sustainability through value-based pricing and customer-centric approaches can navigate these challenges effectively. While resource and workforce constraints may seem like hurdles, they can also be opportunities for creativity and efficiency. By focusing on high-impact strategies, such as personalised pricing for popular items and thoughtful customer engagement, these pubs can foster strong connections with their patrons, even with limited resources.


Furthermore, it’s important to remember that community-owned pubs hold a unique advantage—their close ties to the local neighbourhood. Leveraging this community spirit to drive loyalty and word-of-mouth referrals can be a game-changer. With dedication, strategic allocation of resources, and a commitment to delivering exceptional customer experiences, these pubs can not only sustain themselves but also flourish as cherished hubs of their communities, embodying the essence of the Australian way of life.


For a comprehensive view of ensuring the continuous growth of your business, Download a complimentary brochure on How To Drive Pricing Strategy To Accelerate Sales & EBIT Growth.


Are you a small or medium-sized business in need of help aligning your pricing strategy, people and operations to deliver an immediate impact on profit?

If so, please call (+61) 2 8607 7001.

You can also email us at if you have any further questions.


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