Dynamic Pricing in restaurants and Impact

An article in the Wall Street Journal on March 10, 2024, titled ” Surge Pricing is coming to More Menus near you”, describes dynamic pricing at restaurants to reflect demand increases, estimated to increase revenues between 4 and 6%. The owner of Cali BBQ claims a 5% revenue increase in delivery orders. Surveys suggest that 61% of adults support dynamic pricing, but some restaurants frame it as a price discount during nonpeak periods. Can dynamic pricing be justified as increased cost or a way to shift demand during surge periods? Is the 5% revenue increase worth the potential customer perception of pricing unfairness? Can dynamic pricing enable average prices to decrease, thus increasing overall demand?

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