Restaurants are fooling you into spending more money
Behavioural economics is a relatively new field in business, though as consumer tastes become more refined, and bargain hunting becomes more en vogue, it’s never been as prevalent.
What is behavioural economics? It’s the study of how social, cognitive and emotional factors play into the financial decisions of people and institutions. So, let’s put it to use.
The example I always offer when discussing behavioural economics is a good one I’d heard about airlines. Let’s say Airline X wants to attract more travellers by offering a sale, providing 25 per cent off all airfare for a limited time.
According to the principles of behavioural economics, Airline X would be better suited to advertise a contest where one in four tickets would be free. Instead of 25 per cent of all tickets – the same bottom line for the airline as one in four tickets being 100 per cent off – customers would be much more likely to jump at the chance of randomly winning entirely free airfare, thus boosting sales for Airline X through the form of a contest.
Anyhow, these aren’t just principles because they’re heavily studied ideals, but still, that’s behavioural economics in a nutshell: finding ways businesses can better target customers by capitalizing on the way they think, consciously or subconsciously.
*Bing: How to know when a deal is a good one
In practice, many industries use behavioural economics today, perhaps none more so than restaurants.
Think restaurants don’t trick you, so to speak, to spend more? Here are a few examples of how they do, courtesy Bankrate.com:
1) No dollar signs: Ever notice how fancy restaurants just put numbers next to their dishes, not numbers with dollar signs? “Dollar signs remind people of money,” one restaurant source tells Bankrate. “If you take (the dollar signs) off, it softens the pricing.”
2) Elaborate dish descriptions: Restaurants like to get long-winded when describing their meals, though this isn’t just to blow smoke their own way. By exhaustively cataloguing all the fresh ingredients in a dish, restaurants are subtly convincing you that, hey, maybe with all that I should be paying $16 for a salad.
3) Anchoring: Anchoring is where restaurants offer up one absurd price so as to prepare you to pay a not-as-absurd, lesser-of-two-evils price. So, maybe you’re not spending $75 on a filet mignon, but after seeing that, all of a sudden the $49.99 sirloin starts to sound like a deal.
By Jason Buckland, MSN Money
Posted by: Frank | Nov 12, 2021 8:59:11 PM
When I go to a restaurant, I want to experience something that I will not at home. That means going to a high-end restaurant. I do not look at prices when I order food. For a family of 4, I recently spent $650 for a meal (before tip) that was so spectacular that I will remember it for the rest of my life. In fact, just writing about it makes me want to go back again.
Posted by: Rick | Nov 13, 2021 11:10:48 AM
Money should not be an issue if u plan on going to a restaurant of your choice casual dining or fine dining u should do some research before going to such a place.
Frank seriously what restaurant did u go and pay $650 before tax for a family of four were there kids or all adults?
Posted by: Fool | Nov 16, 2021 9:14:28 AM
Hey frank, for $650.00 I can feed a family of four for two to three weeks, a fool and his money are soon parted, come the next recession, you may wish that you had that $650.00. I am not exactly poor, but I am not rich either, when I work a full year, I pull in $140000.00 to $165000.00 per year, but I work construction, do the math, no restaurant would squeeze that kind of money out of me for less than a hundred dollars worth of food, plus labour. Learn how to cook, or buy cooking lessons for your wife. Hey Frank, I have ten magic beans for sale, a bargain at $650.00, you will remember buying them for the rest of your life.