The CSR Newsletters are a freely-available resource generated as a dynamic complement to the textbook, Strategic Corporate Social Responsibility: Sustainable Value Creation.

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Tuesday, November 24, 2015

Strategic CSR - Pay What You Want

The article in the url below represents an exercise in economics, psychology, and humanity:
 
"Zod Arifai, a local chef [in New Jersey], is offering customers a menu with no prices for the month of August, encouraging them to order as many dishes as they'd like at his two side-by-side restaurants. When diners signal for the check, servers ask, 'How much would you like to pay?'"
 
The exercise (which was prompted when the chef decided to close his restaurants and wanted to thank the local community for their support) raises the complex set of emotions and rationale that govern the purchase decisions that we make:
 
"With no price guidelines -- such as a museum's 'suggested donation' -- the offer compels diners to gaze inward and develop ad hoc criteria, in order to look a fresh-faced server in the eye and announce the meal's value. … Consumers like to see themselves as 'fair' and even generous, but also want others to see them as 'prudent and not a sucker.'"
 
The restaurant is reporting mixed results from the exercise. While there are some customers wanting to pay the full value of the meal (as much out of concern for the servers as the chefs), there are others who try to take advantage of the opportunity:
 
"… at least once a night, the staff gets a bad taste — such as from the 'young, smug' table of five that ordered 25 dishes, paid $15 and left a $5 tip."
 
Not all those seeking to take advantage of the opportunity are being mean-spirited, however:
 
"… another family left a thank-you note with their modest amount. 'The food and service was worth way more than we were able to leave.' It continued, 'As a kid in college and a mother doing inconsistent freelance, without the deal we wouldn't have gotten the chance to come.' … And then there was the customer who somehow manned both ends of the bell curve : He took advantage of Mr. Arifai's generosity, even as he expressed concern about the server's pending unemployment. The solution? He left $5 for the food and a $50 tip."
 
As a result, the restaurants' owner feels as though the exercise in trust has been worthwhile:
 
"Profit aside -- and it certainly will be -- Mr. Arifai considers the endeavor a success. 'I've learned that humanity is not as bad as we think,' he said. Yes, 20 percent are paying less than a dollar a dish. 'But 80 percent are not.'"
 
Happy Thanksgiving everyone!
David
 
David Chandler & Bill Werther
 
Instructor Teaching and Student Study Site: http://www.sagepub.com/chandler3e/
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/
 
 
Pay What you Want? Joy, and Guilt, for Diners
By Jan Hoffman
August 18, 2015
The New York Times
Late Edition – Final
A1