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Would You Pay More for Dinner on a Saturday Than on a Tuesday?
A Toronto restaurateur is finding out
Roger Yang had a problem that’s familiar to any successful, full-service restaurant owner in North America: Everyone wants to eat at the same time.
“There’s such a dramatic difference between demand on weekends versus weekdays,” says Yang, owner of vegan tasting menu restaurant, Awai in Toronto’s Bloor West Village.
Most people want reservations at peak times, which in Toronto, starts around 7:30 p.m. on Friday and Saturday night. Unless restaurateurs can convince customers to sit on each other’s laps, they often can’t satisfy demand. Meanwhile, seats can sit empty on Tuesday.
So in March, Yang got creative with a solution by raising prices on weekend nights and lowering them the rest of the week.
Awai now serves five- and eight-course tasting menus for $48 to $75 (CAD) from Sunday through Thursday, and $62 or $95 on Friday and Saturday. Before the policy change, he charged $55 or $85 every night.
“It becomes a phenomenal deal on the weekdays and there’s a premium to pay on Friday and Saturday nights,” says Yang. “It’s really just adjusting to supply and demand.”
He says it has been working, with the restaurant more crowded on Thursdays and Sundays. Yang opened Awai in late 2016.
Customers are used to premium pricing in shopping for flights, hotels, banquet halls, or car rentals. Since the 1980s, these industries have used demand-based pricing, a form of revenue management in which the price of goods fluctuates in relation to time and demand. Decades later, it’s not something customers push back against as an unfair practice.
That concept of fairness, according to Sheryl Kimes, professor of Service Operations Management at Cornell University in Ithaca, New York, is an obstacle for restaurants.
“Demand-based pricing is underused in many service industries, because customers are believed to perceive such pricing as unfair,” says Kimes.
She says the practice works best in businesses with a relatively fixed capacity (other than patio season, restaurants can’t really add seats); variable and uncertain demand…
