A Fast-Food Company Considers Dynamic Pricing (HBR Case Study)

To respond to a volatile inflation crisis, should the CEO of Burger & Bites, a fictional fast-food chain, introduce dynamic pricing to its restaurants? The company's input costs are increasing quickly since several of its ingredients come from other countries. Meanwhile, the CEO is facing intense pressure from investors to boost margins. Using its new digital menus and mobile app, the company could start adjusting prices in real time based on factors from inventory levels to regional demographics to weather. Consumers are used to dynamic pricing in air travel and hotels, but will they accept it at a fast-food restaurant? Some franchisees and members of the leadership team are worried about backlash. Burger & Bites has a reputation for fairness, consistency, and community connection, so changing prices often could alienate customers and damage loyalty. In addition, it could lead to charges of discrimination if some groups are offered higher prices than others, potentially causing a social media-fueled scandal. The CEO isn't sure how best to proceed. For teaching purposes, this is the case-only version of the HBR case study. The commentary-only version is reprint R2505Z. The complete case study and commentary is reprint R2505P.