Being in the restaurant business is difficult writes Tony Eldred. Competition is intense, rents are high, and the price of menu items haven’t risen much with inflation. In these circumstances restaurants have come up with innovative ways to continue to survive. They include:

• 20 years ago you used to get your meal on one plate. Now there’s a Lego set approach were you have a main and then side courses. This was a stealth-price rise.
• Then there was piling. The main course got smaller and was placed on top of cheaper ingredients such as cabbage. This was called art, but it was really about profits.
• People judge a restaurant based on the prices of its main course. This left restaurants free to raise the prices of beverages and deserts, although there was a limit even to this.
• Nowadays you see the rise of tasting or shared plates. The portions are tiny, the prices are high, but it appeals to the social media generation and creates a positive customer perception.
• Restaurants have also stopped taking bookings. Charging a deposit brings negative PR and no-shows are a revenue killer.

The entire article focuses on the Australian restaurant scene, and is a response to another article complaining about the state of the restaurant industry. You can read more including the actual margins of restaurants and how they compare to putting money in a fixed deposit in the bank, what we should really be paying for coffee, the rise of secondary meat cuts, and the experience of the author, over here.

Source: The Age

Via: Marginal Revolution