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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.

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Chinese Restaurant Allows Patrons to Pay What They Want, Is Obviously Losing Money

A small, self-service restaurant in China’s Fujian province runs on a unique concept – no bills! The owner expects diners to pay whatever they think is the true price of the meal. Predictably, many people don’t pay anything at all.

The restaurant, called Five Loaves and Two Fish, opened this August in downtown Fuzhou. It is named after the story of Jesus feeding 5,000 people by multiplying fish and bread. Patrons are required to wash their own plates and bowls after eating, and place money in a drop-box before leaving.

50-year-old interior designer Liu Pengfei, the majority investor, said he got the idea for the restaurant after heard about the ‘suspended meals’ projects in some countries. These projects allow people to pay in advance for a beverage or meal, for someone who really needs it. “Hearing about it, I was deeply moved,” Liu said. “I felt a heartwarming sense of trust because of it.” And that’s the concept Five Loaves is based on – trust.

While the concept sounds really amazing, things aren’t exactly going as expected for Liu and his team. According to Peng Yong, chef and co-investor, around 20 percent of diners walk out without paying anything. The restaurant has been running losses – 250,000 yuan ($41,170) – even though it is packed every day. Just maintaining the place, which is located in a central location, costs 60,000 yuan a month.

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