At IHOP, would you choose the Dubai chocolate pancakes for $13, or an everyday value meal for $6? At Applebee’s, would you order a sesame salmon bowl for $23.49 or an all-you-can-eat dinner platter for $15.99? Are you looking to spend as little as possible for as much food as possible, or are you ready to splash out?
The divide between consumers who are eager to take out their wallets and those pulling back is ever widening. And restaurant chains are trying to draw both types of diners by focusing on low-cost as well as more-premium options on either end of what is known as the “barbell.” The ends are robust, with offerings thinner in the middle.
The so-called barbell pricing strategy is meant to “entice two different groups of people,” said Alex Susskind, a professor at Cornell focused on food and beverage management. The term, which he said has been popular on and off in the food business for decades, has been on an upswing in a value-conscious time.
How it’s pronounced
/bär-bel/
The chief executive of Red Robin, for example, said last month on an earnings call, “We continue to use a deliberate barbell approach to the menu, pairing accessible value with more-premium and indulgent options so guests can choose Red Robin across different occasions and spending levels.” The chief executive of Applebee’s said, “This is our barbell strategy and our marketing playbook in action, an accessible, value-driven all-you-can-eat campaign anchored in affordability, paired with a culturally resonant higher-priced indulgence that drove traffic and generated social buzz among the younger audience.” And the chief executive of Chili’s said on an earnings call this year, “We have the barbell strategy because not every guest wants the cheapest thing on the menu.”
In the second quarter of this year, mentions of the term in conference calls hit their highest point in a decade, appearing in 57 transcripts, according to data from Alphasense, a research firm. That’s up from 37 mentions in the same period a year ago, and 21 in the same period a decade ago. The term has been especially popular in the hotels, restaurants and leisure industry in the past 10 years, the firm found. (It is also used frequently in finance, where it describes an investing strategy.)
These efforts to capture both spendier and thriftier consumers fits in with the broader K-shaped economy phenomenon that has persisted in recent years: Wealthy consumers are spending away while most others are being more careful about purchases.
Gen Z consumers, in particular, are a target of such bifurcated pricing strategies, Mr. Susskind said, because they are “very finicky about the money they spend.” That doesn’t mean they won’t ever spend — but they want good value for what they buy. “They’re very price sensitive and cautious,” he added.
The barbell strategy is especially suited for restaurants in the “casual dining” category — the big, sit-down chains that populate malls and suburban centers, Mr. Susskind said. That’s because full-service casual spots, like Chili’s or Applebee’s, have the “wiggle room” to offer different prices and a range of offerings. That sector has struggled in a time of high inflation, but it has started to bounce back lately. “Guests are starting to warm up to the idea of going back to restaurants,” Mr. Susskind said. Companies set high expectations for their promotions on either end.
Contemporary executives are not alone in turning to the strategy in a moment of economic strain. The term will be familiar to those who have kept an eye on restaurants over the years. “When times are tight, Mr. Susskind said, “this pops up.”
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