Restaurant Loss Aversion: Do Restaurants Have More To Gain Or Lose When Being Ranked?
Photo credit: Glasford & Walker
Jamie Mah @grahammah
The Vancouver Magazine Awards just came out yesterday. As was the case last year, St. Lawrence was once again crowned the cities best restaurant. Upon learning of this achievement, a question popped into my head. Would St. Lawrence have had more to gain or lose if they were to not have been awarded the cities top prize once again? Is the fear of loss stronger than the excitement of gains when it comes to keeping on top?
This idea of loss and gain was first brought forth by famed behavioural psychologists Daniel Kahneman and Amos Tverskyway back in 1979, when they developed a successful behavioral model, called prospect theory, using the principles of loss aversion, to explain how people assess uncertainty.
The concept of loss aversion is encapsulated with the phrase “losses loom larger than gains.” As per the website behaviouraleconomics.com:
“It is thought that the pain of losing is psychologically about twice as powerful as the pleasure of gaining. People are more willing to take risks (or behave dishonestly; e.g. Schindler & Pfattheicher, 2016) to avoid a loss than to make a gain.”
There are several ways one could look at this lens. Kahneman and Tversky present the concept with the principle of framing. By winning again, St. Lawrence can say they have gained wide appeal among the cities dining collective and that they’ve deserved the recognition of a year’s hard work. However, if they were to have lost and been demoted, the framing of such a decision could have been pushed two ways: either another was more deserving or that they were less so. In either scenario, they have much to lose and as such, how they frame the narrative will ultimately dictate the amount of loss aversion they will incur.
Furthermore, this idea of wins and losses causes me to wonder, is it in a restaurant’s best interest to being ranked at all? If polled, I’d assume most would say yes it is. Recognition and brand awareness often emerge when one is awarded a coveted prize. But to say that winning or being ranked is worth more than not being ranked at all seems rather unfortunate in my view. If we look at St. Lawrence once more, let’s just assume they came in second this year to new restaurant X. From this, a domino effect would ensue with the following questions being posed:
Why did they fall?
Is the experience worse now?
Has the food changed?
These three questions will line the heads of all who read and see of their demotion. But in asking these types of questions, what springs to mind immediately is that answers to all three of these questions is of a purely subjective nature, as was the case with the ranking in the first place.
To counter, I’d like to offer my own set of questions on the matter:
What if nothing changed?
What if they’re even better?
What if our perception of them has changed?
As the principle of loss aversion goes on to elaborate, a loss can oftentimes be more painful than a gain. Winning again is great, but losing the top prize can sting even more so. Which ultimately leads me to wonder the following: What will St. Lawrence do when they eventually do fall? I pose this question because this will happen one day and with that knowledge I’m curious if being ranked at all and winning even more so had an overall positive effect on the outcome of their restaurant?
Take for instance a restaurant that is widely popular by it’s locals, yet never receives the recognition it deserves by any said list. Let’s say this restaurant X has never wanted to or tried to gain widespread acclaim for what they’ve been doing. All they want to do is produce an amazing product and run a successful business. Let’s say they do this for years and over that time frame the general consensus is that they produce the best of what the city has to offer, yet they still fly under the radar. If you stop and think for a second, I’m sure you can name a restaurant that you know of which fits this description.
But then, one day, let’s say someone decides to write about them and they go from being unknown to the most talked about gem in the city. In this time, they win the cities biggest award and everyone loves them. Business blows up and it’s amazing. Or is it? This column should serve as a warning that everything isn’t sunny and roses when it comes to being praised.
Ultimately, I find restaurant lists rather stupid. They’re often wrong or prone to manipulation, influence and they often don’t speak to what is truly happening on the ground with regards to a cities dining culture. Minority and ethnic restaurants tend to be overlooked and those that do often win have done so a year or two too late. I’m happy St. Lawrence won again. I love that restaurant. I know some of the people involved and they probably deserve the award they just won again. But do they need the award? Probably not. If they had come in second would that have hurt their business? Possibly, but again, probably not.
But let’s say they’d gone from first to like fifteenth? A huge drop. How would they have reacted? Would they have tried harder to regain their status? Or would they have accepted their new standing and been deflated? Again, to service themselves and their customer base, awards such as the one they just won again shouldn’t be harbingers of how they proceed day in and day out, but unfortunately we as humans are prone to adulation. We crave acceptance, love and respect. But in seeking this form of attention we fall prey to the natural by product of rejection. One day St. Lawrence will no longer be the flavour of the month. When it happens it won’t necessarily mean they aren’t just as good, if not better than they are now, which ultimately is what matters. Winning an award and staking claim to being Vancouver’s best restaurant is great, but not winning is fine either, so too to not being ranked at all. It shouldn’t matter. Sometimes it’s better to be underrated than overrated, as I previously wrote here back in 2017.
Restaurant Lists are not going away anytime soon and as such the debate over who was placed where will continue to rage on. It can be fun to debate and I see the appeal in having lists in the first place. People want to know where to go. Nevertheless, being ranked can come as a gain and a loss. How a restaurant proceeds is up to them.
If it were up to me, I’d throw the award in the trash the minute I received it. As Public Enemy poster boy Flavor Flav once preached, “Don’t believe the hype.”