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Licensed Unlicensed Requires Authentication Published by De Gruyter July 15, 2010

Kish: Where Customers Pay As They Wish

  • Ju-Young Kim , Martin Natter and Martin Spann

New restaurants often do not manage to succeed within a reasonable amount of time. Exotic restaurants especially face the problem that price promotions may not attract new customers because prospective customers might associate very low prices for unfamiliar food with a high functional risk. This paper describes how Pay-What-You-Want (PWYW), a new pricing mechanism, was successfully implemented at Kish, a moderately priced Persian restaurant in downtown Frankfurt. After the initial testing phase, which had the characteristics of a promotional offer, the restaurant decided to permanently offer its buffet lunch under PWYW conditions. We report the long-term effects of this decision as well as a simulation demonstrating that profitability is mainly based on 'trading up' the continuous inflow of new customers to the more profitable dining offer where prices are fixed.

Published Online: 2010-7-15

©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston

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