Gotcha: Why I won’t go back to Olive Garden …

For a measly 2 bucks, they lost me as a customer.

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In class, we cover Customer Lifetime Value – the math that captures a basic truth: businesses are better off getting repeat business from loyal customers than by gouging them on a single transaction.

Apparently, Olive Garden – which used to be one of my favorite chain restaurants — missed that class.

Yep, for a measly 2 bucks ($1.99 to be precise) they lost me as a customer.

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Here’s what soured our “relationship” ….

 

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The short story

Olive Garden (and many other restaurants) have put tablet computers on their tables.

At Olive Garden they’re called Ziosks … the name of the tablets’ manufacturer.

The tablets allow diners to search menus, place orders, play games and pay bills.

And, they increase a restaurant’s productivity by speeding order processing (think: turning tables over more quickly) … and eliminating servers’ busy work (like taking orders). English translation: fewer employees required.

So, far so good.

What’s the rub?

When we got our bill, there was a $1.99 charge tacked on: a “table game fee”.

Say, what?

The server said “there’s a charge for playing games on the tablet”.

“We didn’t play any games!”

“Sorry, the machine says you did.”

Hmmm.

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A few details

A member of our party got curious and leafed through the tablet’s tabs: menu, order, games, etc.

She didn’t play any games. She just hit the tab to see what was up.

Most important, she didn’t authorize that any charges be added to our bill.

In fact, she wasn’t prompted to authorize the charge.

Too bad.

Hit the tab, pay the price.

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A profit scheme

As Navin (Steve Martin) said in The Jerk: “Oh, it’s a profit scheme.”

A quick Google search revealed that I wasn’t the first person to get upset — there have even been class action law suits and local ordinances passed … (for sources, start here)

You, see, it’s all by design … applying some classic (albeit sleazy) marketing principles.

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An “attractive nuisance”

In law, there’s something called the Attractive Nuisance Doctrine.

Paraphrasing, a landowner may be held liable for injuries to children trespassing on the land if the injury is caused by an object on the land that is likely to attract children.

Make no mistake about it … the Ziosk tablet is targeted at 2 groups: teens (& twenty-somethings) who must electronically fidget at all times … and kids. Source

An attractive nuisance, for sure.

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Separation of user & payer

This one is simple.

A kid doesn’t pay the family’s dining check.

So, they’re what marketers call “price insensitive” … to them, it’s a free good.

Parents – who do pay the bill – are certain to be more price sensitive than their kids.

They may think that the gaming fee is worth the price … or not.

But, they don’t get a choice, because …

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Authorization by Default

At Olive Garden, when you land on a premium splash screen, it looks pretty innocuous … just a menu of enticing games.

There’s no message that says “ha-ha, we got you … pay up”.

There’s no message saying “You’re entering a premium area. You’ll be charged a table games fee if you continue. Do you want to continue?”

As a parent said online: “I assumed that any sort of fee-generating activity would be child-resistant, requiring an adult action, like swiping a credit card.”

Most folks agree.

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But, Ziosk & Olive Garden understand that inserting an authorization step would cut the “take-up rate” … since many (most?) of the “transactions” are inadvertent … not intentional.

So, no authorization required … it’s in the small print, sucker.

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Zone of Indifference

The specific “table gaming fee” – which is $1.99 — is no accident.

First, it’s big enough to make a big difference to Olive Garden’s and Ziosk’s profitability.

It’s one of  “Homa’s Law” that a little number ($1.99) times a big number (Olive Garden customers) is still a pretty darn big number.

Second, it’s small enough that most diner’s probably don’t even notice it on the bill.

For those who do notice it, they may conclude that the unexpected charge was worth the price or may figure that it’s too piddly of an amount to complain.

For those who do notice, who take offense, and decide to complain …

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First complainant defense

Based on online accounts, most restaurant managers who are confronted by unhappy customers plead a “George Costanza Defense”.

They tell the complainant that they’re the first to raise the issue, that all other customers are thrilled by the tablets.

In other words: “Are you crazy … or just cheap?”

Then, they can stonewall the charge as company policy … or fork over 2 bucks and say “I’m sorry, here’s your money and a coupon for a free app … please come back” … or defiantly hand over the money with a “get out of here” look in there eyes.

Our store manager choose the latter course of action …

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Cost-benefit trade-off

Here’s the part I don’t get.

I figure that we go to Olive Garden — err, make that used to go – 4 times a year at maybe $35 a pop.

Call it $150 a year … or at least $2,000 for the rest of my insurance-table lifetime.

Why would a company put $2,000 at risk for a measly 2 bucks?

In fact, let’s expand the net …

I was so psychologically scarred by incident that I Googled it, wrote this post and have already told the story a dozen times.

Just the latter get’s us up to $25,000 in revenue at risk … balanced against a $2 gain.

I guess that Olive Garden has concluded that it’s a good bet.

My view: It’s not the 2 bucks, it’s the principle … and the obvious question that’s raised: how else are they screwing us?

“Arrive Derchi, Olive Garden.”

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#HomaFiles

Follow on Twitter @KenHoma            >> Latest Posts

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One Response to “Gotcha: Why I won’t go back to Olive Garden …”

  1. Rob Marshall Says:

    I keep telling friends and family that I cannot wait for tablets to replace people at restaurants. So, your story is a good heads-up about the potential downside. For what it’s worth, my issue lately has been with trying to order verbally at Einstein (for my two year-old). When I order a cinnamon raison bagel, I am served a cinnamon sugar bagel half the time. My dream scenario is that using a tablet in the future would enable me to bypass the bonehead taking my order. The employees at Einstein are no Einsteins…

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