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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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