Airlines, hotels, public transport, and other industries do it, so why can’t cafés introduce surge pricing at busy times? Pablo & Rusty’s CEO Abdullah Ramay reveals why he doesn’t think hospitality customers are ready for peak pricing and suggests an alternative.
We’re all familiar with surge pricing. We all pay it, often without a second thought.
It’s a common practice in many industries such as airlines, hotels, holiday homes, public transport, and ride shares. And there are many more examples. It’s not that the cost of providing these services increases during peak times, it’s simply that demand is higher.
In cafés, costs do rise during busy times – both in terms of staffing requirements and equipment requirements. Plus, quality and wait times suffer. So, why can’t café owners charge more during busy times?
It’s not accepted in hospitality – yet. For the consumer, this concept may be too far for cafés and restaurants.
Imagine if your coffee was 20 per cent more expensive during peak morning hours and cheaper when it’s less busy. This could smooth the issue of uneven demand for coffee. Yet, this idea doesn’t sit well in the hospitality industry. Why? I’m not entirely sure, but this is seen unfavourably by many consumers.
In hospitality, it costs more to serve during busy periods due to staffing and other factors, unlike many other industries that do charge surge pricing. For instance, businesses have to put on two extra team members for half a day when they’re only really needed for two hours.
I’d love to see more daring establishments implement a peak surcharge, but there’s another option: reverse surge pricing.
Reverse surge pricing involves setting your regular prices a bit higher and offering discounts during slow periods. While the end result is the same, this approach seems more acceptable. Reverse surge pricing is about incentivising rather than penalising. It’s a great option to try for cafés that don’t want to rock the boat too much.
In conclusion, the lack of dynamic pricing in cafés makes little sense. It’s time to experiment with these ideas because the cafés of today are shaped by the thoughts of yesterday. To improve the cafés of tomorrow, we must think differently today.
Content originally published on the Pablo & Rusty’s website. For more information, click here.
