A Novel Approach Comes To Restaurant Pricing
One of London’s leading restaurants has started a new pricing model based on the travel industry, with different charges depending on the day of the week and time of your booking.
Bob Bob Ricard, known for a luxurious dining room where each table has a call-button for Champagne, will offer exactly the same menu, only prices are 25 percent lower for off-peak times such as Monday lunch and 15% off mid-peak, including dinner on Tuesdays and Sundays. Book for Saturday night and it’s full price.
“The idea just came from looking at how the rest of the world functions,” said owner and founder Leonid Shutov. “Airlines wouldn't be able to exist, the business model wouldn’t work unless you could balance supply and demand. Everything that we have taken that is widely accepted in the modern economy and applied to restaurants, seems to have worked.”
The new pricing model means that if you fancy lobster macaroni & cheese, you may pay £20.50 off peak instead of the usual £26.50. Go for Russian Oscietra caviar and 20 grams could set you back £36 instead of £49.
Other restaurants are watching closely and may follow suit.
“We have talked about this a lot of times over the past 20 years, thinking why aren’t we like airlines or hotels?” said Des Gunewardena, chairman and chief executive of D&D London, which owns about 40 restaurants worldwide and plans to open Bluebird at the Time Warner Center in New York later this year. “We’ve never done it because we have worried our customers might think it is a bit gimmicky.
“It will be interesting to see what their experience is. We might give it a go.”
Shutov said the average spending per customer at Bob Bob Ricard is about £100 per person, and few go there for inexpensive fixed-price lunches. But there is a huge disparity in the numbers of customers throughout the week. There might be 400 diners and a waiting list for tables on a Saturday night but only 40 for lunch on a Monday.
“To stay competitive, we need to be able to serve people a fantastic lunch without charging ridiculous prices,” Shutov said. “And one of the ways of doing that is ensuring a more even occupancy throughout the week so that we are not subsidizing our Monday lunch with a Saturday dinner.”
Shutov’s background is in the advertising industry in his native Russia, and he’s brought new ideas to the London restaurant industry since opening Bob Bob Ricard nine years ago. Every table is a booth, the Champagne buttons have proved a hit, and he limits the margins on wine prices. For a while, he included wine-price comparisons on the list, a measure that was unpopular with rival restaurateurs.
“It’s what we learn in economics 101, it calls for price differentiation. I do realize it’s a bit of a brave decision because any departure from the standard model involves risk. But I am not really worried. We are not changing the menu. We are not trying to entice customers with anything from what they know and love. We are just saying that on certain days it will cost less.”
Sadly, Shutov has no immediate plans to introduce flexible pricing on the wine list. But he is close to opening a second restaurant in the City of London financial district, where the concept of market-led pricing is likely to strike a particular chord with diners.
News by Bloomberg, edited by Hospitality Ireland