Whether we’re in a textbook definition of a recession right now is irrelevant. Many of us who work in or observe the restaurant industry perceive that this economic slowdown is the worst in decades, and for the small-business owner, perception is reality.
As all restaurateurs know, it’s going to be hard enough to keep guests coming back to restaurants and spending as much as they usually do. The task only gets tougher for independent restaurateurs, something I learned right away while developing Nation’s Restaurant News’ newest blog, Independent Thinking, which is focused exclusively on independent operators.
Obviously, single-unit franchisees or mom-and-pop operators don’t have the massive advertising budgets or the purchasing clout that allow chain restaurant companies to fight margin pressures and avoid passing along the pain to their customers.
But there still might be small, subtle ways to influence people to pay a little bit more, even when the economy’s still tanking. Consider this from a study conducted by The Culinary Institute of America and the Cornell University School of Hotel Administration: People tend to spend more when ordering from a menu without dollar signs next to the prices.
The authors of the study performed research at the CIA’s on-campus restaurant, St. Andrew’s Cafe, in 2007 and randomly gave lunch guests one of three menus: one with a normal number and dollar sign format (“$14.00”), one with just the numeral (“14”) and one with the price written out (“fourteen dollars”).
The researchers found that menus “without an overt reference to money,” meaning one where the price didn’t include the dollar sign or the word “dollars,” yielded an increase in per-person spending of 8.15 percent. The study showed no significant difference in spending between menus with either a dollar sign or “dollars.”
The researchers concluded that repeated references to dollars, either the symbol or the word “dollars,” “acted as an unintentional prime and activated concepts of cost or price, initiated a ‘pain of paying,’ and subsequently caused guests to spend less.”
So the next time all your higher costs force you to change menu prices, try printing new menus without dollar signs. It might be an easy way to drive incremental sales. I know from experience that this works on me. I knew before I read this study that I spent more money at my favorite neighborhood restaurant, Bocca Lupo in Brooklyn, N.Y. The food’s really good. But I never get a pain of paying there, and maybe the menu devoid of dollar signs influences that perception.
