Restaurant tests ‘surge pricing’ menu

UBER is guilty. So is just about every airline and hotel in the world. And now a London restaurant has jumped on the "surge pricing" bandwagon.

"Surge" or "dynamic" pricing is a controversial retail strategy which allows businesses to set flexible prices for products or services based on demand.

The idea behind it is that companies can charge more during peak periods or when supply is limited, and then drop prices again during quieter times.

It is a concept that has just been embraced by up-market London eatery Bob Bob Ricard, with the restaurant now charging patrons less to dine during "off-peak" and "mid-peak" hours during the week.

Bob Bob Ricard owner and founder Leonid Shutov told Bloomberg the restaurant would charge 25 per cent less for lunches from Monday to Wednesday and Monday dinners, and 15 per cent less during "mid-peak" times.

"The idea just came from looking at how the rest of the world functions," he said.

"Airlines wouldn't be able to exist, the business model wouldn't work unless you could balance supply and demand.

"Everything that we have taken that is widely accepted in the modern economy and applied to restaurants, seems to have worked."

But while dynamic pricing has been used by certain industries for years, critics claim it's just another excuse for businesses to rip off customers.

And while the practice is divisive, it also seems to be catching on - fast.

Earlier this month revealed Village Cinemas had quietly introduced a dynamic pricing trial at some Victorian movie theatres during the school holidays.

The trial was slammed as an example of "price gouging" by angry customers, and it was scrapped soon after. has since been contacted by a reader who shared screenshots of tickets purchased on different days at an Event Cinema in Chermside, Queensland.

The images appear to show surge pricing in effect, however, the company could not be reached for comment.

Screenshots showing alleged surge pricing at Event Cinemas. Picture: Supplied
Screenshots showing alleged surge pricing at Event Cinemas. Picture: Supplied

And in June 2017 Aussie shoppers worried that the arrival of electronic tickets in some Woolworths stores indicated the supermarket giant would soon start trialling surge pricing.

Retail experts Dr Louise Grimmer and Dr Gary Mortimer warned surge pricing was likely to be adopted by more and more retailers and service providers in Australia in the near future.

Queensland University of Technology associate professor Gary Mortimer said "surge pricing" was just another name for a practice businesses had always employed, from pubs promoting happy hours to supermarkets offering a short-term special to clear surplus stock.

"It works for things like hotel rooms, airlines and Uber - those types of products and services with limited quantities of supply and at times significant demand - so at times where the demand outstrips supply, often surge pricing is used to mitigate that demand," he said.

"For example, if you wanted to fly to Sydney for the weekend, on Friday night ticket prices will be up, so you might fly on Saturday morning at 5.30am instead when tickets are cheaper.

"It's a way for airlines and hotels to fill up at the most profitable rate and still push demand in quiet periods where people are looking for a bargain."

But Dr Mortimer said raising prices could also be seen as exploitative.

"It's a risky strategy for any retailer or service provider to follow because it could be seen as profiteering from demand," he said.

University of Tasmania lecturer in marketing Dr Louise Grimmer said she believed dynamic pricing was becoming more acceptable to consumers as the practice became more transparent.

"I think it will become more common, but I actually think consumers are starting to accept it more and more," she said.

"Everything is a lot more transparent these days - consumers can see what companies are doing.

"Consumers know if you stay in a hotel on the weekend it will cost more than on a weeknight, and we expect that."

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