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Why anchoring is so important in restaurants.

The Subtle Power of Anchoring: How Perception Shapes Value in Restaurants.

Salvador Assael, Magnate of Cultured Pearls Two people studying trays of beads on a table in a sunlit room. Text: "Why anchoring is so important in restaurants."
 

The environments we inhabit influence us in surprising and often subconscious ways, shaping how we think, feel, and act. One Anchoring bias is a powerful behavioural phenomenon that influences how we perceive value and make decisions.


In the restaurant industry, it plays a pivotal role in shaping customer expectations, from menu pricing to portion sizes and even the overall dining experience. By understanding and leveraging anchoring, restaurateurs can create environments that not only enhance perceived value but also drive customer satisfaction and loyalty. This fascinating concept demonstrates the subtle interplay between human psychology and strategic design in hospitality.


Why Anchoring Is So Important in Restaurants.


It is May 1945. The war has just come to an end, and the young Salvador Assael returns to New York from the 78th Infantry, excited to begin a new life and eager to join his father James Assael’s lucrative business supplying the American troops with waterproof Swiss watches. To his dismay, however, he finds that the end of the war also brought an end to the demand for the watches. Literally overnight, the Assaels are left with containers of unsold watches that nobody wants.

Salvador Assael smiling; holding dark pearls to his eyes, mimicking glasses. They're indoors with a colorful abstract painting on the wall.
Salvador Assael Black Pearls.

In his attempt to find a new market, Salvador travels to Japan to offer the watches to the American troops still stationed there, and something unexpected happens a love affair. The Japanese people themselves fall in love with his Swiss watches, and Salvador, in turn, falls in love with their beautiful Akoya pearls. By 1950, Salvador had managed to trade all his watches for the most exclusive pre-war stock of Japan’s finest pearls, which were now also in very high demand in the West. Almost by accident, the Assael pearl business was born. During this time, Salvador also discovered and single-handedly introduced South Sea pearls to North America. They were of impeccable quality and impressive size. By the 1960s, the Assael pearl business was booming, and Salvador became known as the Pearl King.

Salvador Assael in Tahiti, surrounded by Tahitian Black Pearls. Examining pearls at a table in a room with large windows. Palm tree and ocean visible outside. Calm and focused mood. Black and white tones.
Salvador Assael in Tahiti, surrounded by Tahitian Black Pearls.

With the wind now firmly at his back, Salvador started searching for bigger and better products and, in 1970, discovered Tahitian black pearls. This is where the story gets interesting. Unlike the white pearls that had a massive market in America, black pearls were virtually worthless. Salvador, however, saw an opportunity. By this time, he had amassed considerable wealth and was able to buy an island in Tahiti called Muretea. He partnered with a French businessman, brought in the best pearl specialists, and established pearl farms to cultivate the best possible black pearls. Then he did something genius. He convinced his friend Harry Winston, a legendary American jeweller with a salon on 5th Avenue, New York, to purchase the first strand. The strand was placed in his best showcase window among the most expensive and exclusive rubies and diamonds. It sold within two weeks.


Upon this success, Harry bought all 18 strands that Salvador had available at the time and transformed them into stunning necklaces with an outrageous price tag of $1 million. All of them sold almost immediately. Van Cleef & Arpels and Tiffany soon followed with orders. Capitalising on this success, Salvador immediately launched full-page ads in the best magazines with the headline “A New Gem Is Born.” Again, he presented the Tahitian black pearls in the company of diamonds, rubies, and emeralds with a premium price tag. And just like that, virtually overnight, the Tahitian black pearls became far more coveted by the elite than their brilliant white cousins.


What Happened? The Power of Anchoring Bias.


How had Assael managed to turn junk pearls into such coveted items with such outrageous price tags? The answer lies in a very powerful human behaviour bias called anchoring. In the minds of the wealthy elite, the other precious gemstones and high-priced jewellery in Harry Winston’s 5th Avenue display window, as well as the full-page glossy ads, served as perceived reference points to estimate and justify the value of the never-seen-before Tahitian black pearl strands. This anchored them in the minds of the customers to the value of the finest gems in the world.

Anchoring Bias . An anchor is connected to a brain-shaped rope against a white background, symbolizing the weight of thought or mental burden.
Anchoring Bias.

What Is Anchoring Bias?


Anchoring bias is a heuristic or mental shortcut that relies on the first information we receive concerning a subject or product. This initial information serves as a basis or anchor to inform our choices, regardless of subsequent information.


However, it also makes us vulnerable to skewed assumptions and expectations. In the case of the black pearls, the first piece of information people had was the price and quality of the other gemstones set around the Tahitian black pearls. This firmly anchored the price of the black pearls in the minds of the consumers, influencing what they were willing to pay.


Anchoring Bias. Red price tags illustrating anchoring bias: left shows ₹300 with a wrong symbol, right shows a crossed-out ₹1000, now ₹300, with a correct symbol.
Anchoring Bias | Pricing

Anchoring bias exists everywhere. Think about how we line up at our favourite café to happily hand over $5 for a cup of coffee that costs less than 50 cents to make at home. Why do reasonable, intelligent people knowingly hand over 10 times the cost of the product? The answer lies in anchoring. By being aware of much higher prices of other items around the coffee price, we quickly make a bad decision that somehow feels good. The $10 chocolate mochas or macchiatos make that $5 coffee feel like a good deal. And so it goes on. A $30 pasta dish right above a $45 steak dish, or a $16 bottle of wine among $25 or $30 wines on the menu? Anchoring. Anchoring works because our emotions are more powerful than our reason.


Similarly, when restaurants serve bigger portions than we need to eat, it favours the anchoring bias as it alters our perception of value. This anchoring bias also exists in how a restaurant looks and feels. If it looks cheap, we expect the food to be cheaper. Conversely, if it looks more exclusive and well-appointed, a price point slightly lower than what we expected, judging by our first anchor, the aesthetics of the restaurant, will give us a greater sense of value and help increase the frequency of visits, leading to higher sales.

Red carpet lined with stanchions leads down a city street. Evening setting with blurred pedestrians and buildings in the background.
Red Velvet Ropes & Carpet. Hospitality.

Furthermore, when customers are treated like royalty, they are more likely to spend like royalty. This is called the service anchor, and as the name suggests, it is particularly effective in the service industry, such as restaurants. It’s a method of anchoring a person’s sense of self-worth to the service. If you are treated exceptionally well by someone selling you the product or service, you will associate owning that product or using that service with feelings of wealth, success, achievement, and desirability.


Anchoring bias highlights the profound influence of first impressions and reference points in shaping customer perceptions and decisions. For restaurants, mastering this cognitive bias is not just about pricing but creating a holistic experience that aligns with guests’ expectations of value and quality. By leveraging anchoring strategically, restaurateurs can enhance satisfaction, boost loyalty, and drive success.


Although anchoring is considered an error in judgment, overlooking this simple behavioural heuristic has sadly led to the failure of many otherwise great inventions, services, and products. Anchors away!

 

Information Reference Index:

Thinking, Fast and Slow

How Anchoring Affects Customer Perceptions in Restaurants

Behavioral Economics in Hospitality

Menu Psychology: The Art of Pricing

The Impact of Anchoring on Consumer Behaviour



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