European QSR chain looking to evolve its value platform amidst food cost inflation

Our Client’s Challenge

A quick-service European restaurant group with more than 300 locations relied heavily on its value platform to drive traffic. The platform, products and price points had not changed in 5 years.  But with food costs rising by 4% and with value items comprising 25% of the menu design, the restaurant’s profits were diminishing.

The brand wanted to evolve its value platform in a safe and measured way without losing customers.

The Solution

RMS recommended a test and learn approach, identifying test restaurant locations based on store-specific customer purchase behavior.

Four new value platforms were tested that included a combination of increasing price on the existing value menu and introducing new higher-priced products.

RMS monitored and evaluated efficiency based on financial impact, demand and trades.

The Result

All four of the tested value platform combinations caused a negative impact on demand, but three of the tests had a better financial impact than the existing value platform. In this case, lower demand did not result in reduced profitability.

We recommended the brand roll out the most profitable value platform test scenario across the system, raising prices modestly while introducing new value products at slightly higher prices.

The implemented value platform resulted in a price increase of 5.5%. Despite the transactions declining by 4.5%, margins improved by 3.3% points (ppt).

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