Here’s Why Some Restaurants Have You Pay First Before They Give You Your Order
By Ryan Chew
Producer’s note: Someone on Quora asked: In China, why do so many restaurants make you pay for your food immediately after ordering? Are they afraid customers will steal? Here is one of the best answers that’s been pulled from the thread.
Disclaimer: Everything below is anecdotal and borne out of years of shovelling food into strangers’ mouths.
Shall I let you in on a secret?
The restaurants are afraid of you, but not for the obvious reasons.
I used to own a restaurant, and there’s a term we use in the industry. It’s called table turnover.
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 you’re having a sit-down meal, you’re not just paying for the food, you’re renting a small piece of real estate. To maximise yield, it is in the restaurant’s interests to serve you and kick you out the door as soon as you’re done. But of course, restaurants can’t do that. So instead, they make you pay upfront.
The psychology behind this:
We’ve actually experimented with prepaid vs postpaid meals in our restaurant. The verdict? Upfront payment increased table turnover by over 80 percent.
The difference is that customers who haven’t paid can justify their occupation of a table. They surf facebook. They chat away for hours on end. They getcomfy. It matters not whether they intend to order more stuff, the merepossibility 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 restaurant’s business model. If it’s a low-end restaurant, this tactic will serve it well. If it’s a high end restaurant, paying $150 for that bottle of wine buys you a little more time.
Also, here’s an answer to the question: Why restaurants with upfront payment and free wifi have seemingly low table turnover.
Allow me to explain:
Here’s a fictional coffee house called Steerbuggs. Steerbuggs makes its money from takeaway. That’s why their drinks come packaged ready to go. You pay upfront, and if you can’t 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, you’ve 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?
It’s called herd behavior.
The psychology behind this:
I call it the honeypot trap. The more activity you perceive a restaurant to have, the better you assume 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 Steerbugg’s free wifi, you’re volunteering to act as bait.
Knowing this, on our restaurant’s 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’re engaged in psychological warfare.