Ryan Chew In China, why do so many restaurants make you pay for your food immediately after ordering? Are they afraid customers will steal? This is done even at some places frequented by many Western guests. Most of my friends find it very annoying and silly, like we are not trusted to pay our tab. Ryan Chew, retired hotelier and restaurateur. The restaurants are afraid of you, but not for the obvious reasons. I used to own a restaurant, and theres a term we use in the industry. Simply put, the more times a restaurant can serve a particular table, clean it, seat a new customer, serve the new customer, rinse and repeat, the more money the restaurant makes. Think about it. When youre having a sit-down meal, youre not just paying for the food, youre renting a small piece of real estate. To maximise yield, it is in the restaurants interests to serve you and kick you out the door as soon as youre done. But of course, restaurants cant do that. So instead, they make you pay upfront. The PsychologyWeve actually experimented with prepaid vs postpaid meals in our restaurant. The verdict? Upfront payment increased table turnover by over 80%. The difference is that customers who havent paid can justify their occupation of a table. They surf facebook. They chat away for hours on end. They get comfy. It matters not whether they intend to order more stuff, the mere possibility of them ordering more gives them the moral upper hand. Customers who have paid up on the other hand, do not have moral justification. They could order more food, but diminishing marginal utility and inertia discourages that act. They get edgy. They feel guilty. They leave. It all depends on the restaurants business model. If its a low-end restaurant, this tactic will serve it well. If its a high end restaurant, paying $150 for that bottle of wine buys you a little more time. ---- Disclaimer: All the above are anecdotal and borne out of years of shovelling food into strangers mouths. Additional notes: One recurring debate in the comments section below is why restaurants with upfront payment and free wifi have seemingly low table turnover. Allow me to explain: **** To forestall future lawsuits lets invent a purely hypothetical and entirely fictional coffeehouse called Steerbuggs. Any resemblance to actual businesses is coincidental. **** Steerbuggs makes its money from takeaway. Thats why their drinks come packaged ready to go. You pay upfront, and if you cant find a table you can just as easily take your drink elsewhere. As soon as the barista hands you your drink, as far as Steerbuggs is concerned, youve already been turned over; their goal of making a profit is done. Think about it. If you left then and there, Steerbuggs will be none the poorer. So why would Steerbuggs pay more rent for a bigger space when a much smaller one would do, and why would they encourage customers to linger with comfy sofas, free wifi, and conveniently placed power outlets? Herd behavior I call it the honeypot trap. The more activity youperceive a restaurant to have, the better youassume the product to be, regardless of its actual quality. So while the crowd of people you see at Steerbuggs may not have bought anything for the past couple of hours, their purpose is to draw even more people in just by virtue of being there. In other words, when you partake in Steerbuggs free wifi, youre volunteering to act as bait. Knowing this, on our restaurants opening day, we hired a platoon of students to stand in line and fill up the seats. As the real customers queued up, we rotated our actors towards the back of the line. We were full from the very first day. You might not know it, but every time you dine out you engage in psychological warfare.
Posted on: Sat, 11 Oct 2014 08:10:22 +0000
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