Monday, February 11, 2019

What do restaurants have in common with airlines?

They both use revenue management (peak load, variable, or surge pricing) to maximize profit. 
On Super Bowl Sunday in 2014, Nick Kokonas, co-owner of Alinea, a molecular gastronomy restaurant in Chicago, sent out a tweet inviting diners who didn’t care about football to make a reservation for $165 that evening—about 35% off the normal price of dinner. He told Grub Street that they went from 30 reservations to 74 for the evening, traditionally the slowest of the year.

For some, saving $80 on a dining experience at the cost of watching the biggest football game of the year (while enjoying markedly less esoteric fare) might not be worth it. But diners eager to try a place with a hefty price stand to benefit, though they may not actually end up spending less.

Bob Bob Ricard, a high-end London restaurant, charges 25% less for its à la carte menu during off-peak times, with a 15% “mid-peak” discount. “When they come in on off-peak days, they’re not necessarily looking to spend less. They’re looking to get more for the full budget,” owner Leonid Shutov told NPR. “So our average checks have not changed in any meaningful way on those days because the customers are rewarding themselves with more special things—with a bit of caviar, with a little bit more Champagne than they may have had otherwise.”
HT: Justin

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