Pricing to Stay in Business
How much does a single donut at Dunkin Donuts cost? Calling around to a few stores I received the following 4 answers: $0.50, $0.69, $0.99, or $1.29? Are the stores charging $1.29 overpriced? Are the stores offering it at $0.50 discounting too much? The answer is “yes, it depends”. This same question applies across the QSR spectrum.
A thorough analysis of all transactions and an understanding of the locations is required to best answer the question. Using economic principles with the results displaying graphically, a business owner can make a more informed decision. By understanding the local demand through the use of data insights techniques, he can work to maximize marginal profits. Typically this improves bottom line profits by several percent. In a world of compressing margins, knowing where you can and can’t pass higher commodity costs to the consumer could mean the difference between staying in and going out of business.