The Lowdown: dynamic pricing
Dynamic pricing. What’s so energetic about it?
We’re not talking about the flamboyant, passionate meaning of dynamic, but more the practice of routinely altering prices based on changing external factors, such as the weather, time of day, and location.
Interesting. So why are we talking about Stonegate?
The group, which is the largest pub company in the UK and which counts the Be At One and Slug & Lettuce brands among its portfolio of 4,500+ sites, has introduced the practice across around 800 venues in its managed estate at peak times to help cover the cost of extra staffing, licensing requirements, and additional security. According to a report in The Telegraph, the decision means drinkers will be charged around 20p more for a pint of beer over the weekend. In a statement regarding the matter, the pubco stressed that any increases were ‘marginal’, with prices falling again during normal trading hours. A spokesperson said: “Across the managed business our dynamic pricing encompasses the ability to offer guests a range of promotions including happy hours, two-for-one cocktails, and discounts on food and drink products at different times on different days throughout the week. This flexibility may mean that on occasions pricing may marginally increase in selective pubs and bars due to the increased cost demands on the business with additional staffing or licensing requirements such as additional door team members.”
An ‘unhappy hour’ then?
It’s certainly fair to say Stonegate has received something of a backlash, with some consumers on social media calling on fellow customers to boycott the group’s venues. London pub the Carlton Tavern posted online: “Just a stealthy price increase for more transient guests basically. Or as you more eloquently put it an ‘unhappy hour’! Sharp tactics however you look at it, but those huge refurbs and investments have to be paid for somewhere I guess!” Others to condemn the move include Tom Stainer, chief executive of the Campaign for Real Ale (CAMRA), who described it as ‘troubling’. “We know pubs and brewers are having a difficult time at the moment, but we don’t think an extra charge penalising customers that want to support the industry is the right solution,” he said. “Our fear is that it could convince people to stay away.” Meanwhile, a rival pub chief executive, quoted by the FT, said the move set a dangerous precedent over pricing transparency, describing the use of dynamic pricing as ‘not good in so many ways’. “Pubs should be transparent with their customers and not rip them off when it’s busy,” they added.
What do the public think?
It's not great news for Stonegate. A recent poll by YouGov in response to the move has found - maybe unsurprisingly - that 74% of Britons are opposed to pubs and bars charging higher prices for drinks during peak hours. The research found that 51% considered it 'completely unacceptable' while 23% said it was 'somewhat unacceptable'. Just 19% agreed with the practice.
Oh dear. Has it been universally slated?
Actually, no. On the flipside, there’s been a large contingent that’s defended it, describing Stonegate’s decision as being ‘indicative’ of the reality of operating costs facing businesses big and small right now. Business leaders who have leapt to Stonegate’s defence include Tom Kerridge, who told Radio 4’s Today programme the industry was under huge pressure. “It’s very difficult to make any money,” he said. “Beer is an incredibly expensive commodity. The process of brewing has gone up by an incredible amount. It’s ridiculous. That end result does have a knock-on effect.” Then there’s Steve Alton, chief executive of the British Institute of Innkeeping, who said the move by Stonegate is ‘indicative of the reality of operating costs right now where pubs are trying to find any opportunity to deliver decent margins’.
Dynamic pricing isn’t a new phenomenon, is it?
Absolutely not. Stonegate itself has previously trailed the practise during major sports tournaments like the FIFA World Cup in 2018 and 2022, when prices were increased by as much as £1. Many restaurants have long toyed with elements of it, too. Back in 2018, Soho restaurant Bob Bob Ricard adopted a three-tier pricing system, at the time charging 25% less for ‘off-peak’ bookings and 15% less for ‘mid-peak’. Other notable restaurants that have previously dabbled in this form of variable pricing include The Clove Club, Chez Bruce, and Luca in London, and Home in Leeds. Writing on X (Twitter) this week, Loungers chairman Alex Reilley pointed out that other sectors as well as hospitality venues had used dynamic pricing before – but without transparency. He said: “A number of city centre brands do this already (and have done for some time) – at least Stonegate have been honest about telling their customers. Maybe hotels and airlines should charge a flat fee and maybe Greggs and Costa should charge the same in service stations as they do on the [high street]. In this case Stonegate are being criticised for being transparent – tons of businesses in a number of sectors operate dynamic pricing and don’t tell their customers.”
And don’t forget, prices can go down as well as up
In Barcelona there’s the popular Dow Jones Bar, which acts like a stock exchange and changes drink prices live depending on their popularity. A similar concept called Reserve Bar Stock Exchange launched in London in 2015, although it subsequently closed four years later. More recently there’s been BrewDog’s ‘Beerometer’, which it relaunched during the heatwave earlier this month. Starting at a base temperature of 20°C, 25p was knocked off the price of a pint of BrewDog’s ‘Cold Beer’ for every degree hotter it got. Unsurprisingly, this kind of dynamic pricing came under less flak.
