Wednesday, November 13, 2013

How to Run a Restaurant

My previous three posts were serious proposals for changes that I thought worth making. This one is more nearly a puzzle. In the other cases I can see plausible reasons why the changes might not have occurred even if I am right in thinking them desirable. In this case, I take the nonexistence of what I propose as pretty strong evidence that I am missing something, that it is for some reason a considerably less good idea than I think.

When I sit down in a restaurant, I am consuming two different things—the food produced and the use of seat, table, heating or air conditioning, the part of the restaurant I occupy and the services it provides. I can choose to eat lots of expensive food fast, in which case I consume lots of the first and little of the second. Alternatively, I could order something inexpensive, perhaps a bowl of soup, and linger over it for an hour. 

Since the restaurant charges only for the food, I have no direct pecuniary incentive to economize on my consumption of space. Since the price of the food has to cover the cost of both food and space, I have too strong an incentive to economize on my consumption of food. If desert costs the restaurant a dollar to produce, is priced at three dollars, and is worth two dollars to me, I don't buy it—a net loss to me plus the restaurant of a dollar in potential surplus. 

The obvious solution to these inefficiencies is to price food and space separately. When I sit down, a clock at the table starts running. When I leave, my bill includes a certain amount per minute for the time, plus the cost of what I ordered. If I want to spend two hours chatting with a friend over tea and scones, I can do it without worrying about angry looks from the waiter—and pay for it. My total bill should average out about the same, since the combined bill still has to cover the same costs. But now the separate cost of sitting and of eating is being billed separately, giving me the right incentive with regard to each.

The puzzle is why no restaurant, so far as I know, is run that way. Some have crude approximations, such as a cover charge. But why not simply price food and space separately, just as rental cars sometimes price use of the car, mileage, and gas separately?

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