CBS News
Dynamic pricing was once the realm of Uber and airlines. Now, it’s coming to restaurants.
Your burger and fries could soon cost $12 in the morning and $20 just a few hours later — at the same restaurant.
That’s because more eateries are experimenting with so-called dynamic pricing by lowering and raising menu prices based on demand.
People who use ride sharing services like Uber or Lyft are accustomed to the companies boosting prices when roads are congested or demand is high. On the flip side, ride share prices can drop during quieter periods to convince customers to book rides, helping keep drivers busy.
The same goes for airlines and hotels. Booking flights or accommodations around the holidays costs a lot more than afterwards, when demand tapers off. Now, with the rise of online ordering and digitization of menus, dynamic pricing is starting to pervade restaurants, and it may irk some consumers.
Businesses, on the other hand, say it helps them balance supply and demand while giving customers the opportunity to take advantage of bargains at off-peak dining times.
Wendy’s made headlines — and faced a backlash — when the fast food chain announced it would experiment with dynamic pricing in its restaurants starting in 2025 using digital menu boards. Customers took the announcement to mean they’d be charged more at peak times. Wendy’s, on the other hand, insisted the move was intended to allow it to more easily change menus and offer customers discounts during slow periods.
Markups and discounts
The rise of delivery apps and digital menus, accessible through QR codes, have made it easier for restaurants to implement dynamic pricing.
Colin Webb, co-founder and CEO of Sauce, a dynamic pricing engine that helps restaurants leverage data to improve online sales, said in a recent podcast that “you’re starting to see restaurants take that same step” that retail and taxi businesses took when they moved online.
Puesto in La Jolla, California —a restaurant chain that relied on Sauce’s services to fluctuate menu prices — said the strategy boosted sales by 12%, according to a case study on Sauce’s website. It raised prices by as much as 8% during busy periods and reduced them by as much as 20% during slower times.
“[W]e’re happy to see both the markups, and we’re also happy to see some discounted orders,” Puesto co-owner Moy Lombrozo told Sauce. “When the kitchen is dead, we’re willing to take one to two dollars off an item in order to just keep the kitchen going, keep the staff working.”
Restaurant chains Dave & Busters and Tony Roma’s are also planning on rolling out dynamic pricing, according to news reports.
“Punch in the gut”
Even so, dining establishments are lagging behind other industries in turning to dynamic pricing.
“Restaurants are late in the game in making this happen,” said Stephen Zagor, a restaurant management professor at Columbia Business School. “We’re starting to see it take effect, but there’s a lack of transparency.”
Restaurants have been reluctant to change prices based on demand to avoid alienating customers. That’s in part because people have a more emotional connection with the food they consume compared with other goods, Zagor explained.
“When suddenly we don’t know where the price is coming from — one day it’s this, another day it’s this — it feels like a little bit of a punch in the gut,” he said. “We don’t know how much we’re going to pay when we go to eat out, and that doesn’t feel good.”
Guests can be choosier
In a way, dynamic pricing has long existed in the restaurant industry, with dinner menu items typically priced higher than for similar plates served at breakfast or lunch.
“It’s not out of the realm of possibility to see the same burger with a different price on lunch and dinner menus,” food and beverage management consultant Lilly Jan said.
Consumers may not like dynamic pricing, but they don’t have much choice when it comes to airline and hotel reservations, Jan added. That might not hold true with restaurants, she added.
“There is a certain cost for getting to one side of the country to the other this time of year. If you need to make it from New York to LA, you only have so many options,” she said. “You don’t have the same thing going out to dinner with friends. Because you have so many options and experiences available, you can be choosier.”
How to take advantage of dynamic pricing
Dynamic pricing can boost revenue for businesses, but also present opportunities for consumers to save.
“It helps companies’ profitability, but at the end of the day it also gives customers control over their willingness to pay,” said Apostolos Ampountolas, assistant professor of hospitality finance at Boston University. “It doesn’t only mean prices will go up. In theory, restaurants give diners discounts to eat in between meal times when they’re less busy.”
Look for discounts on food items at off peak times, like between 10 a.m.-12 p.m., or 3-5 p.m., or during slower times like the holidays and inclement weather.
You can also choose not to patronize a given establishment if you don’t like the prices.
“With a restaurant, if you don’t like the prices at a restaurant that day, you can eat at home or do something different. There is a lot more agency to step away from prices that are not amenable to guests,” Jan, the consultant said.
Roger Carstens, the Biden administration’s top official for freeing Americans held overseas, on Friday arrived in Damascus, Syria, for a high-risk mission: making the first known face-to-face contact with the caretaker government and asking for help finding missing American journalist Austin Tice.
Tice was kidnapped in Syria 12 years ago during the civil war and brutal reign of now-deposed Syrian dictator Bashar al-Assad. For years, U.S. officials have said they do not know with certainty whether Tice is still alive, where he is being held or by whom.
The State Department’s top diplomat for the Middle East, Barbara Leaf, assistant secretary of state for Near Eastern Affairs, accompanied Carstens to Damascus as a gesture of broader outreach to Hay’at Tahrir al-Sham, known as HTS, the rebel group that recently overthrew Assad’s regime and is emerging as a leading power.
Near East Senior Adviser Daniel Rubinstein was also with the delegation. They are the first American diplomats to visit Damascus in over a decade, according to a State Department spokesperson.
They plan to meet with HTS representatives to discuss transition principles endorsed by the U.S. and regional partners in Aqaba, Jordan, the spokesperson said. Secretary of State Antony Blinken traveled to Aqaba last week to meet with Middle East leaders and discuss the situation in Syria.
While finding and freeing Tice and other American citizens who disappeared under the Assad regime is the ultimate goal, U.S. officials are downplaying expectations of a breakthrough on this trip. Multiple sources told CBS News that Carstens and Leaf’s intent is to convey U.S. interests to senior HTS leaders, and learn anything they can about Tice.
Rubinstein will lead the U.S. diplomacy in Syria, engaging directly with the Syrian people and key parties in Syria, the State Department spokesperson added.
Diplomatic outreach to HTS comes in a volatile, war-torn region at an uncertain moment. Two sources even compared the potential danger to the expeditionary diplomacy practiced by the late U.S. Ambassador Christopher Stevens, who led outreach to rebels in Benghazi, Libya, in 2012 and was killed in a terrorist attack on a U.S. diplomatic compound and intelligence post.
U.S. special operations forces known as JSOC provided security for the delegation as they traveled by vehicle across the Jordanian border and on the road to Damascus. The convoy was given assurances by HTS that it would be granted safe passage while in Syria, but there remains a threat of attacks by other terrorist groups, including ISIS.
CBS News withheld publication of this story for security concerns at the State Department’s request.
Sending high-level American diplomats to Damascus represents a significant step in reopening U.S.-Syria relations following the fall of the Assad regime less than two weeks ago. Operations at the U.S. embassy in Damascus have been suspended since 2012, shortly after the Assad regime brutally repressed an uprising that became a 14-year civil war and spawned 13 million Syrians to flee the country in one of the largest humanitarian disasters in the world.
The U.S. formally designated HTS, which had ties to al Qaeda, as a foreign terrorist organization in 2018. Its leader, Mohammed al Jolani, was designated as a terrorist by the US in 2013 and prior to that served time in a US prison in Iraq.
Since toppling Assad, HTS has publicly signaled interest in a new more moderate trajectory. Al Jolani even shed his nom de guerre and now uses his legal name, Ahmed al-Sharaa.
U.S. sanctions on HTS linked to those terrorist designations complicate outreach somewhat, but they haven’t prevented American officials from making direct contact with HTS at the direction of President Biden. Blinken recently confirmed that U.S. officials were in touch with HTS representatives prior to Carstens and Leaf’s visit.
“We’ve heard positive statements coming from Mr. Jolani, the leader of HTS,” Blinken told Bloomberg News on Thursday. “But what everyone is focused on is what’s actually happening on the ground, what are they doing? Are they working to build a transition in Syria that brings everyone in?”
In that same interview, Blinken also seemed to dangle the possibility that the U.S. could help lift sanctions on HTS and its leader imposed by the United Nations, if HTS builds what he called an inclusive nonsectarian government and eventually holds elections. The Biden administration is not expected to lift the U.S. terrorist designation before the end of the president’s term on January 20th.
Pentagon spokesperson Pat Ryder disclosed Thursday that the U.S. currently has approximately 2,000 US troops inside of Syria as part of the mission to defeat ISIS, a far higher number than the 900 troops the Biden administration had previously acknowledged. There are at least five U.S. military bases in the north and south of the country.
The Biden administration is concerned that thousands of ISIS prisoners held at a camp known as al-Hol could be freed. It is currently guarded by the Syrian Democratic forces, Kurdish allies of the U.S. who are wary of the newly-powerful HTS. The situation on the ground is rapidly changing since Russia and Iran withdrew military support from the Assad regime, which has reset the balance of power. Turkey, which has been a sometimes problematic U.S. ally, has been a conduit to HTS and is emerging as a power broker.
A high-risk mission like this is unusual for the typically risk averse Biden administration, which has exercised consistently restrained diplomacy. Blinken approved Carstens and Leaf’s trip and relevant congressional leaders were briefed on it days ago.
“I think it’s important to have direct communication, it’s important to speak as clearly as possible, to listen, to make sure that we understand as best we can where they’re going and where they want to go,” Blinken said Thursday.
At a news conference in Moscow Thursday, Russian President Vladimir Putin said he had not yet met with Assad, who fled to Russia when his regime fell earlier this month. Putin added that he would ask Assad about Austin Tice when they do meet.
Tice, a Marine Corps veteran, worked for multiple news organizations including CBS News.
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