Case Synopsis and Dilemma

Oct 2014, Bruce miller, Co-owner of The WORKS Gourmet burger Bistro, was evaluating marketing decision
plan for 2015. With 50% YoY growth from last 4 years, miller and his colleagues bring the restaurant chain
growth with increment of restaurant network from 5 locations to 25 locations in Canada .
The WORKS was fastest growing restaurant chain in canada in 2013 by using uniq tactics for product
development, advertising and promotions.
In ending of 2014, Costing was drastically increased for the company as cost for beef and pork had been
rising.

Miller was Co founder and chief Marketing and Development officer of the company and pricing strategy and
implementation was in his hand. Miller had 3 types of pricing decision need to be made:

1.Price Structure 2. Price Presentation 3. Price Levels

Also how to display, communicate or advertise the price change to customer is on the miller decisions.

Bruce miller had Many options for alter pricing and also which
strategy to be applied for changing price on commodities and
competitors market is also there. But to provide valuable meal and
experience, what pricing strategy was in need of wholesale
changes?
 Should Miller change prices at The Works? Why or Why not?

We feel miller should increase prices of the burgers and the drinks and allow the prices of salads and desserts to be constant.

Reasons for price increase at the The Works :

1. The Work locations are generally located in downtown with a high foot traffic due to which it is remains jam packed even during
the weekdays implying significant demand.
2. Costs are on a rise especially the meat cost which are increasing annually at a rate of 25%. Moreover labor cost has also increase
due to the increase in the minimum wage wage increase.
3. With the frequent rise in the prices a marginal increase will not make the consumption of The Works products elastic
4. Moreover the a marginal increase will help the The Works who is totally in the Full service market to increase its profit margin
which remains 1.6% less than the quick service.

Reasons for price increase for only Burgers and drinks :

1. Burgers are one of the most consumed fast food products in the Ontario Market.
2. The works known for its 100% Canadian beef has witnessed 50% rise in the prices of the beef from
the 2011 to 2014.
3. The Works customers generally opt for combination of burgers and drinks. Marginally increasing
their demand will not affect their demand.
4. Prices of the other products of The Works like Salads and dessert should remain constant.
Increasing their prices will negatively affect their demand.
What Pricing strategies are currently used?

There was no change in the pricing structure from the last three years. Below are the current pricing
strategies that are in use:

1. With hamburgers being the product with the maximum number of sales. Miller was not
concerned about the prices of other items

2. There is an individual price for each of the burgers with an option of additional toppings on
the request of the guest. In addition to that customers could also choose between patties, bread,
and side dishes. The basis that tier pricing is done as per the wish of the customer

3. Sharp pricing (e.g. $9.99 or $6.95) is used to provide customers connotations of the correct
price. As per Miller, this might catch the eyeballs of the customers on the pricing that he did
not intend

4. The WORKS did not want to jeopardize its growth strategies by increasing the price of the
burgers. They maintained the price at a lower end in comparison to the competitors out there
In which market (quick service, fast casual, full service) does The Works compete and who are its key
competitors? Look at this from the perspective of both the company and the customers.

- The primary market at which The Works compete in is overlapped with Quick service and Full service.
- In terms of customers perspective, We works enjoys average bill share of 17-18$ price range, along with ambience
of full service restaurant. However the primary offering lies at burger options
- The major price competition we see is from kelsey and Montana. With not much distinction in offering and usage
of sharp pricing they are able to create a distinction, Holding the size of burger as constant.
- 40% of guests opted for quick service items, and the bill includes burger with drink and shared appetizer, with
infrequent addition of sandwich/desserts
- Further majority of 26 locations had lesser space in comparison to full service restaurant, and mostly full
utilisation. Further optimisation would include expansion of quick service customers to reduce wait times

Considering these factors, The works compete in fast-casual, a variant between full service and quick service
markets.
What value does The Works provide its customers in what ways it is superior or
inferior to its competitors?

Advantage for Works as compared to competitors

● Focused on local markets named burgers after local people or places:

● Works core value proposition was fresh, tasty food, industrial décor and full service:
The works use fresh 100% Canadian Beef, serve great Canadian beer and wine, have seven
different patty options and endless variety of topping combinations. The restaurant also had
salads, hand scooped milkshakes, fresh cut fries and ice cold beer

Disadvantage for Works as compared to competitors

● Price presentation
The majority of The WORKS' fast food contenders did exclude sides with each burger and
could therefore publicize lower burger costs. Regardless of whether a contender had similar
cost as The WORKS, the worth offered was not very much spoken to if the client didn't know
whether a side was incorporated
 Develop a new pricing plan for Miller. Consider price structure, price level and price
presentation and justify your point of view.
Burger in Current Distribution of Pricing
In the new pricing plan
- Switched to sharp pricing for upto 10% increase, with no change of perceived cost (13.54
Price <$12 $12 - $14 - $15+ changed to 13.99, however also 12.5 changed to 13.99$), rest other options held at status quo
Range $14 $15 - With majority of burger priced at $13.99, customer perceived price shall be at par with
competitor
Top 10 0 7 3 0 - New pricing keeps window open between 17-18$ range for customer to order drink or appetizer
- Tiered Pricing option to reduce customer choice, however a premium category with decreasing
All 1 26 7 0 price difference to switch from 13.99 to 14.99 to 15.49 (1$ and $0.5)
burger

New Number of burger % increase Closest Competitor - As part of promotion, we suggest 12.49$
Distribution (Top 10 + other burgers) Offering option to offer pricing discount of 1$
(penetration approach as promotional
$12.49 0+1 -4.5% $7.99 without side discount)
- Addition of premium category to switch
$13.99 2+26 0.5- 10% $13.99 customer acceptance of 14.99 and 13.99
category with price increase
$14.99 5+7 (5 burger price $13 in top 7% $15.43 (with soup and - The change of price for 12$ range to 13$
10) side) range is major increase (10$) however, it
could be acceptable as it is at par with other
$15.49 3 (from 14-15 $ range as top 7% $15.43 (with soup and competitors.
3) side)
Thank you