Sunday, March 9, 2008

Divide and conquer?

I hope you can hear me over all that fiddling. It’s that damned pack of economists, wailing away as they watch the business climate soften like an overripe peach. They’re more concerned about declaring a recession at precisely the warranted moment than they are about the meltdown already evident in industries like the restaurant business. It’s a good thing the trade is taking matters into its own hands. While the Brooks Brothers set jams away, restaurateurs are trying R-word remedies like this recent phenomenon of adding more pricing tiers.

If you stop by an Au Bon Pain bakery-café right now, you can forego the usual salad or sandwich and economize a bit with one of the regional chain’s new small plates. But your options don’t end there, or even with picking which of the 14 new Portions you’d like. Go for the hummus and cucumbers, and you pay $2.99. Trade up to one that includes meat, like the Thai peanut chicken, and you’ll have to pop for $3.49.

In another economic climate, might the fast-casual chain not have bothered to create two pricing groups a mere 50 cents apart?

Similarly, if you wanted to trade up from fast food to a full-service breakfast, Denny’s has just the option for you. Or options, really. Try one of its three new “real” breakfasts (as opposed to the “fake” ones purportedly offered by quick-service restaurants), and you’ll pay $5.99. But each has a trade-up option: Pay a buck more, and get a few add-ons—another bacon strip, sausage link and hash browns, maybe.

The notion is certainly not new. It’s a staple of the industry to offer a soup or salad add-on for a slight bump in the price of an entrée.

But the tactic seems to be gaining momentum, and sometimes with a twist. In the standard version, you offer a lower priced option, like Quiznos’ $2 Sammies sandwiches. In some instances, even that price is segmented, into Bargain and Bargain Plus.

Perhaps the poster concept is Starbucks. Once upon a time, the coffee king offered its drinks in three sizes, in prices ranging from high to stratospheric. Now the chain is testing a $1 “short” option that comes with free refills. Some stores are also experimenting with coffee made in a press pot, priced at more than $2. That price falls between the charge for a standard cup of Coffee of the Day and the usual hit for premium espresso-based drinks.

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