Pricing

Well Behaved Kids Discount – People Respond To Incentives

By Christine Carragee
February 25, 2013

well behaved kids discountA mother in Washington state recently posted a receipt on Reddit displaying a $4 discount for having “Well Behaved Kids” at their local Italian restaurant.  News coverage, both in the blogosphere and multiple print sources, has focused on the behavior of children in public spaces and what parents can do to keep kids under wraps when dining out.  The focus of all these stories has been on parenting, but the first thing I thought of was how funny that would look as a waterfall adjustment.

Our dining experience is clearly impacted by those around us, including the drunk guy at the bar, the shrill woman on a first date, and those kids crawling on the floor and spreading Cherios like New Year’s confetti.  In economic terms, the behavior of others is an externality imposed on us. In part, we go out to eat to experience postive externalities (ambiance, live music, decore, people watching) rather than just to eat food we aren’t able to cook at home.  Restaurants can’t control all of the factors which influence your willingness to frequent their establishment, or the price you are willing to pay for your meal; but they do have control of pricing structure.

The food service industy is full of pricing incentives designed to manipulate customer behavior.  There are happy hour drink specials to draw you in at low peak times, senior citizen’s discounts to target lower income patrons, and the classic kids-eat-free-on-Tuesdays-type deal.  Almost all of the promotions I can think of are geared toward increasing overall demand, price discrimination for various customer segments, or increasing demand for certain ingredients before food spoils – here I’m thinking of Bourdain’s warning in Kitchen Confidential not to eat any Saturday morning seafood omelettes.  By in large, people respond in rational ways to these incentives.  We try the specials, we will check out a new resteraunt if we have a Groupon, and we will leave work early to get happy hour drink prices.

ian monkThe novelty of the “Well Behaved Kids” discount is that it is aimed directly at driving customer behavior within the establishment, an acknowlegment that this behavior has been a previously uncontrolled externality in the dining out experience.  I love this discount.  It not only targets families who are likely to be more price conscious, but the right type of family. By which I mean the ones who aren’t going to drive your other higher margin patrons away.

What remains to be seen is if the discount which is targeted at the parents, whom we assume to be paying, can influence the behavior of the kids who aren’t directly benefitting from the price break.  So we’ve come full circle back to the parenting techinques discussion that every other news source has already exhausted.

– Christine Carragee

    Christine Carragee

    Christine has a diverse background in pricing analysis and implementation across industries. As a pricing practitioner, she has worked in both B2B and B2C environments and collaborated across functional areas to improve margin performance. Applying her passion for data analysis, Christine has helped Vendavo customers to anticipate their data and reporting needs during requirements gathering in anticipation of the on-going the value realization process. Another component of her work has focused on corporate education and training; ensuring strong project ROI through user adoption and increased pricing understanding.