Consider the following menu (from our default Chinese dining choice). Consider the incentives on that recurring question, “Should we pick-up or get it delivered?”.

The puzzle is this. Getting the food delivered is higher cost to the restaurant. They have to hire a driver to support delivery. There is no additional revenue, nothing but more cost. And yet, they reward that behavior with additional free food. Why? All it does is make me want to have them do more work for more cost to them. They won’t budge on this policy. I pointed out these perverse incentives to them and got nowhere, all the time feeling like I was Larry David getting angrier and angrier at the stupidity of the world.
Why do they have this system? After years of intermittent noodling on this, I believe I understand. Do you have an answer? Mine is below.
They don’t see the free food kicker as an incentive to switch from pick-up to delivery. They see it as an incentive to get delivery food from their restaurant instead of another one.
If that is the correct logic, I don’t believe the reasoning is justified. The percentage of customers that are newly acquired through this system is likely to be very small and the expense very likely outweighs the potential benefits.
What do you think?








