Rafi Mohammed

Peak/Off-Peak Pricing at Restaurants

Posted on May 7th, 2010 (1 Comments)

Wednesday’s New York Times had an interesting article on the pricing strategy of well-known Chicago chef Grant Achatz (Table for Four? May I See Your Stub? by Pete Wells).

To dine at Mr. Achatz’s new restaurant (Next Restaurant), the price of a 5 to 6 course meal will vary by time (ranging from $45 to $75). Dinner at 5:30 PM on Monday will be cheaper than a meal at 8:00 PM on Saturday. Makes complete sense, right? As in the airline, hotel, and power industries, prices vary according to demand and capacity constraints. Just to be clear, this is not the first time that a restaurant is charging different prices based on peak/off-peak time periods. As it turns out, Alice Waters (known for her focus on using locally grown and fresh ingredients) is also a pioneer in pricing strategy! At her famed Chez Panisse restaurant in Berkeley, California, the price of a set dinner has long varied by day (currently ranging from $60 on Monday to $95 on Saturday). Interestingly, the New York Times quotes famed restaurateur David Chang (owner of three wildly successful Momofuku restaurants in New York) as being concerned that offering off-peak pricing would turn off customers. Why would people get upset? They now have the option to dine during peak and off-peak times.

The other unique part of Next Restaurant’s strategy is in order to garner a reservation; you have to pre-pay for your meal. I’ve never understood the one-way deal associated with restaurant reservations - restaurants have to honor reservations but diners can cancel (or not show up) at the last minute. If a restaurant is going to block a table and potentially turn away paying customers, a diner ought to be on the hook if they don’t show or cancel within a few hours of their appointed meal, don’t you think?

Given that I travel frequently, I stay at a lot of hotels. Categorically, some of the nicest people work in the hotel industry – always very helpful. If the hotel industry – which is very sensitive to ensuring that their guests are happy - can impose cancellation fees and peak/off peak pricing, I bet that restaurants can too.


Add Comment
Send to Friend
Email Signup
RSS Feed

Readers' Comments on This Blog Entry

From Steve on May 7th, 2010
I love those early bird prices. I never thought I'd be a senior citizen eating at 5:30 and going to a 7:00 movie, but we do it all the time. On Vashon, people eat earlier, but in big cities, that 7:30 or 8:00 reservation is gold. If I eat at 5 or 5:30 in Seattle, it IS early and we can get in anywhere. Pre paying for your meal. The idea sounds cheesy to me, but I understand the argument for it. I'm one of those people who ALWAYS cancels in a timely manner if there is a change in plans. The restaurants are always effusive in their gratitude when I make that call. Must not be the norm.