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Chinese Restaurant Adopts “Pay What You Want” Policy, Loses $15,000 in a Week

A naive restaurant owner in Guiyang, China, who thought that appealing to people’s inherent goodness would be a good way to attract customers to his new karst cave-themed restaurant, managed to lose over 100,000 RMB in just seven days.

Liu Xiaojun and his two business partners did the math, and decided that promoting their new restaurant by applying the now-famous “pay what you want” policy would be a good idea. Choosing to ignore the disastrous experiences of other restaurant owners who allowed customers to pay what they wanted for the food, the three simply assumed that the vast majority of customers would be rational and fair. They were wrong.

To be honest, their idea wasn’t a total failure. The news that they could order as many dishes as they liked and pay whatever they wanted for them attracted lots of customers, but many of them paid only 10% of the cost of their meal, while a few even dared to leave just 1 RMB (¢15) on the table. In just seven days, the restaurant had incurred losses of over 100,000 RMB ($15,000) and the promotion fell apart. Following the disastrous result, the three owners got into a serious argument and one of them left the city, vowing never to return again.

“If our food or service was the problem, then that would be one thing,” owner Liu Xiaojun told The Paper. “But according to customer feedback, our dishes are both filling and tasty. It’s just that the payments don’t match up with the evaluations.”

But it turns out that people didn’t really think that Liu’s food was actually good enough to pay for. While his cave-themed restaurant used to be full during the week-long “pay what you want” promotion, customers evaporated as soon as it ended. As of 4 p.m. on on the first day after the promotion fell apart, not a single paying customer had walked through the door. “It makes sense that people like to eat food and not pay much. I just don’t understand why they haven’t come back since the promotion ended,” Liu complained.

Three years ago, we reported on another Chinese restaurant that adopted the “pay what you want” policy as a way of challenging China’s notorious lack of trust. It lost 100,000 RMB in a month. Liu’s recent experience suggests that things haven’t improved at all since then. If anything, they’ve gotten worse.

via Shanghaiist, People Daily