Australian diners are already familiar with the pay-what-you-want business model, thanks to the likes of Melbourne’s Lentil As Anything, but could a pay-as-you-stay model work Down Under?
UK café Ziferblat has been operating since early 2014 and according to The Mirror, is now turning a profit at its locations in Manchester and Liverpool.
The cafes are based on a pay-as-you-stay model that first came out of Russia: patrons can eat and drink as much or as little as they want, while also using the café’s Wi-Fi, and instead of being charged per menu item, they pay 6p ($0.10) per minute.
Café owner Colin Shenton told The Mirror while some customers come in to eat as much as they can in the shortest time possible, others choose to set themselves up in the venue for hours on end while they work.
A similar venture has also recently opened in Brooklyn in the US. Customers at Glasshour pay $US6 for their first hour at the venue and US$0.10 per minute thereafter. In return, they get unlimited food and drinks and access to Wi-Fi, board games and even a foosball table, according to SBS.
Would the same concept work in Australia?
Behavioural economics expert Bri Williams told SmartCompany business owners contemplating a pay-as-you-stay model would need to aware of the risks in adopting such as pricing strategy, which she believes outweigh the benefits.
“You would assume one objective is to get people turning over more quickly [in the café] as the clock is ticking,” she says.
“The risk the business runs is that it attracts people based on ‘all you can eat’ … they would be there to feast and that makes it really challenging in terms of margins.”
Williams says the time-based pricing model may also put off certain customers.
“From a consumer’s perspective, when you put on a time on something, it can elevate their anxiety levels … like when they’re waiting for a parking meter to run out” she says.
“They may tend to rush through.”
Williams says while these examples show business operators are looking for different pricing models and ways to differentiate themselves from competitors, and this should be encouraged, it’s important for them to consider what type of behaviour they are seeking to encourage in their patrons.
“It would depend on what market you are trying to attract,” she says, suggesting this sort of environment could be attractive to freelancers or people who enjoy working in shared office spaces.
“It becomes a quantity proposition, the quality of the food might not be the attraction,” she says.