How does RBI navigate pricing? It is complicated

Jonathan Maze and Jose Cil. Photo by Nico Heins

There is an art and a science to raising menu prices.

For Jose Cil, CEO of Restaurant Brands International, that math leans a bit more towards the art of things.

“It’s not always the backdoor price that goes up, the front door price goes up,” Cil said Saturday in a conversation with Restaurant Business editor Jonathan Maze at The National. Restaurant Association Show. “You have to think about it. »

Consumers are at the heart of pricing decisions, Cil said. And it’s likely that some Burger King franchisees were too aggressive in their price increases, he said. RBI is also the parent company of Popeyes, Tim Hortons and Firehouse Subs.

“We’ve had instances where we’ve gone a bit too far,” he said, noting that some value-conscious consumers are put off by higher prices. “It’s hard to come back. When was the last time you saw someone in the restaurant space take the prize back?”

But with food prices soaring and wages rising, what else can a restaurant do but raise prices?

Sometimes a creative response is needed, Cil said.

For example, Burger King’s Whopper had long been available on the chain’s two-for-$5 menu. With prices rising, Burger King changed that to a two-for-$6 deal.

But “it diluted the perception of value” of the burger chain’s flagship sandwich, said Cil, who was named Restaurant Business’s 2021 restaurant chef of the year.

So Burger King dropped its iconic Whopper from this two-for-two deal, added a few different burgers, and lowered the price to two for $5.

“This change was well received by consumers and improved store operator margins by 100 basis points,” he said.

As operators see costs rising, they are scared and want to make major price changes. It’s a bad idea, he said.

“It’s better to take small steps and do them frequently than to take a big leap,” said Cil, whose company runs 29,000 sites in 120 countries.

At RBI, there are pricing discussions almost every day, with regular testing of different pricing models across all of the company’s brands. Grocery inflation has risen so rapidly that shoppers are beginning to decrease their visits to stores and the quantity they buy, he noted.

“It’s really important to always think about things from a consumer perspective,” Cil said. “You can’t get too far ahead of your skis when it comes to price with the consumer.”

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