Highlights of the Case Study:
|Client||A major US-based tavern sought to rationalize its pricing and product portfolio in the bars section to help drive demand.|
|Business Challenge||The client wanted Quantzig to develop a pricing analytics solution and help optimize its product portfolio. The client also wanted to create an AI-powered application capable of updating menus in response to current market conditions.|
|Impact||Quantzig’s AI-based solution enabled a 360-degree perspective on products, marketing, and pricing strategies so that the client could maximize profitability.|
Game-Changing Solutions for the Fast-Food Retail Industry
The profit margins at restaurants are frequently low. Therefore, restaurants must consider all possible options for food pricing and select the best ones to ensure sustainability and longevity in the business. Restaurants perform extensive research on food and drink prices based on prevailing market trends, competitive benchmarks, and the degree of demand from customers to arrive at optimal pricing strategies. All these elements influence the menu pricing techniques and the level of profit margin.
However, the restaurant business offers numerous chances for customization and personalization, which can be leveraged to optimize profits. This is where an AI-powered menu and the utilization of pricing analytics solutions can offer unique benefits. Quantzig can help restaurants and fast-food businesses leverage new technologies for menu optimization and price rationalization to remain competitive and drive profit margins and growth.
The Challenges of the Fast-Food Chain Retailer
Our client, a prominent US-based tavern, wanted to rationalize its pricing and product portfolio in its bar section to help drive demand. The client approached Quantzig to develop a pricing analytics solution and to help optimize their product portfolio. To optimize its product portfolio, the client wanted our assistance in analyzing the impact of restaurant-specific data such as special offers, complimentary drinks, different flavors of drinks, portion sizes, and consumption of diverse dishes. Our client also intended to gather insights on rush hour and the frequency of people ordering specific alcoholic and non-alcoholic drinks.
The client wanted to develop an AI-powered application capable of updating menus in response to current market conditions. The client approached Quantzig for solutions capable of generating data from all the menu items sold. This data then could be analyzed to provide insights on optimizing the menu, enhancing the use of resources, and even monitoring the real-time price gaps with competitors. Some of the issues that the client sought to address were as follows:
- Gathering customer feedback
- Managing bulk corporate bookings
- Rising competition
- Shifting customer preference
- Finding it difficult to come up with a unique selling point
- Understanding consumer trends to develop new recipes for food and drinks
Data Analytics and AI-Solutions for the Fast-Food Retail Industry
Quantzig assisted the client in designing a menu solution that empirically analyses each item on the menu to determine its popularity and profitability. Using a cutting-edge pricing analytics solution, Quantzig also assisted the client in adjusting menus to reflect findings, thus enabling revenue increase. The Quantzig solution helped the client develop a descriptive approach for the targeted menu and pricing as per the below steps:
- Understanding and analyzing prime restaurant costs
- Conducting recipe costing
- Calculating plate/glass cost
- Determining targeted food cost percentage
- Determining targeted menu price
Even though digital and touch screen menus have been around for a while, AI-enabled menus have advanced the use of digital screens. By leveraging AI, Quantzig provided a complete 360-degree perspective of rival companies’ selection, marketing, and pricing strategies. Our algorithm also looked at our client’s pricing and coupled it with marketing and sales data to suggest consumer preferences depending on particular demographics.
Impact Analysis of Quantzig’s Data Analytics and AI-based Solutions
Our collaboration thus helped the client analyze buying patterns and understand customer psychology to boost purchases. The Quantzig solution assisted the client in providing various pricing strategies such as value-based pricing, penetration pricing, price skimming, and competitive pricing. It also enabled a data-backed understanding of popular items which need to be added to the menu to drive sales. AI-enabled menus deliver a smooth and seamless customer experience by remembering client preferences and settings, recording loyalty information, past orders, and much more. The customer could then leverage the data intelligence of this solution to sell the correct product at an optimal price and at the right time while maximizing profitability and product portfolio.
One of the most popular menu pricing strategies, cost-plus pricing, is frequently used by restaurants. In essence, the restaurant owner accounts for all the expenses that go into a plate of food, including the fixed costs like rent, energy charges, and salary paid to the cooks and wait staff. These should all be spread out among the restaurant’s numerous services to its patrons. Our solution enabled a data-backed approach to implementing this pricing strategy. In addition, it also helped the client with additional inputs such as competitive benchmarking and planning the menu per the current demand trends and customer choice. All these features helped the client optimize its pricing and menu.
A Broad Perspective on the role of AI in the F&B Sector:
Understanding consumer purchasing decisions can help restaurants and quick service restaurant (QSR) businesses increase revenue and margins. Additionally, analytics can combine competitor pricing analysis with a restaurant’s pricing strategy to increase shop profitability and aid in setting fair prices. Advanced restaurant pricing solutions can help enable various benefits such as menu optimization to drive profit margins and revenues. It can also provide insights on new products based on understanding consumer behavior. These tools can implement customized dashboards for performance evaluation and strategic decision-making based on benchmarking against top-class competitors.
Quantzig’s AI technology helped the client to unlock the following benefits:
- Increased sales through dynamic personalization
- Enabled cost savings and increased ROI
- Enhanced future production processes by determining the underlying cause of quality problems.
- Eliminated poor-performing items from the menu
- Customized orders and highlighted more profitable menu items
- Implemented a regular analysis of the menu to drive profitability
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