Surge pricing is coming to pubs

In his weekly The Bar Man column, Jeff Hoyle discusses surge pricing…

Surge pricing. Have you heard of it? It means that prices go up when there is a greater demand. In some areas of the economy, it is common. When we used to travel regularly to see Bury FC, hotel prices around Manchester were much higher if United were at home. Look at the prices for hotels over the Christmas and New Year period if you still need convincing.

Now the concept is coming to pubs. The Stonegate group has announced that it is to increase the price of its drinks by 20p in some of its outlets when it is busy, which will be some evenings and weekends. Its brands include the Slug and Lettuce bars and Craft Union pubs, several of which are to be found in Lynn.

Their reason seems to be that when it is busy, they need to spend more on bar staff, security, glass washing and so on and the extra 20p will help to pay for these expenses. My initial reaction was that if it is busy, you are taking more over the bar. I also did a bit of mental arithmetic. Let us suppose that a drink costs £5, so that an increase of 20p adds 4% to the price. If the publicity around the price rises means that sales drop by over 4% due to people going elsewhere, then the company loses money, a situation that could easily happen.

It seems even stranger when you think that a form of surge pricing is already common. Instead of increasing prices at the weekend when it is busy, many pubs reduce their prices during quiet times to attract more trade, with promotions such as happy hours. I have never been in marketing, but if it had been my decision, I would have tried to slip through a general 20p price rise with as little fanfare as possible and then offered cut price drinks during slack periods.

I think that people react better to the impression that they are getting a bargain, than suffering a price rise, even if the effect is the same. Personally, I have a long memory and if I think that I have been unfairly treated in a pub or shop, it can be a while before I choose to go return. Why risk alienating customers for so little extra profit?

Back in the 80s, there was a guy who used to drink in the Seven Sisters most evenings, and after a trip home to Scotland, he tried to pay for his pint with a Scottish pound note. The landlord refused to accept it and from that day forward the customer took his trade elsewhere, costing the pub an untold amount in takings. Good business? I think not.

On a more personal note, I remember delivering our CAMRA magazine, Norfolk Nips, to a pub out on the fen. I had a pint and asked for a glass of water for the Bar Wife who was driving. It was explained to me that the tap water out on the fen was not very good and it would be far wiser to purchase a bottle. You could view this in one of two ways. On that evening, they made the cost of a bottle of water, but ever after they just had their magazines delivered without us stopping for a drink. The pub has now changed hands and is far more welcoming and they are sticking to my golden rule which I have just made up. The customer is not always right, but do not upset them over minor matters if you want to keep them.

bar.man@btinternet.com