There are significant opportunities for the sector to use regional price differentiation as a way of offsetting rising costs, research by MCA has shown.
A review of prices across 84 leading branded operators showed 82% charge the same price across the country.
The Regional Price Differentiation Analysis by MCA identified seven brands offering multiple brand pricing - where the same menu item has a different price in three different regions. They were All Bar One, Beefeater, Browns, Café Rouge, Piccolino, Vintage Inns and Zizzi. Eight brands surveyed offered two tier pricing –where the same menu item has a different price at two different regions across London vs Midlands or the North.
The research showed that price differentiation doesn’t necessarily mean “London premiums”. Four brands surveyed used selectively lower price points in London than in the Midlands and the North. This included Browns, where the chicken Caesar salad was 25% cheaper in London. Meanwhile, Harvester priced three mains at £6.99 in its London site, “simple grilled chicken”, “7oz gammon steak” and “new cellentani pasta in tomato sauce” – 7% lower than in the North.
Piccolino was identified as adding the highest premium for London, with a 35% price difference on some single mains.
Across the board, price differentiation on selected dishes only was the preferred strategy. Only three operators – Brasserie Blanc, PizzaExpress and Vintage Inns – apply differential prices across all mains.
The report says: “Having the same national price increases operational efficiency and reduces administrative costs. However, price differentiation can be a powerful tool for optimising revenues and profits.
“Operators are facing rising staffing costs, not least through the new National Living Wage, as well as increasing input costs. There is scope for more brands to introduce regional price differentiation to help offset the impact of rising costs on profitability.”
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