As the holidays approach, restaurants and caterers will be preparing bids to handle private and corporate parties. What should they do about pricing the meal? Do customers like to see service charges listed as a line item in a prix fixe meal or do they respond better to seeing only a bottom line. Researchers at Cornell’s hotel school recently tackled this topic and their survey results provide some answers.
The Cornell researchers surveyed over 500 consumers who eat out at full service restaurants at least 4 times a month. Like all consumers, this group had definite ideas about what constitutes a deal. First, if they were presented with a menu that showed gratuities rolled into the price, consumers generally believed they had enjoyed a meal of good value. However, when the gratuity was broken out for diners to see as a separate line item, opinions changed. In cases where the included gratuity was below 15%, diners said they believed they were getting a good deal. However, any charges for service listed above 15% caused diners to question the value they’d received.
According to researchers Wang and Lynn, restaurant operators should consider marketing their prix fixe meals with only a single dollar amount listed. This strategy would apply to caterers as well. Using a single line item in an ad, a brochure or other marketing collateral allows prospective consumers to evaluate value and will not generate any surprises when they are budgeting for either a personal or professional event.[Source: Wang, Shou and Lynn, Michael. The Impact of Prix Fixe Menu Price Formats on Guests’ Deal Perception. Cornell Hospitality Report. November 2010. Web. 16 Nov. 2010]