All-you-can-eat deals can be a dangerous proposition, and a hot pot restaurant in the Chinese city of Chengdu found that out the hard way recently. As the Australian Broadcasting Company reports (translating a story from the Chengdu Daily), the Jiamener restaurant closed down for good last week after being left $100,000 in debt once a $25/month all-you-can-eat plan failed miserably:
Customers paid the fee and received a membership card that entitled them to unlimited food for the month.
Some customers reportedly shared their card around with family and friends, drastically increasing the volume of meals being consumed on a single purchase.
The neighbourhood restaurant never made it through the first month of the promotion, after it began receiving in excess of 500 customers a day after the deal commenced, with long queues forming before the doors opened and lasting till late into the evening past closing times.
…Co-owner Su Jie said the main problem was a lack of business acumen on the part of owners, who had only opened the restaurant in December.
“The uncivilised behaviour of the diners was secondary — the main problem was our poor management.”
Well, that’s some refreshing honesty. And yeah, an all-you-can-eat deal probably needs some regulations to prevent card-sharing and this kind of run on the restaurant. And it sounds like the restaurant underestimated how many people would want this, how frequently they’d use it, and what it would cost them to provide that service. Jie mentions that they expected to lose some money on the deal, but thought they could negotiate better deals with suppliers if they were buying more, and that makes some sense. However, you still have to be pretty careful with any kind of deal offering services at a level below what they cost. Otherwise, “all-you-can-eat” can turn into a nightmare.