Pricing & Elasticity
What is menu price optimization?
Menu price optimization is the process of setting each menu item's price using measured customer demand response, rather than applying uniform percentages or cost-plus markups. The output is a specific price file — item by item, and for multi-unit brands, store by store — designed to hit a revenue or check target with the least possible customer impact.
Optimization inverts the usual pricing conversation. Instead of 'we need 3%, spread it around,' it starts from where the pricing power actually is: concentrate increases on inelastic items, protect the landmines, respect psychological price points, and keep any single item's move below the threshold customers notice.
A real optimization also accounts for relationships between items — combos and their components, items that anchor value perception, and substitution within the menu — so that a price move on one item doesn't quietly shift volume somewhere less profitable.
Why it matters
Two pricing plans can hit the identical check target with radically different traffic outcomes. Optimization is the difference between taking 4% that customers absorb and taking 3% that shows up as a traffic decline two months later.
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