The Risks and Rewards of Surge Pricing in the Fast Food Industry

Key Takeaways:

1. Surge Pricing Debate - Surge pricing may work for some industries based on demand, but applying it to steady products like fast-food may not always be justified.
2. Customer Retention - A significant risk of surge pricing is the potential loss of customers who may not see the added value in varying prices for the same product.
3. Operational Excellence - A strong operational process can often negate the need for surge pricing by streamlining service delivery and maintaining consistent quality.
4. Market Differentiation - For surge pricing to be accepted by customers, there needs to be a clear differentiator that warrants the increased cost.
5. Universal Business Goal - All businesses aim to solve a problem for the customer, and excelling in service and delivery can set one company apart from its competitors.
   
   
   

Chapters:

Timestamp Summary

0:00:05 Introduction and disclaimer about the content

0:00:37 Phillip and Allison discuss the positive energy of springtime

0:01:53 Introduction to the topic of surge pricing

0:02:35 Wendy’s implementation of surge pricing

0:03:39 Phillip and Allison discuss the risks and rewards of surge pricing

0:07:24 Comparison of surge pricing in fast-food chains

0:08:47 Phillip mentions the secret menu at In-N-Out Burger

0:09:53 Allison and Phillip discuss the lack of motivation to pay extra for standardized products

0:10:14 Conclusion of the conversation about surge pricing

0:10:12 Is there something that justifies surge pricing?

0:10:38 What problem does your product solve?

0:11:26 How can you provide your product/service better and faster?

0:12:25 Does your product/service fulfill a great need?

0:13:05 How to align vision with operational and service experience?

 

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Phillip Washington, Jr. is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.