Comments on: Game theory at Denny’s

By: Mehul

Mehul — Wed, 31 Mar 2010 08:41:52 +0000

I saw a similar sign in a Subway (sandwich) store. It made sense as there is no way of figuring out exactly how much ingredients were used. A store clerk can easily adjust the ingredients of 5 extra sandwiches (without billing) in the daily consumption and pocket the revenue (or mark the extra ingredients as spoilt and dispose).

In India I’m sure the sign means we have an eye on the store clerks.

By: michael webster

michael webster — Tue, 16 Mar 2010 02:48:52 +0000

@Frank;

I am not sure that under a standard commercial lease, the landlord would have the ability to dictate policy on receipts.

By: Frank Park

Frank Park — Sun, 14 Mar 2010 10:03:08 +0000

I have also heard that under commercial leases based on percentage sale of the retail store, the lessor does this to ensure that the leasee is “honest” about it’s sales. Many stores deal in cash so it’s harder for the lessor to track what is going on. By using this method there is at least some ability to monitor sales.

By: Presh Talwalkar

Presh Talwalkar — Fri, 12 Mar 2010 09:42:24 +0000

Thanks for the clarification Michael. Come to think of it, I know Walgreens and Dunkin Donuts have a similar receipt policy so the franchise explanation seems plausible. Next time I am at Denny’s I will ask a manager and confirm.

By: michael webster

michael webster — Thu, 11 Mar 2010 18:13:38 +0000

I agree with Asad.

It is more likely that the Denny’s franchisee is doing this to assure the Denny’s franchisor that they are not under reporting gross sales.

The franchisee pays royalties on gross sales, so the principal agent problem would suggest that it is in the interest of the franchisee to under report.

The franchisee can assure the franchisor that it is not under reporting by following such a policy – in some states it would not be legal to fine the employees who made the mistake.