Restaurant Confidential
The Flat–Rate Pricing Paradox: Conflicting Effects of 'All–You–Can–Eat' Buffet Pricing
Summary
Are price and consumption independent in fixed–price settings? We investigated if consumers' drive to "get their money's worth" influences how much they eat at an all–you–can–eat (AYCE) buffet. A field study was conducted at an AYCE pizza restaurant's lunch buffet. Over three days, 66 customers agreed to participant in a short survey about the restaurant before they went inside. Participants were randomly given either a coupon just for a free drink or a coupon for a free drink and 50% off the buffet price. The control group thus paid $5.98 for their AYCE pizza lunch and the treatment group who had received the coupon paid $2.99. All participants' pizza consumption was observed and their uneaten pizza was weighed after being bussed. The people who paid the regular price for the buffet ate more 31.77% more pizza than those who had received a 50% off coupon, indicating that higher prices lead to greater pizza consumption. Additionally, when we controlled for socio–demographic variables, we found that those who paid half price consumed approximately one slice of pizza less on average. Those who paid full price left twice as much food waste on their plates. We measured taste perception in both groups and found that consumption appears to be negatively related to individual evaluations of taste within treatment, which raises the question: when paying a flat–rate, will one eat more while liking it less? From our results we conclude that increasing the price people pay increases their consumption and that increasing price may reduce consumption utility.
For more information, see: Just, David R. and Brian Wansink (2010), "The Flat–rate Pricing Paradox: Conflicting Effects of 'All–You–Can–Eat' Buffet Pricing," Review of Economics and Statistics, forthcoming.
Contact:
Brian Wansink, PhD
Food and Brand Lab, Director
110 Warren Hall
Cornell University
Ithaca, NY 14853
Email: foodandbrandlab@cornell.edu
