

Variable Pricing for Restaurant Reservations - tomkit
http://www.nytimes.com/2012/09/05/dining/restaurant-prices-can-vary-by-reservation-time.html?hp

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jhermsmeyer
If this attempt at price discrimination does indeed become popular it will be
via digital menus that update their pricing automatically, not via fiddly
coupons. We are quite aways away from this still due to hardware costs and the
sheer number of tablets that would be needed at most full service restaurants.

I have no doubt it would be a hit with consumers. Tuesday nights out would
become "a thing" for the price sensitive. That's good for everyone.

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K2h
I was pretty impressed with the low tech solution in the article. I thought of
the same thing as you at first, digital menus online, or on the table, or..
digital paper menus.

They instead just offer a discount up front. 10-30% if you book a particlular
time. So most everyone except the fractional multiplier afraid will know how
to adjust the prices on the fly.

as an aside - many cheap places that I end up at have menus posted outside for
the foot trafic, that may be the perfect place to replace it with a digital
sign for dynamic pricing.

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jhermsmeyer
Agreed. There are low tech ways to achieve a similar result. But operators,
servers and managers absolutely loathe anything that changes their steps of
service.

The winning solution will be completely transparent to their current workflow,
and will also be seamless to the customer. Until this happens I don't think
we'll see widespread adoption of new pricing strategies.

For instance, a pricing increase when many/most seats are filled is probably
best way to discriminate in a restaurant. Sophisticated pricing strategies
like those could become commonplace with digital menus, and the staff wouldn't
have to think about it - but they would see the effect in their tip total.

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greeneggs
Sheryl Kimes: “If you said it’s 20 percent cheaper to come during the week
than on the weekend, people thought that was more acceptable than if you said
it’s 20 percent more expensive on the weekend.”

Yes, we are mathematically illiterate, thanks for digging it in.

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tzs
I disagree that this shows mathematical illiteracy. What you've overlooked is
that eating at a restaurant is, in game theory terms, a repeated game. You
have to analyze it in terms of multiple plays.

If I go into a restaurant on some random night, and their price list tells me
a steak is $25, but they also tell me they are having a discount that night
and I can have the steak for $20, then they have established in my mind that a
steak at that restaurant costs $25, and that sometimes they offer discounts.

If I go in some other random night, and am charged $25, I'm OK with that. I've
planned for it. I've decided my budget can handles a $25 steak. If I happen to
hit some kind of discount night, great. I save some money.

Suppose instead the first time they charged me $20, but did not tell me that
was some kind of discount. I see $20 printed on the menu, and no indication
that the price is higher at other times. That sets in my mind that a steak at
this place is $20. I expect now to be able to go in any time and get a steak
for $20.

I then go in another random night, and it is $25. Now I'm not OK. I had
planned on $20. They've stuck me with an extra $5 that I had not budgeted for.
No I can't have popcorn at the movie I'm going to afterward. :-(

What it comes down to is that people want the "normal" price to be the highest
price that the place charges. They can then plan for that, and if they happen
to hit a sale, then they get a windfall. Windfalls don't screw up budgets.
They are surprises--but they are pleasant surprises.

When the "normal" price is not the highest price, people get surprises, but
not the pleasant kind.

When I go out to eat, I do not want unpleasant surprises. Hence it is more
acceptable to me for restaurants to offer discounts on non-busy nights rather
the surcharges on busy night. The former only gives me pleasant surprises, the
latter only unpleasant surprises.

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philwelch
This is why you sometimes see retailers where literally every single item is
on sale at all times, but they still get to post a nominal "full price" that
no one ever pays.

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krallja
This is also known as "happy hour".

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klochner
. . . or "early bird special"

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travisp
How does this article not mention one of the pioneers of this, Next in
Chicago, which uses non-refundable tickets for reservations and costs a
different amount on weekends and weekdays?

[http://www.nytimes.com/2011/08/17/dining/reviews/rstaurant-r...](http://www.nytimes.com/2011/08/17/dining/reviews/rstaurant-
review-next-in-chicago.html?pagewanted=all)

The restaurant is always sold out, so I guess it's been successful.

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tptacek
In fairness, they could probably require chicken sacrifice and still be sold
out; Grant Achatz is among the most celebrated chefs in the country.

Also, I think the Next/Alinea ticketing system is addressing a related but
different problem. Next and Alinea are restaurants that casual diners can't
get into at any price. It's hard to plan around a table at Next except to
call, ask for the next available table a few weeks out, and rework your whole
schedule around it. If you're traveling to Chicago, even with a few weeks
notice, it's a crap shoot.

What the Next ticketing system does is give tables some predictability and
transparency. Instead of calling the restaurant and squeamishly asking for a
table on a date that you probably won't get, you hit a website and get a
choice of dates.

Most restaurants don't have that problem; with a few days notice, you can get
a table almost anywhere else in Chicago (except schwa, but no reservation
system is going to help those guys).

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travisp
Oh, I certainly agree with much of what you say about this restaurant being a
bit of an exception. And, I recall an article that discussed their thinking on
the ticketing. Their main reason was that even at the high prices that their
first restaurant Alinea charged, margins were actually fairly small and last
minute cancellations cut significantly into those margins.

But, it's still worth pointing out that they are _still_ using variable
pricing and are one of the first to really do so. From everything I've read,
there's no reason to think that they wouldn't charge the same high rate every
night if they didn't think they could get it, so even they seem to have found
value in offering different pricing for days with different levels of demand.

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doggonematte
The best strategy for getting a little spike in reservations may actually be
something as simple as getting mentioned in the NYT. Getting mentioned in
NYMag might be even better. No software needed for that; just some old
fashioned PR.

Power of the press.

