Should a restaurant require prepayment for meals?

This I found in a Quora forum on prepaid meals in China:

We’ve actually experimented with prepaid vs postpaid meals in our restaurant. The verdict? Upfront payment increased table turnover by over 80%.

The difference is that customers who haven’t paid can justify their occupation of a table. They surf facebook. They chat away for hours on end. They get comfy. It matters not whether they intend to order more stuff, the mere possibility of them ordering more gives them the moral upper hand.

Customers who have paid up on the other hand, do not have moral justification. They could order more food, but diminishing marginal utility and inertia discourages that act. They get edgy. They feel guilty. They leave.

It all depends on the restaurant’s business model. If it’s a low-end restaurant, this tactic will serve it well. If it’s a high end restaurant, paying $150 for that bottle of wine buys you a little more time.

For the pointer I thank Eduardo Pegurier.

Comments

Is McDonalds a prepaid restuarant? Seems to me, that this is just the fast food model.

There's plenty of non-fast-food restaurants where you pay and receive a placard with a number, and someone brings your food to your table when it's ready.

Yes it is, so is a deli or cafeteria. You order, pay, sit, and eat. It's just a matter of what kind of 'restaurant' you want to be.

Yes, it's the McDonalds and quick-serve food model. A lot of bars follow this model too, particularly the kinds of bars that only serve drinks, not food.

I like those sushi restaurants (called "restos" or "restobars" here in the Philippines, as the youth --did I mention my gf is 25?--like to shorten everything to one syllable) where a conveyor belt comes around your table and you must take something off it on occasion, or it looks like you're a poseur. Moral pressure.

I don't buy the reasoning here. One of the most frustrating experiences I have at a restaurant is the time between when I have finished my meal and when I receive the check. Eliminating this idle time probably has more to do with increasing the table turnover than any latent feelings of "guilt" from the customers. Panera Bread, for example, has a pre-payment model and I frequently see a large number of people at their tables surfing the web and reading long after finishing their food.

Agreed. The extra turnover time probably relates to the delay the customer spends waiting for the check. A more attentive wait staff delivering bills could reduce that time just as easily. The mystery here is why restaurants don't keep the staff on top of bill service.

I agree. I saw an innovative use of technology lately. A local family style restaurant in my area just installed devices on the tables where your check is provided electronically and you can swipe your card whenever you are ready. You can also order desert or additional drinks from it if you are not done. I have to think it has increased table turnover by removing the search for your waiter and the annoying wait for the check that JamesfromGod'sCountry mentioned.

Could you expand this to eliminating waiters' customet interaction entirely? Place food and drink offers through a smartphone app and have a skeleton staff shuttling food and dirty plates between tables and kitchen. For me the time/cost savings would outweigh the depersonalization aspect.

There's a small chain of Japanese restaurants in Sydney, Australia named Wagaya that do something similar to this. They have iPads at all the tables that you order all your food and beverages from and wait staff merely shuffle orders around. It's a mid-end quality restaurant and it works quite well, especially for share food. You don't need to order all at once, so you can just add more items on as you go and the staff don't need to roam in order to keep an eye out for people needing help. Language skills of the wait staff are less important as well. Australia tends to put less stock on traditional American customer service but it definitely has potential.

Virgin America does this on flights. It appears far more chaotic than traditional row by row service. Id like to know the corporate results and customer satisfaction.

Panera is anomalous in that they more or less explicitly market themselves as a "third place" where people are welcome to hang out for hours at a time; rather like a coffee shop but with a better food selection at the expense of the coffee.

For most fast-casual restaurants, upfront payment most likely increases turnover by eliminating the mandatory wait-for-check-servicing phase, with any psychological nudges being secondary. What happens if and when that model is pushed out towards the "fine dining" end of the axis is an interesting question; the answer is not obvious and data - even the subjective evaluation of restauranteurs - would be welcome.

I eat out about a 100 times a year, I have absolutely no problem getting a check on time, because there is a well-known skill known as human contact. Using this skill known as human contact, I let my fellow humans (who are temporarily in a role classified as the role of "waiter" or "waitress") know that I, a fellow human, would be happy not to wait too long for my check. Some of them may be offended that I think it is necessary to impart such information, but almost all of them, for indifferently (a) specifically explainable or (b) non-specifically stochastic reasons, want me to be happy in this specific context - and as a decent human being, I make sure to leave big tips to both the offended and the unoffended.( suggestion number three in a recent "be nice today" supplement at one of my favorite churches, which included 10 or 20 suggestions as to how to treat others well).

Adding to the chorus here. I HATE waiting for my check, especially when it takes 10 minutes for the waiter to show up and he just wants to upsell me dessert.

Makes sense. Although I wonder if customers order more when they pay after meals - instead of having to pay up front for the whole cost and then do add-on, they instead decide to add more on and pay a larger bill at the end.

The related question is what happens to tips when customers pay up front.

I go to a seafood place North of Boston that is a step up from a clam shack.

You pay when you order, as in most clam shacks. After you order they seat you in a dinning room and the waiter than brings your food. In a clam shack you do not tip because you pick up your food at the counter. I do tip here but am not quite sure what to tip. I generally follow my normal practice of around 20% and add it to the bill up front that I pay with a credit card. So I have no idea how the service will be when I pay the tip. I guess I could lead a cash tip.

You can leave the tip in cash on the table for the waiter/cleanup crew to pick up.

What is this "cash" you speak of?

Cash is useful when you go to a prepay restaurant or buy carryout and don't want to leave a tip. Otherwise if you pay with plastic, there is that "tip" line on the receipt, and you have to physically put a line through it and then sign, thereby signalling "I am choosing not to tip you". If you pay in cash, you can just take your change, pretend not to see the tip jar, receive your food, and leave guilt free.

A change is most needed for lunch. Wouldn't you prefer to prepay at lunch? I once worked in a restaurant where the policy was to drop the check as soon as the food was delivered, which gives customers the option to pay before they are done eating. Wish more places would do that.

JamesfromPittsburgh nails it. The staff itself is often causing the increase in table time. Especially exasperating when you wait for the check, then wait for them to come back for your card, then wait for them to come back with your card and receipt.

The new Chiles add has the solution - order and swipe your card at the table.

Sounds like a business model that is more viable in societies without tipping.

Agreed. Also, while I did say above that this was like McDs or a deli, it's actually a bit different. Unlike those places I presume this restaurant is still one where you go in, are seated, a waiter takes your order at your table, etc. But then you pay right there before he/she runs your order back to the kitchen.

Or when gratuities and taxes are automatically included, and what you see is what you pay. It is SO much better that way. If you dont like your service, you complain.

I love pre-pay.
1. No waiting for check.
2. No tipping as there no waiters, only runners.
3. Works well for casual, semi-upscale dining at places such as: http://www.parisidenver.com/parisi/

Prepay might not work so well for an a la carte restaurant, as customers just might have a pre-commitment sticker shock when they realize how much everything is going to cost.

Even if it's not strictly a la carte, it's hardly a secret that margins are higher on drinks (alcoholic and soft), desserts, appetizers than on the main course. Perhaps you'll prepay an appetizer, but if you want dessert or another drink you'd have to get billed again, thus creating a nudge to just not bother.

From the restaurant's PoV, the ideal situation would be to pre-swipe customer's credit cards and just put it all on the tab, including a mandatory tip. But will customers balk at signing what is essentially a blank check? Would you?

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Having the cashiers at the Varsity in Atlanta slur "What a ya have" at the customers seems or speed things up there. Is that model scaleable? No one said the rush to the bottom would be pleasant.

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