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Expert case by Joe
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Case Prompt

Our client is a global fast-food restaurant that offers a wide range of breakfast and rest of day products including burgers, salads, fries, and beverages, and offers combo bundles. Over the last ~5 years in the US, our client has seen a relatively flat guest count, but a decline in profitability

They have launched several
large national advertising campaigns focused on highlighting their "value" products which have not turned around profits the way they had hoped. The head of the US business has asked us to help him understand why gross margin is decreasing, and specifically to take a look at his menu's pricing.

  1. Is there an issue with the menu pricing structure? If so, what would you recommend to restructure the pricing?
  2. What is the overall implications to volume and gross margin with a revised pricing structure?

Question 1: Potential Framework – Can you help the client identify how its current pricing architecture is impacting profitability?

Question 2: Current product pricing and cost data – What are your observations and what can you infer from this data?

Question 3: Recommendation – Given this, what do you think the client should do to revise pricing?

Question 4: Product price sensitivity – What would the impact be to profitability at each price point?

We did some elasticity calculations and have a bit more data on volume impact at different price points for a few key items.

Question 5: Brainstorming – What are some of the key issues the client could run into?

Take a moment and brainstorm the possible risks of this pricing reset.

Question 6: Synthesis – If the client asks for your initial recommendation, what would you say?

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