December 31, 2018 |
New Year’s Eve is traditionally a festival of superlatives around the world. Cities are spending millions of dollars for fireworks, security and cleaning up the mess on the 1st of January. People are spending millions of dollars travelling, partying and hangovering [sic] on the 1st of January. And for the F&B industry this can be the single most profitable night of the year, if prepared properly.
Restaurants in cosmopolitan cities all over the world are competing with each other by offering luxurious packages to ring in the new year. While it is easy to justify making customers spend a few hundred dollars on a 6-course menu with caviar, foie gras, lobster and champagne, the sell is harder to make if all that you’re offering is a chair and a view. Many venues in the world’s absolute prime locations are capitalising exactly on that for new years eve and it does not seem to stop people from booking. Let’s look at some examples from Dubai and New York:
Tim Hortons, Downtown Dubai
To get a prime view of the spectacular fireworks at Burj Khalifa tower in downtown Dubai, the Canadian coffee shop chain requires their guests to have deep pockets. A table at the waterfront costs roughly US$ 500 which equals to the price of around 2,222 Timbits, Tim Horton’s famous fried dough balls. For this amount they offer customers a 5-course menu specifically created for the occasion. Oh, and because you would be sitting in a public area in a Middle Eastern country, there will be no Champagne available, so you’d have to ring in the new year with a Caramel Latte Supreme or an Iced Mocha. Cheers!
Burj Khalifa, Dubai Photo by Lester Ali
The Knickerbocker Hotel, New York City
It is estimated that around 1 million people flock to times square every year to celebrate with the world-famous ball drop countdown. For people who don’t fancy standing in the midst of this crowd, The Knickerbocker Hotel offers exclusive packages at their rooftop terrace which is just 45 meters away from the dropping ball. To book a box at the St. Cloud Rooftop, the most expensive package would set you back US$ 125,000. A box typically can accommodate around 15 guests who will be served a high-end menu, premium spirits and champagne all night long.
St.Cloud Rooftop, Photo by The Knickerbocker Hotel
Looking at the business side and comparing what people pay vs. what they actually get, it is easy to spot that the COGS are in the single digit percentage and therefore make this evening extremely profitable for these venues, if people are actually buying the packages. And the strange thing is, they seem to do. Critics may say that restaurants get greedy and asking for such exorbitant prices is not right, but then again what is the right price? As with everything else, the right price for an experience is whatever someone is prepared to pay for it.
Customers are voting with their feet and if a restaurant’s experience cannot live up to its pricing the seats will remain empty, but as long as these tickets get sold, there is no reason for the strategy to change. An important note however must be that people spending this kind of money are looking for a “once in a lifetime experience” which means that it is very unlikely to convert them into regular returning guests afterwards.
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