Saturday, January 11, 2014

The Other Way To Run a Restaurant

A restaurant provides two different products—food and a place to eat it. In two different posts, one recent and one older, I raised the question of why restaurants only charge for the first. Why not have a restaurant which charges separately for the food and the use of a table?

According to a recent news story, there is now a cafe in London that reverses the usual policy. Food and everything else is free—except for the per minute cost of being there. 

The entrepreneur calls it an anti-cafe.

P.S. A commenter points to a post by a prominent restaurant entrepreneur arguing for my system—but I gather he hasn't actually implemented it yet.


At 12:59 PM, January 11, 2014, Blogger Unknown said...

This post and a series of others by the same restaurant owner are very interesting, along the same lines. He started out the series by highlighting what was fundamentally flawed about tipping and really went into it.

At 1:02 PM, January 11, 2014, Anonymous Anonymous said...

It is very common in Italy or Crotia (at least at tourists spots) to charge some extra "table fee".

At 1:57 PM, January 11, 2014, Blogger David Friedman said...

Is the table fee a fixed amount or a per minute rental?

At 2:03 PM, January 11, 2014, Anonymous Bruce said...

Corkage? I mean the practice of restaurants charging BYOB customers, not Flashman's presumably hypothetical case of a brothel charging a gent who brings his own girl.

At 2:43 PM, January 11, 2014, Blogger Tibor said...

Bruce: Hypothetical? I think they call these rooms a "lover's asylum". At least that is how they advertise on the outside of one strip-bar (which is also unofficially a brothel...prostitution is not legal in the Czech republic, but it is not illegal either...basically, it is in a legal vacuum there, kind of like bitcoins, but with a more solid position, I guess ) in my home town. I can't imagine why someone would use that unless both lovers are married and don't want to risk discovery by either spouse at their respective homes. But there are a couple of these "hour hotels" around.

At 7:01 PM, January 11, 2014, Anonymous CC said...

I've always been puzzled by everyone's confusion about this topic.

Restaurants are good at charging extra for stuff that indicates that you'll be hanging around for a while. The classic example is alcohol: If you're ordering wine, you're probably going to be there a long time, and so they charge a big markup on wine.

Russ Roberts and others have expressed confusion over why restaurants charge the same for take-out as they do for eating in the restaurant. The fact is that they typically charge a lot LESS for take-out: If you do take-out, you don't have to tip (save 15-20%), you don't have to buy drinks (save roughly 15%-20% again), you often get bigger portions, and you often have take-out specials as well.

Eating in the restaurant could easily cost 40% more than take-out.

There are exceptions though. I suspect that some restaurants actually want to subsidize eating in; that way they can show passers-by that it's a popular place.

At 11:23 PM, January 11, 2014, Anonymous Norm said...

Is the table fee a fixed amount or a per minute rental?

Many places charge more, even double, for table service compared to ordering at a counter and eating/drinking/licking (ice cream) standing up or taking away. So the table charge is not a fixed fee nor is it time based. It is more like a percentage.

There is also sometimes a coperta which is a fixed fee per person.

At 2:20 AM, January 12, 2014, Blogger Tibor said...

CC: I'm not sure your alcohol example holds. I know a couple of people who run bars and the rule is that most money is on shots, there they charge highest margins. The smallest margin is on beer.

From the perspective of paying for staying it does not seem to make much sense. People typically drink shots very fast and beer very slow. However, beer makes them stay and buy more shots and other things. I guess this works mostly for bars wherein the space is not such a limiting issue and you mostly want to keep people in to attract more people and to make them slightly which point they are more likely to drink shots. On the other hand, I know of at least one restaurant where they actually discourage beer drinking by refusing to make 0,5 liter (about 5% more than a pint) and only give you 0,3 liter (so you can't just sit there and sip one beer for very long). I heard they even asked some people to leave when they had a busy night and those people were there only drinking a couple of beers...whereas other customers were eating or drinking something more expensive. I don't know if that is true though. Paying for time separately would solve these problems...but I still think there is the missing element of "feeling like a guest" that would be disrupted by that for most people. And the majority is probably very big, since there are very few places where they charge for time or seats...or I'm wrong and there is yet another reason.

At 11:17 AM, January 12, 2014, Blogger David Friedman said...

"but I still think there is the missing element of "feeling like a guest" that would be disrupted by that for most people."

It sounded, from the article I linked to, as though the proprietor of the anti-cafe saw exactly the opposite situation. Charging for food make people not feel like guests, charging for time and giving the food away made them feel like guests.

At 12:59 AM, January 13, 2014, Blogger Tibor said...


Good point. However, my impression from the article is such that the place is not really meant for the usual sort of "restaurant goers". It is more like having another living room/kitchen in the city centre - you are even supposed to wash the dishes afterwards (although, probably noone is going to make you do that). What I meant by "feeling like a guest" was rather "feeling like a VIP" I guess. But it is true that this "third product" of a restaurant is probably more complicated than I thought, because different customers expect it to be different and it even correlates in different ways with the other two. Still, it seems from observation, that most of the customers, most of the time, prefer to feel like a "VIP" guest (I don't like that simile, but cannot think of anything better right now) rather than the kind of guest you are when you visit your friends. Also, this sort of establishment may have other difficulties (such as the ones that the owner mentions himself as reasons why it did not work so well in Russia) compared to the easier "traditional" model which make it rarer than it would otherwise be.

At 12:27 PM, March 03, 2014, Blogger Ze'ev Felsen said...

An article on this same sort of thing in Russia:


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