The Bold "Pay-What-You-Want" Restaurant Experiment

The bold "pay-what-you-want" restaurant experiment

www.salon.com/food

After the fuss/comments/feedback from our 30 Day Business Growth Challenge, I thought I should post this (slightly pessimistic) view of "pay what you want".

A new dining trend allows customers to decide their own menu prices. An economist explains why it's a bad idea

I will copy and paste the best bits from the article:

In the last few weeks, a radical pricing strategy has been making waves in the restaurant world: establishments that allow diners to decide themselves what they'd like to pay for their meal.

Of course, the pay-what-you-can model has been attempted with some success in other businesses, most notably three years ago, when Radiohead put its "In Rainbows" album online and allowed fans to choose its worth.

To find out if the pay-what-you-can model could work for a restaurant, Salon spoke with Tyler Cowen, a professor of economics at George Mason University (and food writer), from Berlin, Germany.

Do you think this pay-what-you-can model could actually work for restaurants?

Do you think it could work on a small scale -- two or three restaurants in a city?

I'm not even sure it can in the long run.

But Radiohead's experiment was fairly succesful. What's the difference between it and a restaurant?

With Radiohead, there's a focal price of about $10, which is pretty cheap. If you download an album and send in $10, you feel you've done your bit, and it's not a question of repeat business. A restaurant has no other way to get that money back. They count on the people to pay for their food.

Is there anything that these restaurants can do to encourage people to pay more?

You have to feel like you're being watched. You have to feel that other people are paying. You have to feel like you're part of a cool experiment.

Are some sectors of the economy better suited to this kind of pay-what-you-can model?

It depends on what you mean by giving things away for free. There's plenty of stuff that gets given away for free, like NPR. But once NPR's content is produced, it doesn't cost them extra to have additional listeners.

Why are these restaurants popping up now?

I'm actually not surprised you see them in down economic times. You let some people pay less that can't pay more -- it's part of the charm.

• Thomas Rogers is Salon's Deputy Arts Editor. More Thomas Rogers
• Robert Craven's 30 Day Business Growth Challenge - the blog..."pay what you think it is worth..."
• The Growth Challenge - webpage

Disrupt - extended 12" Mix

Being disruptive pays. Following the pack does not. At least not for most people.

Most marketing activity interrupts. It interrupts evenings in front of the TV, reading the newspaper, walking down the street. However, the interruptions get less effective as the consumer becomes immune to the endless messages.

Marketing has to get louder to continue to interrupt

Advertisers have to shock or surprise the consumer in a bid to have their full attention – but this is just a ‘louder’ form of interruption: louder TV ads, brighter colours, larger typefaces. Just because the consumer can’t avoid seeing or hearing a promotion doesn’t necessarily mean that it engages the consumer’s attention.

The ‘guerrilla marketing’ school of thought looks for devious ways of going under the radar, of reaching the consumer in ways that the competition has not thought of. This is relatively disruptive – it seeks to ‘bend the rules’ to do things differently, to get noticed. It messes with the rules of engagement.

Being Disruptive?

Disruption means the act of breaking the regular flow or continuity of something; disturbance; dislocation, especially an event resulting in dislocation or discontinuity.

So, to be disruptive you should shake up the market. It is not disruptive if no-one notices.

Disruptive Businesses

Starbucks – was a disruptor as it changed the habits of a generation (as did FaceBook, Google and so on). But what is new today becomes old tomorrow. Today’s revolutionaries are tomorrow’s Old Guard.

Whole Foods Market - all wholefood stores are (or rather, were) small, local affairs then along comes the real deal (in the same vein as Virgin Megastores)

The Flip Phone – as brainless as a video can be, and cheap, and high definition, and plugs into YouTube. Who would have thought of that?

A great disruptor doesn’t just do more than interrupt; it can change the face of the landscape.

The small record shops were pretty much destroyed by the arrival of the Virgin-type megastores, Starbucks changed how and where we socialise, Amazon…. So while we can quote the big disruptors I think that we can all disrupt if only on a smaller stage.

Dans Le Noir restaurant, where you are served by blind waiting staff in a pitch black room, is wonderfully disruptive. It disrupts every part of the standard process we call going to a restaurant. You don’t know where you are or what you are eating. You are lost. A truly memorable experience. Unforgettable. Changes how guests see food forever.

And then we have ‘Disruptive Marketing’

What I am calling ‘disruptive marketing’ is when we disrupt how things are done in the marketing world. We do things differently from the rest and so we stand out. But this is not about creating some cheap gimmick but actually challenging the way things are currently done and doing them differently.

Pretty much everything that Apple does is disruptive. And Innocent Drinks.

Hobbs House Bakery sells very expensive (and wonderfully delicious) bread on the internet – no-one else did it before and why not?

You can zig when they zag. Go against the traffic. Challenge the notion of “that’s how we do it around here”, a myth perpetuated by the majority who have lost the passion and excitement to try to create newer and better ways of doing things. Get innovative in every possible part of the process. Get noticed (but not for a gimmick but because you see a different world.)

Looking at your industry, what could be improved to give the client a significantly better deal? You could deliver quicker or higher quality or cheaper.

But what would be disruptive?

Depending on your marketplace, think what would happen if you:

• Charged by ‘results only’
• Let customers decide what to pay
• Only work online or by phone
• Charged per 5 minute slots…

I am sure you get where I am coming from.

Being disruptive certainly creates attention. Challenging the status quo normally does. In business this is a good thing.

You get noticed. But a gimmick will be seen for what it is. To disrupt effectively, change how people buy and give them the service they really deserve. No easy task.

Disrupt

Being disruptive pays. Following the pack does not. At least not for most people. (See Contrarian or Follower.)

Starbucks – was a disruptor as it changed the habits of a generation (as did FaceBook, Google and so on). But what is new today becomes old tomorrow. Today’s revolutionaries are tomorrow’s Old Guard.

A great disruptor doesn’t just do more than interrupt; it can change the face of the landscape. This is particular true of the customer experience.

Starbucks changed how and where we socialise, Amazon... So while we can quote the big disruptors I think that we can all disrupt, especially if on a smaller stage.

You can zig when they zag. Go against the traffic. Challenge the notion of “that’s how we do it around here”.

Depending on your marketplace, think what would happen if you:

• Charged by ‘results only’
• Let customers decide what to pay
• Only work online or by phone
• Charged per 5 minute slots…

I am sure you get where I am coming from.

A Truly Remarkable Business - One Worth Talking About

Where there’s a great experience then there’s probably great care.

Just been to Dans le Noir - a truly remarkable restaurant in London (and Paris).

What makes it so special and worthy of mention?

1. You eat and drink in the pitch darkness. And it really is dark.
2. Serving people are blind or partially blind
3. After the meal they tell you what you actually ate!

Just think about it.

The whole concept challenges how you ‘see’ flavours and textures and how you relate to your food. It is mind-blowing. You have to go. It is like no other restaurant. And the “blinded guides” have to care for you while you are totally outside your comfort zone.

The experience is wild and challenging. Spending a couple of hours without any sight makes you re-evaluate your fortune at being sighted, think about what it must be like to be blind, and messes with your palate. You have little idea what you are eating. Crazy. The experience lingers for days.

My point. Dans le Noir is a true experience. You don’t forget it. You tell everyone about it. Remarkable. A business. And it increases public awareness about blindness.

If only more businesses could offer a true experience.

New: The Robert Craven 30-Day Challenge!

Our research says that people work with consultants because they are looking for results. (What Do You Want To Grow Your Business?)

We are as obsessed as our clients on results so we thought we should liven things up and so the birth of the 30-Day Challenge.

Spend half-a-day working with me. Wait 30 days and I'll call you up. You tell me what the improvement has been.

You then decide what to pay for the results you have achieved.

The catch? None.

For more information go to Robert Craven's 30-Day Growth Challenge.


POST SCRIPT: NEW DATES...

• LONDON - 6th APRIL
• BRISTOL - 8th APRIL

Is Mine A Controversial Position on Twitter?

I have been asked to put my thoughts/writings and ramblings about Twitter in one place so here it is. Sometimes repetitive I think you get the general thrust of my thoughts! The comments are worth a look at in the blog entries.

• A Challenge To The Twitteratti and Networking Junkies - blog post: "I have a sneaking suspicion that endless networking may not be the path to riches..."
• Twitter (Again) Survey - blog post: "another convenient comms tool?"
• Should I have a Twitter Account? - blog post: "convince me..."
• Networking Is The Crack Cocaine Of The Business World - article: agree/disagree?
• Twitter Is For Losers - article: maybe the title should have a question mark? (and Is Twitter For Losers in SYB magazine).