Philosophy
by
Josh Sanburn
August 30th, 2012
Time
The next time you’re in Chipotle, check your receipt. That’s what one guy in New Jersey did, and he discovered that the fast-casual restaurant was rounding up to the nearest nickel — and it was costing him money.
Jayson Greenberg of West Caldwell, N.J., noticed something funny on his Chipotle receipts recently. The numbers just weren’t adding up. One receipt showed several items adding to $35.24, but the “total” came up as $35.25. It happened again with another purchase that was $9.24 but was totaled $9.25, and another that was rounded from $18.99 to $19.00. So Greenberg contacted a Chipotle manager.
“He said, ‘Oh, it’s a computer program. It is just rounding numbers. It takes a little from certain receipts and gives a little to others. What do you want? A few pennies?’” Greenberg told The Star-Ledger.
It turns out, Chipotle was rounding totals — both up and down depending on the price — in high traffic restaurants in New Jersey, New York, locations in Boston and elsewhere. The rationale: counting pennies takes time, and in restaurants that often have people lined up out the door, why not just round to speed the line along?
There is actually research on this very issue. MIT physicist Jeff Gore has become a de facto spokesperson for getting rid of the U.S. penny, not just because it’s lost so much value over the years, but because it actually wastes everyone’s time in line. About a decade ago, Gore estimated that we waste $5 billion a year just fiddling around with pennies to make change at a cash register. While Chipotle’s reasoning was a bit different, it appears they believed they could get more people in the door if they could decrease time at the register.
Since The Star-Ledger investigated Chipotle’s penny-pinching, the restaurant now says that the restaurants that do round will only do so to the nearest nickel rather than rounding up. Greenberg told The Star-Ledger that after he complained to Chipotle, he returned to the restaurant and discovered a new line on his receipt: “Round -0.02.” His bill should’ve been $19.02, but he only paid $19.00. Similar receipts have shown up on Consumerist.
Chipotle’s “hidden fees” bring to mind Starbucks’ shadowy “bean fee” that was disclosed last year after a Massachusetts consumer affairs bureau fined Starbucks for secretly adding $1.50 to an order of beans that weighed less than a pound.
But if Chipotle decides to round at all of its restaurants nationwide, it could make the idea of rounding to the nearest nickel more acceptable to Americans, something that has been talked about in the ongoing debate over whether we should keep the wildly out-of-whack U.S. penny, which costs more than 2 cents for the U.S. government to make. Our neighbors in Canada will take their penny out of circulation next year, meaning every Canadian business will basically be doing what Chipotle is doing — rounding to the nickel.
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Philosophy
Chump change, but a clever way to make more bucks
This reminds me of a tactic that UPS adopted several years ago. It didn't involve pennies...just time. A study revealed that it would be better for UPS drivers not to make left hand turns at intersections...time was wasted and that was money lost.
"Chipotle’s Fuzzy Math: Why They Stopped Rounding Customers Out of Change"
by
Josh Sanburn
August 30th, 2012
Time
The next time you’re in Chipotle, check your receipt. That’s what one guy in New Jersey did, and he discovered that the fast-casual restaurant was rounding up to the nearest nickel — and it was costing him money.
Jayson Greenberg of West Caldwell, N.J., noticed something funny on his Chipotle receipts recently. The numbers just weren’t adding up. One receipt showed several items adding to $35.24, but the “total” came up as $35.25. It happened again with another purchase that was $9.24 but was totaled $9.25, and another that was rounded from $18.99 to $19.00. So Greenberg contacted a Chipotle manager.
“He said, ‘Oh, it’s a computer program. It is just rounding numbers. It takes a little from certain receipts and gives a little to others. What do you want? A few pennies?’” Greenberg told The Star-Ledger.
It turns out, Chipotle was rounding totals — both up and down depending on the price — in high traffic restaurants in New Jersey, New York, locations in Boston and elsewhere. The rationale: counting pennies takes time, and in restaurants that often have people lined up out the door, why not just round to speed the line along?
There is actually research on this very issue. MIT physicist Jeff Gore has become a de facto spokesperson for getting rid of the U.S. penny, not just because it’s lost so much value over the years, but because it actually wastes everyone’s time in line. About a decade ago, Gore estimated that we waste $5 billion a year just fiddling around with pennies to make change at a cash register. While Chipotle’s reasoning was a bit different, it appears they believed they could get more people in the door if they could decrease time at the register.
Since The Star-Ledger investigated Chipotle’s penny-pinching, the restaurant now says that the restaurants that do round will only do so to the nearest nickel rather than rounding up. Greenberg told The Star-Ledger that after he complained to Chipotle, he returned to the restaurant and discovered a new line on his receipt: “Round -0.02.” His bill should’ve been $19.02, but he only paid $19.00. Similar receipts have shown up on Consumerist.
Chipotle’s “hidden fees” bring to mind Starbucks’ shadowy “bean fee” that was disclosed last year after a Massachusetts consumer affairs bureau fined Starbucks for secretly adding $1.50 to an order of beans that weighed less than a pound.
But if Chipotle decides to round at all of its restaurants nationwide, it could make the idea of rounding to the nearest nickel more acceptable to Americans, something that has been talked about in the ongoing debate over whether we should keep the wildly out-of-whack U.S. penny, which costs more than 2 cents for the U.S. government to make. Our neighbors in Canada will take their penny out of circulation next year, meaning every Canadian business will basically be doing what Chipotle is doing — rounding to the nickel.
- The Ethics Of Bag Fees
Did a bit of flying last week and the thing that always annoys me is what people believe counts as carry-on baggage. If it has wheels and you have to roll it, then you aren't carrying it. If you aren't carrying it, then, by definition,...
- Free Lunch (except For The Lunch Part): Caveat Emptor Or Morally Empty?
Flew cross-country a couple weeks ago and found that certain airlines no longer provide food on long trips -- now you can purchase a bad meal for $7 or a cheesy adolescently stocked snack box for $5. Then we took our kids to an amusement park that charges...
- An English Language Curiosity
"Why Do People Use Nope Even Though No Is Shorter?" by Quora Contributor March 8th, 2013 Slate This is an example of sound change, and there are a few hypotheses we can consider as to why this sound change came about. The first hypothesis is that this...
- Canadian Penny...gone
"Canada Wins the Race to Eliminate the Terrible Penny"byRebecca GreenfieldMarch 29th, 2012 The AtlanticCanada has bested America in at least one thing today, ridding itself of what The New Yorker called "horrid and useless" bits of currency, the penny....
- Case Of The Long Paper Receipt
"Ridiculously Long CVS Receipts Will Remain Ridiculously Long" by Rebecca J. Rosen August 10th, 2011 The Atlantic I'm not sure when I first noticed them. I don't remember them as a child or a teenager. Then, one day, walking out...