The Honor Box in Restaurants?
Wednesday, June 23, 2010 at 10:13AM Ever since, I visit the Freakonomics blog every now and then. This morning I read a short post that linked to a Salon.com article written by Tyler Cowen. He states that the "pay-as-you-wish" (honor box) model is a bad idea for restaurants.
I agree. Here's the comment I posted:
I have been utilizing a “pay-as-you-wish” system in my chiropractic practice since 2001. It is a system I call the Honor Box. I agree with Mr. Cowen that “pay-as-you-wish” would not work in restaurants. However, I think his reasoning behind his assertion is a a little off. He seems preoccupied with the psychology of the system and the “pressure to pay more” and the “need to feel like you’re being watched.” These are not strong indicators as to the potential of success or lack of success for this payment system.
The main reason and the reason which should have been emphasized more clearly by Mr. Cowen , is the inherent overhead costs. Radiohead can deliver an album over the internet and I can deliver a chiropractic adjustment practically for free. Not so with a restaurant meal. Factor in ingredients, staffing, etc. and it’s very easy to lose money with every transaction. Simple as that. If restaurants could tweak this system to ensure each transaction captures at least the overhead costs so there is no potential of losing money with a sale, then with effective marketing, the PAYW model could work.
What do you think? Can McDonald's go Honor Box? How about Ruth's Cris?
Reader Comments (1)
I know of two restaurants that do this. So All May Eat (soallmayeat.org) is in Denver and the St. Louis Bread Company Cares is out of Missouri and affiliated with Panera Bread. Interestingly, when discussing these restaurants, I always, always, ALWAYS use you as an example. As a former restaurant manager and someone who is familiar with the Honor Box, I'm terribly intrigued by the idea and would love to see it function up close.