Revenue StrategyCS.01
When Raising Prices Actually Worked
A growing hometown restaurant
- The Problem
- Owner implemented a 13.6% menu-wide price increase and needed to know whether it helped or hurt the business.
- The Analysis
- Weekly POS data split at the hike date. Two-sample t-test on guest counts. Revenue bridge decomposing price effect vs. volume effect.
- The Finding
- Demand was inelastic (elasticity −0.56). Guests fell 7.6% but price added $2,156/wk while volume only lost $1,403/wk — net positive. The guest decline was actually steeper before the hike.
- The Result
- Owner confirmed the hike was the right call. Optimization focus shifted to conversion, not reverting the price.
Weekly Revenue Impact
+13.6% menu price increase
−7.6% guest count
+7.3% net revenue gain