Sbarro

 "During these challenging economic times, Sbarro needed a more precise capability to approach our menu pricing. Affinnova has one of the most advanced methodologies and analytics that I have seen in the industry. Their use of forward-looking data to understand how our guests trade in and out of individual menu items based on price changes means we can be surgically precise in how we re-engineer our menu for optimal profit and traffic."

- Mark Censoprano
Chief Marketing Officer
Sbarro

Headquarters: Melville, NY
Target Market: USA
Pricing Sensitivity

ORDERING UP OPTIMAL MENU PRICING STRATEGIES

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Rising food costs, softening industry traffic and a premium-priced menu was a recipe for hard times at Sbarro. Senior executives needed to optimize menu pricing to boost profitability without risking core guest loyalty and frequency.

CHALLENGE

Sbarro is the world’s leading Italian quick service restaurant and the largest shopping mall-focused restaurant in the world, with over 1,000 outlets. With roots as a family owned delicatessen, Sbarro is best known for fresh, traditional Italian Cuisine with “tastes to fit every palate.” In 2011, the company sought to increase profits, while careful not to alienate core guests. Traditional, backward-looking register data analysis would not provide enough insight. Sbarro needed a deep dive on individual menu item price elasticity and guest switching behavior to understand reactions to different pricing scenarios.

SOLUTION

Price Advantage enabled Sbarro to explore a range of six price variations across 45 core menu items. Presented with realistic pricing scenarios and imagery, consumers chose which product they would most likely order at Sbarro. Price increases and reductions were applied throughout the test, as new respondents participated. Individual responses were aggregated to develop robust price curves for the individual menu items. Simultaneously, behaviors were noted as to which items guests migrated to or from when each of the potential pricing actions were taken. This cross-item sensitivity analysis enabled Sbarro to identify scenarios to take pricing action while encouraging orders of higher-margin contribution items. Data was then built into a state-of-the-art, easy-to-use simulator, which senior executives can continue to use to model “What if?” scenarios that project changes in guest preferences as a result of pricing action.

SUCCESS

Sbarro was able to undertake a holistic review of their pricing strategy and model at the individual menu item level to see where and by how much they could change price while stimulating core guest loyalty. A customized contribution index analysis also prioritized the role each menu item could play.