Top 5 Ways Restaurants Make You Spend More
By Michael Macklon | Investopedia – Sun, Apr 21,
2013 1:00 AM NZST
Dining in America used to be simple.
Before the 1960s, competition among food service chains was timid, with only a
few established restaurants operating in a handful of formats. Over the years,
factors such as the demand for healthy choices and the introduction of foreign
cuisines have created an overwhelming number of eat-out options. Food industry
corporations must continually work to lure in customers and maximize their
guests' spending, and a handful of companies seem to have a recipe for
accomplishing both. But this industry is vulnerable to trends, and staying on
top takes inventive marketing, shrewd strategies and aggressive selling. To
prove this point, set a budget the next time you eat out and then look for
these common restaurant tactics that work to increase your spending.
1. The Upsell
All successful restaurant operators mandate their serving staff to use suggestive selling. And servers have plenty of incentive beyond their boss's bottom line, as the higher the final bill is, the larger the tip the server stands to receive. A good server sells food like a car salesman. Every menu offering is simply a base model that can be enhanced with special features. A pasta dish can be outfitted with garlic toast and upholstered with cheese. Everything's better with bacon, and who doesn't deserve a "king-sized" serving? These suave suggestions of super-sizes, appetizers, dessert, extra cheese, double burgers and double highballs can quickly double your tab, too, and these extras are often the difference between an operation being a laggard or a moneymaker.
2. Forced Waiting
Have you ever been on a restaurant's waitlist but noticed a number of open tables that you could be dining at? Many times, the restaurant has done this by design. The idea is to get you to sit in their lounge (there always seems to be room in the lounge). Here, the bar server has an opportunity to upsell you on drinks and appetizers. Often, some restaurants will bill you separately for your lounge items, which may make you feel obligated to tip both of your servers. Many diners may walk in with a budget, but when made to wait among a lounge full of food and drinks, it's tough to ignore a sudden craving or a hungry belly.
3. All-You-Can-Eat
This gluttonous proposition appeals to consumers' desire to get the most value for their dining dollars. And while there is some value in all-you-can-eat offerings, savvy restaurateurs know how to make a lot of money from the seemingly generous deal. First, the price for the entrée is often more than the regular price and the serving size is smaller. Guests are encouraged to fill up on less expensive side dishes and complimentary (see cheap) breadsticks and salad, leaving less room for refills. Second, mass-producing one item reduces the purchase and production costs of the item, allowing for a significant profit margin. To actually cost the restaurant money, a guest would need to eat numerous refills. Very few people actually go beyond two refills, so the law of averages works in the restaurant's favor.
These promotions are also great at attracting big crowds on otherwise lackluster days, and a crowded dining room creates plenty of opportunities for servers to upsell profitable add-ons. Even if a customer happens to be a competitive eater, it's likely they still have to wash down all that chow with over-priced sodas or bar drinks that balance the costs of the entrée. Even at a small loss, the restaurant can still hope to offset losses with repeat business and positive word-of-mouth advertising.
4. Fake Specials
Many restaurants reserve a place on their menu for the daily "special." Often, this unique offering is simply the food that is set to expire soonest. Featuring a dish is also a great tool for pushing high-profit menu items. Restaurants like to push big-ticket entrées as a featured item to give the impression that an upscale meal is available for less. There are real deals to be had, but it's wise to check the regular menu to see if the special is indeed less than the regular price. Many restaurants will let their guests assume that featured items receive a discount when in fact there is no savings. Being skeptical of subjective descriptions like "special" and "feature" can help you avoid paying up for false value.
5. "These Pretzels Are Making Me Thirsty"
TV's "Seinfeld" made an astute point about what happens when you eat too many salty snacks: You get thirsty! This scientific tidbit isn't lost on bar owners, who profit from sodium's dehydrating effects. Many bars are happy to offer free pretzels, peanuts, potato chips and popcorn (pretty much anything that's cheap and addictively salty will do the trick), knowing that customers will soon crave drinks to ease their growing thirst. Considering a keg of Heineken costs about $110, bar owners can make a $415 profit, or a 377% return on investment (ROI), selling $5 pints of beer. If you're trying to keep a modest drink tab, avoid curing your tongue with salty snacks that drive you to drink.
The Bottom Line
No matter what food you're craving, America's food service industry offers a host of options, and aggressive competition means great deals are out there. But to follow your food budget, you need to see past the slick commercials, flashing neon and limited-time promotions. By becoming impervious to restaurant sales tricks, you can avoid overspending and, by fortunate coincidence, overeating.
1. The Upsell
All successful restaurant operators mandate their serving staff to use suggestive selling. And servers have plenty of incentive beyond their boss's bottom line, as the higher the final bill is, the larger the tip the server stands to receive. A good server sells food like a car salesman. Every menu offering is simply a base model that can be enhanced with special features. A pasta dish can be outfitted with garlic toast and upholstered with cheese. Everything's better with bacon, and who doesn't deserve a "king-sized" serving? These suave suggestions of super-sizes, appetizers, dessert, extra cheese, double burgers and double highballs can quickly double your tab, too, and these extras are often the difference between an operation being a laggard or a moneymaker.
2. Forced Waiting
Have you ever been on a restaurant's waitlist but noticed a number of open tables that you could be dining at? Many times, the restaurant has done this by design. The idea is to get you to sit in their lounge (there always seems to be room in the lounge). Here, the bar server has an opportunity to upsell you on drinks and appetizers. Often, some restaurants will bill you separately for your lounge items, which may make you feel obligated to tip both of your servers. Many diners may walk in with a budget, but when made to wait among a lounge full of food and drinks, it's tough to ignore a sudden craving or a hungry belly.
3. All-You-Can-Eat
This gluttonous proposition appeals to consumers' desire to get the most value for their dining dollars. And while there is some value in all-you-can-eat offerings, savvy restaurateurs know how to make a lot of money from the seemingly generous deal. First, the price for the entrée is often more than the regular price and the serving size is smaller. Guests are encouraged to fill up on less expensive side dishes and complimentary (see cheap) breadsticks and salad, leaving less room for refills. Second, mass-producing one item reduces the purchase and production costs of the item, allowing for a significant profit margin. To actually cost the restaurant money, a guest would need to eat numerous refills. Very few people actually go beyond two refills, so the law of averages works in the restaurant's favor.
These promotions are also great at attracting big crowds on otherwise lackluster days, and a crowded dining room creates plenty of opportunities for servers to upsell profitable add-ons. Even if a customer happens to be a competitive eater, it's likely they still have to wash down all that chow with over-priced sodas or bar drinks that balance the costs of the entrée. Even at a small loss, the restaurant can still hope to offset losses with repeat business and positive word-of-mouth advertising.
4. Fake Specials
Many restaurants reserve a place on their menu for the daily "special." Often, this unique offering is simply the food that is set to expire soonest. Featuring a dish is also a great tool for pushing high-profit menu items. Restaurants like to push big-ticket entrées as a featured item to give the impression that an upscale meal is available for less. There are real deals to be had, but it's wise to check the regular menu to see if the special is indeed less than the regular price. Many restaurants will let their guests assume that featured items receive a discount when in fact there is no savings. Being skeptical of subjective descriptions like "special" and "feature" can help you avoid paying up for false value.
5. "These Pretzels Are Making Me Thirsty"
TV's "Seinfeld" made an astute point about what happens when you eat too many salty snacks: You get thirsty! This scientific tidbit isn't lost on bar owners, who profit from sodium's dehydrating effects. Many bars are happy to offer free pretzels, peanuts, potato chips and popcorn (pretty much anything that's cheap and addictively salty will do the trick), knowing that customers will soon crave drinks to ease their growing thirst. Considering a keg of Heineken costs about $110, bar owners can make a $415 profit, or a 377% return on investment (ROI), selling $5 pints of beer. If you're trying to keep a modest drink tab, avoid curing your tongue with salty snacks that drive you to drink.
The Bottom Line
No matter what food you're craving, America's food service industry offers a host of options, and aggressive competition means great deals are out there. But to follow your food budget, you need to see past the slick commercials, flashing neon and limited-time promotions. By becoming impervious to restaurant sales tricks, you can avoid overspending and, by fortunate coincidence, overeating.
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