Friday, June 6, 2008

Wood doesn't grow on trees, you know.

I just got back from my weekly lunch with my wife. Don't think I'm a cheapskate, because as with most things of this nature in Ukraine, it's not so much about the money as it is the principle.

As Ukraine watchers know, Ukraine is going through a serious inflation problem. Prices rose about 30% here since January, on top of 16% for 2007. Plus the National Bank of Ukraine recently lowered the official hryvna-dollar exchange rate by about 4% UAH 4.85/$1, strengthening the hryvnia to fight this inflation. Anyway, the point is that consumer prices for everything are rising.

My wife and I usually eat at a Japanese restaurant in her building. Although there are more expensive restaurants in Kyiv, it is a relatively "upscale" place. Our lunch usually runs about $30 and we don't eat a lot. Today I ordered sushi (chopstick food) and my wife ordered grilled salmon (fork and knife food). When we get the bill, I found something on the bill I didn't recognize and when we asked, we found out that we were being charged for using two sets of chopsticks. Yes, it was itemized on the bill - UAH 6 for two sets. We just started laughing. On top of that, my wife hadn't even used her chopsticks. When we asked the manager about it, she said that it is due to inflation costs of the sticks. Mind you, these are disposable wooden chopsticks. The kind you'd get from any carry out.

We'd actually experienced this type of pricing system years earlier while visiting relatives in a smaller city, Mirgorod. At this restaurant, they charged us for lighting the candle on the table. No, it wasn't a "special" candle or a request on our part. It was the same candle that was on all of the tables. And, of course, the lights were turned down very low so you actually needed the candle to read the menu.

As for the chopsticks, I know we're talking a whopping $1.20. What's the big deal, right? The big deal is not so much the cost, but what this says about the brand to a customer:

First, it tells me you are greedy. I'm no restauranteur, but I doubt a pair of chopsticks is a significant cost to you. A quick check on eBay shows me I could buy 400 pairs of chopsticks for $10 ($0.025/pair). And I'm sure a restaurant could get a volume discount and a cheaper source. Therefore, you are not merely trying to recoup increasing costs, you are trying make more profit off of me - at 1000% margin no less.

Second, it tells me that you put little value on my loyalty. In this case my relationship with your brand is worth less than $0.03 to you.

Third, it tells me that either you are stupid or that you think I am. The clientele in this restaurant are well-educated business professionals. You don't give us enough credit to know that two 8" pieces of cheap wood cost less than $0.60? Or is it that you, Ms. Manager, don't know?

Fourth, you don't understand me. Yes, I come because your food tastes good and I can (almost) always trust the quality. I also come because it makes me feel somewhat classy and cool. By using a pricing technique practiced by low-priced holes-in-the-wall you ruin that experience.

Now, we took this somewhat in stride, but if we (a regular customer among many) decide to go somewhere else (which we could easily), or let's say to fair just skip one meal in protest (which we're considering), the restaurant has lost at least $29.95 - a $30 sale to save $0.05 right off the bat. And if we find a more inexpensive place to have our lunches (which there are many alternatives) the cost goes up.

In management's defense, I don't think they've raised their menu prices (yet). It seems to me a very small increase in menu prices would be more acceptable alternative for diners, and might even bring in more money. Most of the customers can probably afford to absorb it. Maybe there are other costs to this alternative, but I have a bad habit of giving Ukrainian businessmen here the benefit of the doubt. The only cost I can see now is to reprint the menus.

But if inflation continues eating into this restaurant's profits, I suggest charging for the following overhead items:
  • Use of other eating necessities like plates, forks, spoons and knives.
  • Use of soap, hot water to wash the aforementioned.
  • Each paper napkin used.
  • Soy sauce and other garnishes. (Don't laugh, this some places actually do charge extra for lemon and sugar packets for your tea, ketchup and mustard. McDonald's even used to charge for extra barbeque sauce with your McNuggets.)
  • "Pay-per-use" pricing in the restroom (e.g. per trip, toilet paper sheet, squirts of soap, paper towels, toilet flushes). Again, the paper-per-sheet thing is practiced in some public restrooms).
  • Additional charge for a smile or thank you. That requires energy and training costs, you know.

Hey, I think I just came up with a new concept - "bring your own" dining.


JabbyPanda said...

That's hilarious.

It is like cheap airplane flight handling approach.

Entry is free, for an exit you have to pay.

Your RSS feeed at Feedburner seems to be broken, cannot subscribe :(

Anonymous said...

The same story with plastic bags in supermarkets in Ukraine. I can not understand why they are charge for them? The positive side of being charged for bags and chopsticks is that you become more 'green' thinking person - I've buy nice looking shopping bag in Stockholm and now avoiding stupid charges and Earth pollution.

You need to get your own personal chopsticks and save trees :)

/ Vadim Utkin