The Hindu Business Line : <I>No free lunches </I>

If you are pizza-crazy like my brother is, you may be familiar with the difference in customer policy that pizza restaurants have. In most employee-managed restaurants, especially in North America, you receive a free meal if you do not get a receipt at the time of purchase. This is not true in case of owner-managed restaurants. This difference in policy is based on economics and is not a marketing strategy. What is the rationale?

Suppose you start a pizza shop. You hire a school drop-out to run the outlet, as you keep your full-time job. How do you ensure that she is honest?

Tallying sales and cash

Your pizza-flipper-cum-cashier is expected to tally the sales register with the total amount collected. If she rings the register 50 times a day for an amount totalling Rs 15,000, the cash balance should be Rs 15,000.

But what if she collects Rs 300 from a customer and does not give him the bill? Your cashier will account for 49 sales totalling Rs 14,700 and show the same as cash balance, after pocketing Rs 300.

When you have a policy that states that a meal without a receipt is free, there is no incentive for the cashier to cheat. Such a policy prompts customers to monitor cashiers for free.

If you decide to quit your job and sit at the cash register, you will ensure that all money is accounted for. That is why most owner-managed outlets do not offer a free meal even if you do not get a receipt. As they say, there are no free lunches in economics. So, if you are given one at a restaurant, it could be because you helped the owner monitor his cashier!

(The author is a Chennai-based financial analyst)

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