4 Tricks Restaurants Use to Make More Money

This is a guest post from my online buddy Robb Engen. He writes over at Boomer & Echo, as well as contributes to Moneyville.ca. I love his look at some of the ways restaurants try and squeeze a little more out of you. Personally, even knowing this, I still like to eat out — I enjoy the experience.

We all love going out to eat to enjoy good food and wine with our friends and family.  But when you go to a large chain restaurant, keep in mind that it’s a business and their aim is to boost the bottom line at the same time they’re creating an enjoyable evening out for you.

When I worked in the hospitality industry, I learned a few different techniques to get customers to spend more on their dining experience. Here are a few tricks restaurants use to get more money out of your wallet:

Menu engineering

The menu is the place where people choose their meal so a lot of time is spent trying to items more profitable.  The uses of shaded boxes and borders around items on the menu are designed to catch your eye and can increase sales by 25 per cent.  The word, ‘special’ or ‘new’ can increase orders by up to 20 per cent.

Often these highlighted items are dishes with the lowest food cost which means they may not the best value for you.

Each menu item is priced according to its cost.  Most restaurants want to keep their food cost below 30 per cent.  However, you won’t see oddball pricing of $19.31 simply because it fits a formula.  Customers don’t perceive a difference between $19.31 and $19.99, so the restaurant raises the price and the extra 68 cents goes to the bottom line

Up-selling

In the hospitality industry, more emphasis is placed on training employees to become better sales people.  The waiter, hostess, and bartender become extensions of their sales and marketing team.

Now up-selling has become the industry standard, as side dishes, appetizers, desserts and drinks all help build a higher average cheque per customer.

Your server is trained to ask if you want to add mushrooms or prawns to your steak dinner, or to try a specialty coffee with your dessert.  Some restaurants expect their servers to suggest bottled water or Perrier when you ask for water, and offer a bottle of wine instead of the two glasses you asked for.  The best servers take every opportunity to up-sell you on an item.

I had to say, “no thanks”, at least a half dozen times during our last restaurant experience.

Buffets

Buffets aren’t a big money maker for most restaurants, which means they likely offer the best value for you.  Still, a good restaurant can find ways to make money on their buffets.

Restaurants use smaller plates on their buffet line, which reduces the amount of food you can take at one time.  The buffet line starts with an assortment of low-cost breads and salads to fill you (and your plate) up faster.

Drinks

Some restaurants can even find savings with the smallest of items.  Take drinking straws, for example.  Your non-stop pop might come with the thinnest straw possible to help slow down your consumption.  On the other hand, alcoholic beverages usually come with a big fat straw so you’re able to drink much faster.

What other tricks do restaurants use to make more money from you?

Robb Engen writes about Canadian personal finance at Boomer & Echo. Together with his mom, (she’s the Boomer, he’s the Echo) they offer their own unique perspectives on saving, investing and personal finance.

Image source: Al Jazeera English via Wikipedia Commons

This post was included in the Carnival of Personal Finance at the THE Canadian Personal Finance Blog.

Written by Contributor

I'd love to review a contribution from you. If you want to contribute to this blog, review the Contributor Guidelines. Keep in mind that I prefer topics related to investing, finance, home business, and freelancing. Email me through the contact form.

49 Responses to 4 Tricks Restaurants Use to Make More Money

  1. Dianna says:

    Great article.
    Percent is one word, and you’re missing a word or two in the opening paragraph.

    • Robert says:

      Per cent is two words in Canada, where this article originated from. Why not just stop at “Great article.” No one appreciates a self-important asshole.

      • Steve says:

        The self important asshole always appreciates himself

      • Clif Rue says:

        Why not just stop at “Per cent is two words in Canada, where this article originated”
        Why lower yourself to name calling? Shall I point out your poor grammar by ending a sentence with an unnecessary preposition? I believe Dianna was trying to help the author as opposed to being a pedant.

        • Steven says:

          @ Clif +1

        • Stargazer says:

          Good answer, Clif. Dianna was trying to be helpful, and those people who try and hide their ignorance by attacking back with rude comments just show their true colors.

        • Dianna says:

          Thank you Cliff. I was merely trying to make sure his article was given the proper attention, because the subject matter is important, and the mistakes will make it easily ignored.
          I was not aware that this article originated in Canada, but I’m not a fact checker, I’m a reader. These are issues for the writer and the fact checker and the editor.
          Had the missing words not occurred, I’d have ignored the spelling questions.
          The name calling just erases their credibility anyway.

      • Dianna says:

        More importantly no one appreciates poorly written pieces, or offensive responses.

      • Chris says:

        ha ha…

      • kv says:

        ‘Asshole’ is two words’)

    • Jennifer says:

      Diana has one n.

    • Echo says:

      Hi Dianna, thanks for your comment. When I write for Moneyville, their style dictates that I write per cent rather than %, and 68 cents rather than $0.68. It’s become habit now.

      • Dianna says:

        Thank you Echo, I did not know that.
        The missing words, made me look for more unfortunately.
        Your content was very informative and helpful, I did not want it ignored because of minute details.

    • Steve says:

      Percent is written as one and two words; both ways are acceptable

  2. sir jorge says:

    wow, well now i know, i’m going to have to remember this next time i’m out to eat

  3. Andrew says:

    Spelling and missing words matter for credibility. Also, all businesses are established to earn a profit. Up selling and tricks like the straws are no different than other businesses ploys to make more MONEY.

  4. Alex Pierce says:

    The omissions in the first paragraph imply an absence of attention to detail–not only in the writing but, perhaps one thinks (by extension), in the information itself. My first reaction was that Dianna wanted simply to help strengthen the credibility of the article by pointing this out.

    By contrast, my reaction to both replies is that both men possess touchy little egos that mistake a helpful comment as ‘self-important.’ Ironically (or not), no one is as self-important as one who uses foul language in lieu of intelligent criticism. In this case, though, expecting that would be like expecting swine to bathe.

    About the info offered: Having worked my way through college in the hospitality food industry as a waiter, short order cook, assist. line manager, etc., and having done some reading about nutrition, placing salads first–or serving them first at any meal–is thought to insure better digestion of the rest of the meal.

    Moreover, anyone even remotely involved in the restaurant industry knows that profits are razor thin; hence the importance of portion control, as well as pitching foods with lower costs, upselling, etc.

    Just once I’d like to see an article for the general public that, instead of an exposé on the so called ‘trickery’ of businessmen (& these revelations, so called, are as old as Methuselah), instead explores the costs, the obstacles and the struggles necessary to make a business successful–and then offers a few suggestions to improve the odds.

    But that would take more than a few paragraphs rehashing what’s been already written and then passed off as “tips.” Speaking of hype, cheaper fare, fillers and upselling.

    Guess irony can be pretty ironic at times.

    • Echo says:

      @Alex – Consumers deserve to know how a business makes money, whether that’s a bank, financial advisor, or restaurant owner.

      Everyone goes out to eat, so they can relate to the fact that some restaurants can go overboard with the upselling and cost-cutting.

      I doubt restaurant owners are lining up to take courses from John Taffer (http://tafferdynamics.com/products.html) to ensure better digestion of their meals. They want to make more money.

      • Tim Howell says:

        That’s a pretty generalizing statement, don’t you think?

        The restaurant industry is a line of business that operates on little-to no profit, all while dealing with customers complaining about already under-priced service and food. You aren’t doing people any favors by insisting that restaurants are tricking them. You are simply giving entitled diners more ammo to use against already struggling restauranteurs.

        You also seem to be jumping to a lot of conclusions, while ignoring obvious logic.

        For example: Salads are offered on buffets because customers expect them. Salad has been served before the main course as part of basic etiquette for centuries. Customers aren’t forced to eat a salad, and those that do are usually loading their plates up with expensive fruits, condiments, and cheeses.

        After 15 years in the restaurant and catering industries, I’ve never met a single owner that purchased wider straws to sell more cocktails. It sounds like you are extrapolating industry practices from a few personal experiences with greedy owners. Since when did “once worked in hospitality” translate to “restaurant expert?”

  5. Michelle Jordan says:

    There is no trickery involved when suggesting upsells and the such. Restaurants are in business to make money. Plain and simple.

    We restaurants have little room for falling below our projections. Food cost and labor are our two biggest expenses. Most everything is fixed. If a restaurant sells $10,000/week in sales then their variable expenses are anywhere from 55-65%. Which leaves only 3500-4500/week times 4 weeks/month to meet all the other fixed expenses. Rent is usually a restaurateurs biggest expense followed closely by various insurances required by law.

    Another reason that servers upsell is to put more money in their own pockets. Servers make around $3.63/hour plus tips. I know many people criticize restaurants for paying this low wage. We pay the low amount because it would IMMENSELY increase labor percentages based on sales. Then your food would cost even more on the menu. If your per person cost without drinks or appetizers or desserts is $15/head and every person orders a soft drink and then an appetizer or dessert to share, then the per per person check average would be closer to $20/head. A 15% tip on $30 is $4.50. A 15% tip on $40 is $6.00. Based on a server serving ONLY 20 people per shift this puts another $15 in his/her pocket per shift. If a server works 7 shifts a week this results in $105 more dollars in his/her pocket per week with translates to over $5000 a year. A good server KNOWS these numbers. They are trying to feed their families too.

    There is SO much more to say, but nearly enough time to do it.

    SO- in defense of us TRICKY restaurant owners, order a soda, order a dessert, make a memory with your family and have a good time!!

    michelle

    • Echo says:

      @Michelle – I can’t speak to the labour costs in the U.S. Here in Canada, servers must make minimum wage, which is $8.80/hr where I live in Alberta.

      I certainly didn’t intend the post to read that all restaurant owners are ripping off their customers.

      All the tips mentioned in the article were things we did in our own restaurants to ensure growth and survival.

      As a consumer, I always find it interesting to hear how different industries make money. Usually, if it’s a good deal for the business, it’s probably a bad deal for the customer.

      • Alex Pierce says:

        “Consumers deserve to know how a business makes money, whether that’s a bank, financial advisor, or restaurant owner.”

        Why? Unless it’s a criminal enterprise.

        If you like their product and determine it’s a value to you, buy it; if not, don’t.

        People who want to know how businesses make money generally think ‘profit’ to be some sort of sleight-of-hand theft, a trick which they hope to expose. Hence the giving-back-to-the-community scam; the community had nothing taken from it; indeed, a business is a wealth producer and the community reaps the benefits of that. As far as giving back, the community got that when they bought the business’ service or product.

        “Usually, if it’s a good deal for the business, it’s probably a bad deal for the customer.”

        Speak for yourself, as I think you are.

        That sort of thinking, applied to capitalism, is generally based on the inability to distinguish between political power (force) and economic power (choice).

        Of course, in a welfare, socialist or fascist state, there is no separation of money & state. This insures, instead of an economic system based on profit (merit), a political system based on pull. As you have in Canada–and we in the U.S.

        Under genuine capitalism, though, if it’s bad for the customer, it’s bad for business.

        And if you don’t believe me, Echo, try running a business that way. Oh wait, you did say you *used* to run a restaurant.

        Perhaps your statement, then, is an admission, rather than an insight.

        Then put it honestly, if in reverse: I ran my business based on the belief that if it’s a [bad] deal for the business, it’s probably a [good] deal for the customer.

        I ran my own based on this: If I offer a great value to my customers, they will make me rich.

        As indeed they did.

      • Tim Howell says:

        “I certainly didn’t intend the post to read that all restaurant owners are ripping off their customers.”

        If that was the case, you should probably avoid lines like, “Here are a few tricks restaurants use to get more money out of your wallet,” and “What other tricks do restaurants use to make more money from you?”

        Don’t try to make a few quick website hits off of a smear article and then play victim.

    • Alex Pierce says:

      Bravo, Michelle! (Note Echo’s quick back pedaling–like a pickpocket caught in the act.)

      This sort of ‘essay’ is intended to smear business and has nothing to do with actually assisting the consumer in making intelligent, informed choices. (If it were, it would be much more infomative.)

      Nor with explaining to the general public how a good business operates.

      It’s not surprising he’s the son of a Boomer–perhaps (and I am unfortunately part of that generation) forever to be known as The Cupidiest Generation. (Yeah, it’s a neologism (I think); but it fits.)

      Now I think I’ll go have that soda and make a memory. Cheers, Michelle. ;o)

      • Echo says:

        @Alex – did you even read the opening two paragraphs of the article?

        • Marie says:

          what a self-important idiot that alex pierce is. good on you, echo, for pointing out that these are what YOU learned, not something carved in stone. if people can only chill out more, try to enjoy reading the article and not nitpick, then the comments section won’t look like a battleground of humongous egos.

      • Charles P. says:

        If the written intent is true then how is this ‘smearing’? While I do think that this thing is poorly written and very incomplete, it does have some value in allowing some people to get more for their money. Lots of consumers like that and would agree that this information will allow them to make more informed choices.

    • Gene says:

      Restaurants pay servers $2-3 an hour, but if tip income is insufficient to raise the server’s wages to minimum wage, the restaurant must pay minimum wage.

  6. Emerson says:

    How about the recited daily specials with no prices?

    • Echo says:

      @Emerson – yes, this is also very sneaky. The daily special or feature should at least be included as a menu insert so customers know what they’re in for.

  7. Jason says:

    Wow, you took a ton of heat for this article.
    The article pointed out what it needed to, was hoping it would of brushed on some of the things I already didn’t know. I like that you respond to they replies.

  8. Simon says:

    Good point. Those are the basic and not very obvious things actually. Eating in a restaurant will surely cost you more, so expect high priced food and drink.

  9. Lisa says:

    The authors choose to use emotionally charged words like “trick” and “squeeze”. Those set the article up as confrontational.Chain restaurants are mentioned but every restaurant does this including the mom and pops. So does every company that sells a service or a product.” Need socks? An extended warrenty? Extra leg room?” Is it a ploy? Maybe.Or maybe not.Say yes if you want something or say no if you don’t. Is that so hard?

  10. Gerard says:

    I’m surprised by all the negative responses to the piece. A restaurant is a business, and chain restaurants can afford to hire consultants to help them get more money out of us. We have the right as consumers to learn to recognize the tricks that are being used on us, in the same way that we can learn to say no to extended warranties and other sketchy upsells.

  11. WOW Miranda, the comments on this post are almost as good as the content in the article!

    On the rare occasions that I do eat out, I like to think I’m pretty good at avoiding typical restaurant tricks. I always order water. I don’t order appetizers or desserts. I read what’s in a menu item before looking at the price, whether it’s on special or what the name even is.

  12. Nora says:

    Tricky tricky. Why is it so hard to just go in and order some yummy, healthy food and be on your merry way?

  13. escruz says:

    Well, he accomplished what he was trying to do which was, having a discussion. Well done Echo.

  14. escruz says:

    When I go out to eat with my kids , we order everything we want to eat and we don’t care about tricks.
    I worked in the restaurant business for over 25 years and I appreciate what the cooks and the wait staff have to go thru to make a living.
    I always ask my wait person for suggestions and usually buy whatever they suggest.
    They are always making sure that I am happy because they depend on me being happy for a great tip.

  15. Jana says:

    Some of the comments here read as if the restaurants are somehow cheating us. No one is forcing you to eat out. Simply put: eating in a restaurant is a luxury, not some kind of basic right. If you can’t afford to eat out, don’t. It’s pretty simple.

  16. MomofTwoPreciousGirls says:

    The key here is that people have choices. If I’m short on cash or on a budget, I don’t eat at a restaurant. I have my own tricks to save too.

    The tone does sound a bit like an attack on the restaurant business, although it was written from the experience of the author.

    The idea that the businesses are “tricking” people just adds to the “business is evil” rhetoric that is getting in our economy’s way to growth. If a business has a product or idea that people want and are willing to pay for, the business deserves whatever profits they earn based on what people are willing to pay for.

    What was most hypocritical about a lot of what I saw in the occupy movement was everyone saying how evil the big corporations are, and then having no problem walking into those businesses (like Starbucks) and plugging in their iPhones, iPads and MacBooks. They were willing to come up with the money to pay for those items and associated monthly fees crying about how broke they were. What people consider poverty is very different from what it used to be.

  17. I have a wonderful Italian restaurant and my specials are special because my clientele knows that they excpect more from me on my special cause they are more expensive or just the right price sory but just me honest all the time and ur customers will always be happy

  18. Leo De Bruyn says:

    What is this all about folks? I go to a restaurant to eat. It is my choice, I don’t have to listen to what the waiter says. If I like what I hear and appeciate the price, it is my choice to buy it or not. Restaurants must make money, if they have a way to get more out of me, it is still my choice. Let me eat and spend what I desire and be glad that you too have a choice to eat whatever you want at whatever cost you are prepared to pay.

  19. Leo De Bruyn says:

    Does anyone ever read this site?

Leave a reply

Headline Name: Email: subscribed: 0 We respect your privacy Email Marketingby GetResponse