Variable pricing is a strategy that has been discussed and tested for years at retail.
QVC actually perfected the science when they would tell a host thru their earpiece that a product wasn’t selling well and to reduce the price – or if the product was selling very well – to say just a few were left and to up the price. Then came Amazon which created much more advanced technologies and based on the time of day you shopped and the volume, you may find different prices for the same item it may even take into consideration other allied products that you have purchased. Supermarket circulars for decades have zoned editions that offer different prices based on the demographics of a particular neighborhood. Supermarket technology has come a long way and now with electronic shelf tags, some stores are experimenting with the same model in store.
Everytable, a chain of ten restaurants in Los Angeles has taken the reverse tact – the chain offers healthy offerings that they want o make affordable for all. Topline it’s a Robin Hood type of philosophy that offers lower prices in lower income and student areas than those in higher income areas. For example, the University Park demographics are made of of 48% Latinos, 25% white, 16% Asian and 7% blacks. Nearby in Monterey Park, the median property value is $616,000 and the population consists of 65% Asian, 0.4% black and 28.5% Latino. The chicken tinga, with the same ingredients and size in University Park sells for $5.10 in Monterey Park the same food sells for $8.35. Sam Polk, a former hedge fund trader it’s the company’s founder and CEO is committed to the model and believes it’s the was to make healthy foods available to all.
By the end of 2021 he expects to double the restaurants to 20 in California and in 2022 is opening in New York where he plans to open 100 restaurants in 3 years. Polk’s secret sauce if you will, is a hyper-efficient supply chain that produces fresh meals typically found in upscale farm-to-table chains at half the price. He is building commercial-scale kitchens and managing a fleet of delivery trucks to supply his stores and a growing network of subscription customers and smart fridges. Everytable’s meals are prepared in a kitchen with pots big enough to cook 50 gallons of chicken tinga at a time. Its stores are small, usually 500 to 700 square feet, just big enough to house a wall of refrigerated cases, a microwave and two employees to stock shelves and work the checkout. Everytable’s financials bear this concept out: The average cost to produce and package an Everytable meal is about $3.25 — still a 35 percent margin if you sell a meal for $5.
Company models also show that preparing all its food in a central commissary reduces the cost of building out each store by 75 percent. Adam Drewnowski, a professor of epidemiology at the University of Washington and a leading researcher on social disparities and health, said he was encouraged by Everytable’s model, especially its focus on prepared foods, which aid those who are time- as well as cash-poor. But he noted that, even with a recent increase in food stamp benefits, the federal government’s Thrifty Food Plan, an estimate of the cost of a minimum, nutritionally sufficient diet, allocates just $6.89 for a full day’s worth of calories. The balance between the pricing for the poor and taking from the rich will be the key to success, or failure for Everytable. And how will those in wealthier areas feel about the inequity – or will they see it as another example of having a social conscience and taking care of each other?