The Power of Free!

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The practice of giving out freebies in restaurants to drive up guest satisfaction is rooted in several powerful psychological principles.

My own recent experience drove those principles home to me in a completely practical, repeatable way. It was during a visit to a restaurant that is part of a group that works with Yumpingo.

After I was seated, the team brought over a free taster glass of craft lemonade.

It was a small gesture, but it really set the tone for the experience and made the rest of the meal more enjoyable.

Restaurants often offer something for free as part of the experience to engage their guests.

• Texas Roadhouse has their bread rolls with whipped honey cinnamon butter.
• Five Guys offer free peanuts and will always add a generous helping of “topper” fries to your bag.
• In the UK, Hickory’s Smokehouse hands out free popcorn, Zizzi offer free pasta crisps and Pret A Manger encourage their team to hand out freebies to guests they like the look of.  

For hospitality businesses, offering a freebie is a cost they are happy to take on because it feels like it works to make customers feel valued and build loyalty.

But is there any fact behind that feeling?

The restaurant group that I visited use Yumpingo to track how consistently the teams in the venues hand out the free lemonade. They also track customer satisfaction through a Net Promoter Score (NPS) question on each survey.

By running a comparison of the two we can see how that free lemonade affected the satisfaction of their guests in each location.

30,274 customers were surveyed across 66 locations from January to October 2024.

For the ten locations/teams who were most consistent at providing the lemonade*  the NPS was 67.

For the ten locations who were the least consistent** the NPS was 30.

*lemonade handed out to 97% of customers.
**91% compliance

A relatively small difference in the frequency that teams handed out the free lemonade, correlates with significantly lower guest satisfaction.

The free lemonade is just one of the factors involved in providing a great guest experience, but there is a relationship.

Why does it work?

The practice of giving out freebies in restaurants is rooted in several powerful psychological principles:

Continuation Probability Signalling

Continuation probability is a term from game theory, where the chances of cooperation is greater if there is a high expectation of repetition.

When a restaurant offers something for free, it sends a powerful message: “We care about you and your experience here.”

By demonstrating that they’re prepared to make the experience more memorable at their expense, they signal that they are in it for the long haul and they are investing in their guests returning.

Reciprocity

Reciprocity is a social psychology principle that shows when someone does something nice for us, we feel a natural urge to return the favour.

This sense of indebtedness can be subtle but powerful, encouraging customers to order more or tip generously.

The "Coca-Cola" experiment is probably the most well known study on reciprocity, published by Dennis Regan from Cornell University.

In the study, participants believed they were there to evaluate paintings with another participant named Joe, who would later try and sell them some lottery tickets. During the experiment Joe gifted a free glass of coke to half of the subjects.

When Joe handed someone a coke, they bought twice as many tickets as when he gave nothing.

People in the coke group also spent more on raffle tickets than the cost of the free drink. 

The power of free!

Dan Ariely, professor of psychology and behavioural economics, showed through a series of tests, that an offer of free chocolates gets a disproportionate response from customers. 

Here's how he described some of the results in an interview with The Guardian:

“Most transactions have an upside and a downside, but when something is free we forget the downside. Free gives us such an emotional charge that we perceive what is being offered as immensely more valuable than it really is.”

“Zero is not just another discount. Zero is a different place. The difference between two cents and one cent is small. But the difference between one cent and zero is huge!”

“If you are in business, and understand that, you can do some marvellous things. Want to draw a crowd? Make something free! Want to sell more products? Make part of the purchase free!”

Boosting the Effectiveness

It’s not just about offering a freebie. How a freebie is provided influences how effective it is.

The Peak-End Rule (or why freebies are often either an amuse bouche or a mignardises) is a cognitive bias where people remember an experience based on how they felt at its most intense point (the peak) and at its end. People don’t remember an experience based on the average of all the parts, they remember it based on snapshots. So if the freebie is a snapshot at a key moment it has the most impact, which is why restaurants often aim for the start or the end of the meal.  

The more free the better. The more honest and costly the offer appears the stronger the signalling and the more that the signalling works in comparison with competing businesses.

Stronger signalling. How the signal is delivered impacts its effectiveness. An example of this behaviour was captured in a study published in the Journal of Applied Social Psychology that looked at how free chocolates at the end of a meal influenced tipping. 

• Providing a small free chocolate at the end of the meal increased tips by 3%. (The power of free)
• If the server gave two chocolates the tips increased by 14%. (The more free the better)
• If after leaving one chocolate the server came back later with additional chocolate the tips increased by 21%! (All the factors combined)

Which all goes to explain (in part) why I had a great meal and experience that day.

Even though I was aware the free glass of lemonade was rooted in these psychological techniques, it still felt honest and left me feeling very positive towards that restaurant.

And now I think about it, I also ended up buying a dessert and leaving a bigger tip than normal.