Via Larry Ribstein, I see this paper on "Buyer Uncertainty and Two-Part Pricing: Theory with Evidence from Outsourcing and New York Restaurants".
I have not throughly studied the economic theory as yet, but there is definitely something wrong with the empirics here, apparently because the authors didn't think enough about how people order in restaurants.
The idea is this: the researchers noticed that appetizers, desserts, and soups cost more (6-20% more) in comparison to main dishes at restaurants categorized as "romantic" in Zagat's guides than at restaurants categorized as "business dining". From this fact, the researchers extract the theory that restaurants are responding to a sort of uncertainty. Because couples on a "first date" don't know whether they are going to like each other, the authors argue, first date restaurants price "ancillary courses" more aggresively than the obligatory main course, because by the time the couple decides to order an ancillary, they'll have decided they like each other or not, and will thus be willing to pay a premium.
I can't even count the number of things wrong with these empirics when you look at them through the lens of New York restaurants.
1. The ancillary courses used as examples are totally disimiliar - one orders soups and appetizers before or at the same time as the main course, and only dessert afterward. The fact that the empirical results are the same across all three strikes me as fishy. I suppose one might argue that by the time the couples gets to the restaurant they know whether they like each other or not, but in New York you often meet your date at the table.
2. Business meals are often also highly uncertain affairs. You might be making a pitch for a client, or meeting an adversary for some hard words. If it goes badly, shazam! Just a main dish.
3. There are deep structural differences between business dining and dates. One of the most obvious is that business is typically done at lunch, and dating at night. And it is almost certainly much more common to have just a dish at lunch than at dinner, so restaurants might respond to that by attempting to extract more value from the main dish, and then discount the ancillaries to lure lunchers into buying additional courses.
4/09/2008
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4 comments:
I'd actually consider the biggest difference between date meals and business meals to be whether the cost can be passed on to someone else. People working for an entity often can charge the meal to that entity; the self-employed can deduct it as a business expense. Old fashioned heterosexual daters assume the male bears the cost, but that creates a set of social problems in itself to confound the researchers: a woman who likes the guy won't want to order too much lest she look gluttonous or expensive to date; a woman who doesn't like the guy as much may think it's worth spending the extra 15 minutes in his company in order to get a nice dessert to put a better end to the evening.
I don't know about that PG... if I don't like the guy... I'm outta there!! Check please!!
PG - I thought about the expense account problem too, and figured like you that it's certain to cause some problem. In any case, it's a super silly empirical study to back up what may or may not be good economics.
Also, PG, I tasted the Payard opera last night, by coincidence. Still good.
I will have to inspect this Payard soon. I liked aran's suggestion in the wedding cake post to consider croquembouche -- Payard makes individual ones that look like they would be great centerpieces for dinner tables (something different from flowers/ water- stones- candle, and also less wasteful because people could eat them). Eyeballing the picture, there appear to be 15-20 pastries in each mini-croquembouche, which should be about right for a table of 10 people.
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