Monday, June 16, 2014

Behavioral economics comes to Chili's

Chili's recently made a big change to its in-store ordering system. The chain partnered with Ziosk, the restaurant-targeted tablet-maker, to develop a series of tabletop devices that allow customers to order their meals without the pesky interference of a human. ...

And here's the intriguing thing: Chili's is doing all that because de-humanizing the restaurant is, it turns out, good business. In 2013, in a pilot program, Chili's installed tablets at nearly 200 of its stores. And the chain found, Bloomberg Businessweek reported, that the presence of the tablets could "reliably increase the size of the average check." By, often, a fairly large margin.

That's in part because the tablets set defaults for tip amounts. The machines automatically suggest a tip of 20 percent; you can go lower than that (or higher), but you'll need to actively decide to make that change. Chili's is finding the same thing that New York City taxis have: Default settings are, behavioral economics-wise, powerful. ...

But the most intriguing finding takes us back to the whim thing. Ziosk has found that eliminating the wait for a human server can boost impulse orders of appetizers at the beginning of a meal—orders that seem to be encouraged by the digital menus' large images. If you come hungry and you don't have to wait for a server and you're looking at an enormous picture of gooey nachos... there's a good chance you will order those nachos. Ziosk claims to have found a 20-percent increase in appetizer sales, as compared with standard, server-based ordering strategies.

And the bump translates to post-dinner offerings, as well. The Chili's version of the Ziosk menus is programmed to have images of dessert (a molten chocolate cake, say) pop up while customers are still eating their main courses. This has led, Chili's says, to a 20-percent increase in dessert sales. (Ziosk claims a 30-percent dessert-sale bump for its clients overall.) Coffee sales are apparently up, too. The digital menus are constantly present at the table—constantly reminding, constantly beckoning. And constantly promising, even and especially if you order that molten chocolate cake, not to judge.
--Megan Garber, The Atlantic, on defaults and cues for profit