Sunday, July 13, 2008

Restaurant Inefficiencies

Bryan Caplan recently posted that because patrons are not charged for their water or the time they occupy their table, there is an inefficiency in the restaurant industry. In my opinion these inefficiencies are relatively small. If they were larger the highly competitive restaurant industry would already have worked them out.

There is one restaurant inefficiency which I am still trying to figure out. Prices convey information about goods; the prices in menus help guide diners' choices in meals. However, there is one price that never shows up on the menu: the price of beer. It would cost almost nothing extra to print prices by the brands of beer offered, and supply customers with extra information regarding their dining options, so why aren't beer prices listed.

Though beer prices and other alcoholic drinks are generally listed without prices, there is one category of drink where prices are always listed: wine prices. In fact, wine usually gets its own separate menu with its own prices listed. At some lower class establishments, I've even seen unpriced beer listed at the bottom of the wine list-- but you bet every wine had a price next to it. What makes wine different from Beer?

The only thing I can think is that restaurants would prefer to not list prices for any alcoholic beverage to disguise their extreme markup. Beers have national advertising campaigns to create product branding. People know Sam Adams will be more expensive than Budweiser because their commercials target different types of consumers. Wines, however, vary in quality by vineyard as well as year, and there are few national ad campaigns. Aside from price, the only wine quality question I can think to ask is, "does that one come in a box?". That is not to say that there are not vast differences in wine quality, the problem is simply how to convey this. The casual diner needs prices to inform him of wine quality, while beer companies ensure that diners are informed of this on their own.

Any other thoughts?

As a side note, I was once given the tip for impressing a date: when the sommelier comes, show him the wine list and ask him what he would recommend -- with your finger pointing to the cheapest wine on the list -- if the guy is worth anything he'll take the hint and you'll look like a stud. Conversely, you can call the waiter to your side of the table, point to the cheap wine and say we'll go with this one. When your date asks what you ordered, just say it's one of your favorites. The key to this, is making sure the wine list gets cleared before the wine is served. Hey, not everyone needs to know the price of things.


Josh Knox said...

It looks like Steven Levitt agrees with my taste in wine.

mknox said...

Your guess is as good as mine. The fact that there are usually many more wine options supports your argument. Also, wine has more snob appeal. Perhaps published prices play into the need for the ego boost that comes with having "refined taste."

On another note, you shared pretty suave tricks, but I think going out to eat in itself is a treat. Water- just water- however inefficient for restaurants, is great for me!

Josh Knox said...

RI made MR!!! -- this is probably a high point for the blog.

J P Knox said...

Very seldom do you get the same wine, twice.
Very seldom do you NOT get the same beer, twice.
Price is essential to making a choice of wine. Flavor is essential to making a choice of beer.

Compared with the totality of knowledge which is continually utilized in the evolution of a dynamic civilization, the difference between the knowledge that the wisest and that which the most ignorant individual can deliberately employ is comparatively insignificant. ~Fredrich Hayek in The Constitution of Liberty