How happy hour pricing on online delivery can yield a 32% increase in revenue

Learn how happy hour pricing on delivery platforms like Doordash and Uber Eats increased restaurant sales by 32% with dynamic pricing technology.

How happy hour pricing on online delivery can yield a 32% increase in revenue

Happy hour has been a long-standing tradition for American restaurants and bars. Initially started as Navy  entertainment, where sailors would celebrate a few nights of week with select activities, the growing popularity of happy hours elevated the practice to the mainstream. Nowadays, restaurants across the globe use happy hours to bring in customers, and make up for the lull times during the day when the demand might not be as high as your weekend peak time. In fact, it’s become so essential for the restaurant industry (highlighted in a recent Nielsen study) that US restaurants and bars generate 60.5% of their average weekly sales during happy hours, even while providing food at heavily discounted rates. Better yet, the average happy hour check is $68.99, which is $8 more than the average check at other times.

So the question is, how could price decreases yield higher sales and profits for restaurants?

For this, we can remember two important lessons we learned from Econ class: The demand curve, along with cost of goods sold.

The Demand Curve

As with all trade, we see different levels of demand due to a variety of factors: price, time, proximity, quality, weather, and more. For a restaurant, that demand can vary drastically throughout the course of the month, week, or even the day.

As with all trade, we see different levels of demand due to a variety of factors: price, time, proximity, quality, weather, and more. For a restaurant, that demand can vary drastically throughout the course of the month, week, or even the day.

Cost of Goods Sold

Another important factor in the success of happy hours is the relatively low costs of goods sold for the meals served at the restaurant. Restaurants typically have a 25-30% food  cost compared to the revenue they generate from each sale. With those metrics, the reason why restaurants have low margins are due to the costs of operations and employees.

Whether you’re paying one chef to make two burgers during an hour, or you’re selling 10 burgers in an hour, you’re still paying the same amount for the chef, which is the vast majority of your costs. So in the case of late Wednesday afternoon, right after the lunch rush and before dinner time, it pays to have more customers buying food, even if the food is sold for a lower price.

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Happy Hour for Online Delivery

With the rise of online ordering, where restaurants are seeing more sales come through delivery tablets, why don’t restaurants use happy hour there to make more money too?

Unfortunately, online ordering platforms don’t offer the flexibility to be able to offer different prices as easily as restaurants are able to do in person. It’s easy to write a note to staff members to promote a happy hour every Tuesday, Wednesday and Thursday at 5pm that they can communicate to customers. On the online ordering platforms, you’d have to manually change your prices and promotions across each platform to turn them on and off whenever you want the deal to be active. This can be tedious, especially if you wanted to change prices across different menu items on different times during the week.

This is where services like Sauce are so important. When you have an opportunity to make 60.5%  of your sales worth of revenue by running smart happy hour campaigns, that decision can heavily help your business succeed.

This is how TLT food in Irvine, California was able to make 32% more revenue. When they heard of Sauce, which allowed them to adjust their online menu prices using market and demand data to drive more sales, they figured they’d give it a try. Not only did Sauce allow them to apply happy hour pricing at different times to their 3rd party delivery platforms, but they were able to find the most optimal days and times to apply that pricing so that they made the most money, and they could remain profitable from their online sales.

Clearly, it pays to find the best prices for different times of the day, especially when you have online orders! With Sauce, restaurants have the opportunity to always get the most value for their food sales.

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With Sauce you can easily manage pricing to boost profits and sales.