Glen Gould explains why a salad bar's decision to charge 40 cents for a muffin that used to be free backfires. Customers now see it as a cost to avoid rather than a bonus, likely hurting sales. He argues raising the base price by 50 cents instead would feel invisible and keep customers happy.
Hi, Glen Gould here. I just left a restaurant that I really enjoy eating at. I eat there about once a week and it's just a little salad place. It's nothing special. It is, it's special to me. I enjoy it. It's one of those salad places, it's not a salad bar where you fill your own plate, but it is a salad bar and they fill the plate for you. You tell them what you want and they do all the work and they'll add chicken or whatever. And the reason I like going there is because I'm able to get a healthy salad. I'm able to determine what I want and things like that. Like that. The price is right, and there's a little bonus. And this little bonus I get is a coconut muffin. I love the coconut muffin, and it comes with the meal. And so it's just kind of a little bonus. And sometimes I'm, I'm on a diet trying to eat healthy, and so sometimes I won't eat the muffin. I'll bring it home to my son, or I'll intend to bring it home to my son, and it'll get put in the bag, and then it never gets home. Or my wife might want it, or my other son might want it, whatever. But it's a bonus, you know. I'm just happy to have it. Well, today I think that this restaurant tour has made a critical error. I'd love to know your thoughts on what I'm about to tell you and how you would have handled it. Please put those in the comments section below. So when I walked in today, for whatever reason, it looked like there are more people working behind the counter, which I thought, great, you know, that, that's super, I'm going to get through here quicker because it's not the fastest place in town. But then on top of that, there are signs all along the food service area where you order your food, and these signs say coconut muffins are now 40 cents extra, and each person has I'm sure that they walked up to me and said, well, not each person, but several of the people, we're sorry, coconut muffins are 40 cents extra now, is that okay? They're obviously agonizing over the fact that the boss has raised the price by 40 cents. But he really hasn't. He hasn't raised prices at all. What he's done is, and I think the critical error he has made is, he's made an issue of a 40-cent muffin. And now everything's an issue. Now my meal with a bonus is just my meal, and I've got to decide whether or not I want a coconut muffin when I get there. And sometimes I'm going to want the muffin and I'll pay the 40 cents, and sometimes I'm not going to want the muffin and I won't pay the 40 cents. Just like sometimes I want a Diet Coke and sometimes I want an iced tea and sometimes I just want water. And so sometimes he loses out on the drink sale when I just want water, and so sometimes he's going to lose out on the coconut muffin sale. My approach would have been just to raise prices by 50 cents or 40 cents or whatever. Now the reason I say 50 is because The salad that I get is $7.25. If he raised it to $7.75, that's $0.50. I probably would not notice it. And if I did notice it, it would be a passing thing. You know, everybody raises their prices. Heck, you know, it's just, just fact of life. I wouldn't really think much about it. I wouldn't decide I didn't want my salad, my muffin, my drink, my whole experience over a $0.50 addition. It's not even 10% of the price of the meal. But what I would do is now I'm kind of going, well, do I want the muffin? Muffin or not. And so I think this restaurateur has lost business because he's decided to make an issue over 40 cents. I think he should have just raised his price. Now I don't have to think about it. Like, I don't have to think about it before, right? I get a bonus muffin. It's still a benefit to me, whereas now it's a burden. I have to think about it. So what are your thoughts? I'd like to know what you would do if you were the restaurateur and prices— you know, we're all under pressure. So in your business, there's increased costs at the vendor level, and increased cost of labor and all of those things. Eventually, some of those things have to make it to the consumer if in fact we're going to continue to offer the great products and services that they've come to rely upon. So what would you do? Would you raise prices? Would you just eat it? Would you do what he did and make 40 cents the issue over the coconut muffin? Or do you have some other idea? Share it in the comment section down below with us. We'd love to have you do that. If you like this content, please subscribe, pass it on to friends by the share button. We're doing this to help this whole community grow their business and get more life. So talk to you soon.
