Whether it’s a $5 burger or a $25 steak, operators are making menu space for both as a way to lure in two types of customers: those pinching pennies and those who want to splurge.
It’s an old-school strategy operators refer to as barbell pricing – when a restaurant attracts customers with promotional deals while simultaneously pushing higher-end items.
Most recently it has been used to offset pandemic-related losses and current inflation. And for many, it’s working.
Joe Violi, a business solution specialist in Northern Michigan, said he has seen some success among operators in his region.
“Places that have the most success moving forward are targeting all different price points,” Violi said. “They are trying to target customers across different price points.”
The hope is that barbell pricing will counter the weight of inflation by keeping profit margins even for the operator, and hopefully locking them in around a happy medium, according to a recent article in Tasting Table. But, Violi said, while it has been working for some, it may not work for everyone. For example, a special-occasion restaurant likely wouldn’t promote discounts.
“At the end of the day everything has to be done on a case-by-case basis,” he said. “There is no one fit. It may make sense for some places and then not for others.”
Caviar on Pizza, Onion Rings on Burger Drive-Up Price
Timothy Tejuco, a business solutions specialist in the Vancouver area, agrees that barbell pricing is definitely gaining traction again.
“It’s been a tactic in restaurants for a very long time,” Tejuco said. For the most part, he is seeing barbell pricing at fast-food or less expensive restaurant chains. That jives with what Tasting Table has reported, citing Red Robin, where guests can buy a $10 Gourmet Meal Deal or spend $15.99 on two limited-edition cheese lovers burgers.
Another version of barbell pricing is also catching on, Trejuco said.
“Operators are adding upscale additions to typical menu items and it’s becoming really big,” he said. For example, a menu can promote a great pizza listed at its normal price, but a pizza topped with lobster and caviar will be on the same menu for triple the price.
“People will always go out and get what they want, but can add something upscale,” he said. “It’s happening with everyday foods.”
Barbell Pricing Isn’t Foolproof
While it’s likely the pricing tactic will continue to trend, operators should be cautious that the strategy could backfire, Tejuco said.
“There is a risk of losing some sales to barbell pricing,” he said. The discounted items may draw sales away from a $50 steak if a $10 burger is advertised on the same menu, Tejuco said. And some want the experience of dining at a place where discounted items aren’t an option. “People are going to a certain place for a reason. If they wanted cheaper food, they would get takeout,” he said.
Violi said he has watched restaurant operators try various tactics like barbell pricing over the past couple of difficult years. But, in the end, there is no one tactic that works, he said. It’s best for operators to stay focused on what really matters: Great food and exceptional customer service.
“Everyone is losing focus on what matters and they are scrambling for solutions,” he said. “It’s a tornado of things that everyone is dealing with. It’s a difficult time and people need to adapt and figure a way out of this.”