Using prices to drive demand

Sign outside Cactus Club Cafe, Park Royal, West Vancouver, BC

When times are slow you can either close the doors or try to increase the sales. Happy Hour is the textbook example of the later.

In this case the three hours between the lunch rush and the dinner rush from Monday to Friday represent an opportunity for Cactus Club Cafe to try to encourage its patrons to spend more. And the same can be said about the hours after the dinner rush, 9:00 pm to close from Sunday to Thursday.

Critics might say that this sort of variable pricing will encourage consumers to drink more while the prices are cheaper. The flip side is that these businesses are facing high fixed costs and Happy Hour is just an effort to extract a bit more revenue from slower periods. I suspect the former is true, but these businesses will insist that it is the later.