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For restaurant owners seeking to boost business, a push for better food, better service and better ambience is often the way to go. But a study from The Center for Hospitality Research at Cornell University suggests there might be a simpler way: change how prices appear on a menu.
The study, published last month, found customers on average spent 8 percent more when prices were in numerals with no dollar sign (20.) than in a dollars and cents format with a sign ($20.00) or spelled out (twenty dollars).
The result was a surprise to the study authors, who theorized the spelled-out format would yield higher spending, said Sybil Yang, a doctoral candidate at the university’s School of Hotel Administration, who co-authored the study.
“People who tend to be more price conscious, they’ll start adding up what their part of the check is going to be,” she said. “If you make that process a little more difficult for people by not presenting a number in Arabic numerals but rather as text, it becomes so much harder to add.”
Instead, the authors figured the dollar sign and the word “dollar” reminded folks they were about to spend money. The number format with no dollar reference took away that emphasis.
“The best way to increase the revenue is how to reduce the guest’s perception of, ‘We’re spending a lot of money,'” said co-author Mauro Sessarego, an associate professor in hospitality management at the Culinary Institute of America. “So if the guests are more free, more relaxed, they don’t notice, as much, the price.”
The study was conducted in 2007 during lunch at an “upscale-casual” restaurant at the institute in Hyde Park, N.Y. Guests were given largely identical menus, except for the price format.
Some local restaurateurs said they would consider making a change the next time they redesigned menus.
“There’s a lot of psychology – everybody has their own theory when it comes to putting a menu together,” David McMillan, a co-owner of Drunken Jack’s in Murells Inlet, said of the study.
Mike Zemke, the vice president of operations for Divine Dining Group, said an even numeral with no dollar sign could appear upscale and might not work as well in a destination like Myrtle Beach that markets itself as a budget resort. But price format is often discussed.
“Should it be right next to the item, should it be off to the right edge of the page, should there be a dollar sign in front of it or not?” he said.
More study is needed since the result could be different in other markets, types of restaurants and meal times. Although other factors like party size and table location affect spending more than price format, changing the numbers is inexpensive – especially if the menus are being reprinted anyway.
“If the food is good … if you have good service, that speaks so much to how much money you can make inside your operations,” Yang said. “This menu engineering, that’s really just gravy on the top.”