The Undercover Economist – FT Magazine, 21 January 2006
An extended version of this piece is available at Slate.
I don’t want to complain, but my favourite lunchtime haunt has the rudest barman I’ve ever encountered – and I don’t think it’s an accident. The restaurant is famous for its superb, sophisticated Italian cooking and it prices accordingly. A romantic meal for two costs about $150, plus the price of your selection from a wine list of biblical proportions. Even if you pick the cheapest main course for lunch and sip water, this frugal meal for one will set you back $15.
Or, you could sit at the bar or on one of the tables in the bar area. The food is still superb: you can fill up on rich, soft pork meatballs nestling on pillows of light polenta for about $8. The veal ragu is rich but you don’t have to be, because this perfect spaghetti is half the price of a pasta dish in the main restaurant.
It sounds too good to be true, and I’m afraid there is a catch. To get to the food, you have to get past the barman who takes your orders, a man more Bond villain than bon vivant. To walk into that bar is to laugh in the face of fear. The barman welcomes me in with all the warmth of a Transylvanian butler in a B-movie. He drops menus on my table with a sneer. He repeatedly ignores my attempts to order. As he walks past, my companion whispers that he picked up his tattoos in a Russian prison. I think she’s having me on, but I can’t be sure.
It’s possible, of course, that this man is in the wrong job by accident, and when the restaurant owner reads this column and works out that it’s about his restaurant, “Igor” will be fired. I’m not convinced. I think Igor is all part of the plan. One food critic described a previous bartender as acting like she’d just returned from a tax audit. “Venomous” is obviously in the job description.
Why would a restaurant deliberately sabotage the dining experience? A restaurant with a good reputation and a brilliant chef acquires some degree of power to name its prices. With that power comes the temptation to try to separate out customers and charge a high price to the expense-account lobbyists and a cheaper price to me and my friends. A nice idea, but trying to charge different prices for the same product is not easy. Something must be done to keep the lobbyists in the full-priced restaurant, and that something is Igor.
This sounds odd, but it’s not really so unusual. Think of Adobe’s Photoshop Elements, a product that is often described as a stripped-down version of the image processing software, Photoshop. It doesn’t cost Adobe any more to ship a Photoshop CD than to ship an Elements CD, and stripping out those extra features was surely an additional expense. Intel introduced two versions of the old 486 computer chip; the cheaper one was the expensive version with some extra work done on the chip to slow it down.
Consider, too, multipacks in supermarkets. A manufacturer produces a gigantic pack of 12 three-litre bottles of lemonade at a price: it must hire a packaging company to bundle them together. As with Intel and Adobe, the inferior product costs more to produce. The payoff is simple: it enables retailers to target price increases on shoppers who prefer something easier to carry, even if it is more expensive.
One day I shall have an expense account, and I shall dine in the main restaurant where, no doubt, the maitre d’ looks like Pierce Brosnan and sylph-like waitresses will give me massages. Until then, I will eat great food at low prices, and Igor will keep the lobbyists away.