How bars and restaurants get you to spend more during Happy Hour

Singaporeans love getting a great deal. And for those who drink, happy hour promotions are some of the best deals offered by bars and restaurants.

Obviously, food and beverage establishments need to make money, so what do they have to gain from offering steep discounts during happy hours?

And why do we get that nagging feeling that we don't end up saving as much money as the promotions might suggest?

Here are 5 reasons why companies run happy hour promotions - and how they nudge you to spend more in the end.

#1 GETS YOU IN THE DOOR - AND STAYING THERE

When you head out of your office or home for a night out, you have the greatest number of choices, including choosing not to go out. Happy hour promotions, which usually start before dinner, serve to attract you to begin drinking at their establishment.

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Once you've settled down, informed all your friends where to meet you, and are in the full swing of things, you're less likely to get up and leave just because happy hour is over.

You may continue to order drinks at regular price and as dinner time approaches, you're also likely to order food there as well (at full price).

In addition to strategically placing happy hours right before meal times, serving of 'complimentary' snacks like salted nuts and popcorn or accompaniments like pickled gherkins and olives are a sneaky way of making you thirsty - and wishing to quench that thirst with more impulsive alcohol orders.

#2 A CROWD ATTRACTS A CROWD

No one really wants to enter a completely empty bar, because if it looks unpopular, our sub-conscious would probably be wondering if there is something wrong with the place.

Bars and restaurants want to ensure that when it is time for the main wave of party-goers to arrive and pick a place, their establishment would be teeming with activity and a fun vibe, courtesy of happy hour patrons.

When people see other tables full of shot glasses, wine glasses and beer jugs, it lowers their inhibitions and gets them to go all out in their drink orders as well.

#3 ATTRACT FULL-PRICE-PAYING CUSTOMERS FOR THE FUTURE

If you've not been to a drinking spot before, you may be reluctant to give it a try at full-price if you've never heard of it. Happy hour promotions serve to lower the cost for new customers to give them a try, and when they have a good experience, they'll probably be back - happy hour or not.

Enjoying yourself and feeling like you got a great deal serves to build good feelings with the bar or restaurant, which could generate a reciprocity effect, when you feel like you want to support the place by bringing friends over or don't mind ordering food items at full-price.

#4 CLEARING OUT OLD STOCK OR TRYING NEW ITEMS

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Keg beer taste the best when they are at their freshest. Companies may be reluctant to continue to sell beer that have been produced beyond a certain date and offering them up as happy hour promotions is a great way of clearing stock.

Since customers aren't paying full price, they would probably be less picky about a slight deterioration to the quality of drinks. Also, if the drinks taste a little underwhelming, you might end up buying more rounds to feel the alcohol "kick".

Happy hour promotions are also a great opportunity to introduce customers to lesser-known drinks or newly-launched menu offerings, which can boost demand during non-happy hour timings. This increases overall revenue for the company.

#5 YOU GET AS MUCH AS YOU PAY FOR

In a bid to reduce the cost of running happy hour promotions, some places serve happy hour cocktails in specially-designed glasses with thick bottoms that give the illusion that more is served than there really is.

Another way bartenders contribute to the illusion is by making long pours, which is visually appealing but also tricks your brain into thinking there is a larger amount of alcohol is being poured.

BOTTOMS UP FOR YOU AND THE BOTTOM LINE FOR THE BAR

In Economics, sunk cost refers to the cost that a business would need to bear whether they serve 1 or 100 customers. In a bar or restaurant's case, rent and labour would constitute sunk costs.

As we've discussed in this article, happy hour promotions help raise the overall revenue earned by the company, while the increased sales volumes during and beyond happy hour make up for the lower margins earned during happy hour.

As a customer, you're probably happy at the 'discount' off the regular sticker price, and the owners are happy to have you around as well. Cheers!

This article was first published in Dollars and Sense.