28 October 2008

Asymetric Information: Menu Edition

Why is it that menus always list the price of food and wine, but rarely do so for other beverages? I even see a lot of happy hour adverts on bar web sites or on tables in restaurants that say things like "all cocktails $2 off" without telling you what the $2 is being taken off of. Anyone know why hiding the prices of (non-wine) drinks is common?

1 comment:

  1. I suppose you and I already have a similar answer to this question and it has to do why there are no clocks in shopping malls or casinos and why the highest priced food items in the grocery store are on the eye-level shelves.

    Removing prices from both soft drinks and beer/cocktails equates them in the mind of the consumer. You're going to get a beverage, we know that already, you might as well get the Heineken as the Coke.

    I think the proper question here is, why put a price on the wine? And I think the answer is because of wine's elite status. People unfamiliar with wine don't know there are cheap wines. So you give them wine prices to persuade them to upgrade to it. With the right buyer on staff you can really knock up your margins on wine selling cheap wines at moderate prices that are still "cheap" to an unfamiliar consumer.

    Of course, I'm just guessing. It could be about just remaining flexible. When I worked fast food they used to tell us that the sodas were "90% profit" so we should always push people to buy a soda. So maybe they keep the prices on those items off the menu so they can better control the high margin wares. Lot of soda in the backroom about to go south? A lot of Bud Select leftover from that crappy Colts game last night? New prices to move old stock without that pesky menu acting as an obstacle by announcing higher-than-actual prices.

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