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March 6, 2018

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Loss Aversion Makes You Waste with a Delay

March 12, 2018

Last weekend I took part in the Washington DC chapter of the global Design Jam 2018. The team that I was in focused on designing solutions for reducing waste. We focused reducing waste in the context of “takeout” food (i.e. when one orders food from a restaurant to be consumed outside the restaurant).

 

Delayed Waste

 

We realized that much of the waste produced by takeout was delayed. Many (most?) restaurants include in the “takeout kit” items such as plastic cutlery, salt & pepper tiny bags, ketchup etc. that are not necessary in the context of eating at home. Sure, if you’re eating in a hotel room you need these items, but if you’re eating at home, you have your own cutlery, plates and, better ketchup.

 

Loss Aversion and the “Dead-End Drawer”

 

Quite interestingly, people hold on to these items such as plastic cutlery and sauce tiny bags in the hope they will be used at a later occasion. We named the place where these items that come with takeout and are stored “the dead-end drawer” because that later occasion of using them somehow never seems to come.

 

The behavior of keeping useless items in the hope of later use is driven by loss aversion. Many people would actually be happier (better-off) if they wouldn’t receive such items with their takeout, but once they have (own) them, it is hard to let them go – i.e. put them in the trash or recycling bin.

 

Bad Default(?), Efficiency, and Loss Aversion

 

Obviously, useless items such as plastic cutlery and tiny-bag ketchup end up in people’s homes because restaurants put them in the takeout kits. Usually, restaurants put everything one would need to eat the food in the wilderness. And that’s the only option available. Clients don’t really have a say in what non-food items come with their takeout and have very little incentive to act on not getting them. After all, the clients get something “for free” and the restaurants have few complaints and operate with efficiency.

 

Fewer complaints from customers

 

A customer is more likely to complain if something (she expected) is missing from the takeout kit than to complain that she received more than she needs.

 

Operational efficiency

 

Restaurants are businesses that make money when they have a high volume of activity, thus selling (delivering) as many meals as possible is a business goal. Moreover, orders in a restaurant are not uniformly spread throughout the day with peaks at lunch and dinner time. The people who put together the takeout kits are under pressure to achieve the goal of delivering as many kits possible in the shortest time possible.

 

These two aspects have an implication for what goes into a takeout kit. It simply makes little operational efficiency sense to not put everything one could think of in the takeout kit. Customizing what utensils, how many napkins and which sauces go into the takeout kit for each order would be a great operational hurdle and translate into costs (e.g. having more people who pack the takeout kits, having more space dedicated to packing takeout kits).

 

Sure, one might argue that by not sending plastic cutlery to each and every takeout order would save restaurants money. However, these savings are in pennies (i.e. negligible) and they are offset by the costs of customization of each order.   

 

All or Nothing: A Potential (Partial) Solution

 

One potential partial solution for reducing waste generated by takeout is either to get all the non-food items in the takeout kit or get none of them (food packaging excluded).

 

Below is a mock-up of how this solution would take shape in an online ordering interface:

 

 

The box for “protective packaging” is pre-checked (as we found out, keeping the food warm during transportation is important to consumers).

 

Customers can check the “add accessories” box if they need the plastic cutlery and other non-food items.

 

The bird (I can’t really draw) is meant to give some emotional feedback. If the “add accessories” box is unchecked the bird is happy, flies and sings. If the “add accessories” box is checked, then the bird becomes sad.

 

The same choice architecture change can be included in the script for ordering by phone with the restaurant employee asking “Do you need plastic cutlery etc.?”. Notice that we used “need” and not “want”.

 

This solution is sub-optimal from both a waste reduction perspective and a customer experience perspective because some items (e.g. condiments) will be sent to the consumer and remain unused. It also doesn’t allow for maximal customization of which accessories are sent to the consumer (e.g. the consumer wants a plastic fork, but not a knife).

  

It’s Not an Experience Unless It Actually Happens.

 

In the previous paragraph, I said that the proposed solution is sub-optimal, but it is viable. The implementation of such a solution will encounter less (little?) resistance from the restaurants because it involves a very small hassle.

 

The “all or nothing” approach brings little disruption in the workflow of employees who are putting together the takeout kits. There is, indeed, an additional step in their workflow – put everything or nothing, but it is feasible. With this very small hurdle for restaurants, the savings on plastic cutlery will probably start to matter from a business perspective.

 

When designing customer experiences, services and, behavioral interventions designers need to keep in mind the feasibility constraints and the legitimate points of view of stakeholders. Restaurant managers who decide to put everything in the takeout kit even if they know many people don’t need the plastic fork and knife set aren't keen on “destroying the environment”. Their job is to optimize workflows, supply-flows and customer experiences and, ultimately, to keep (make) restaurants profitable businesses.

 

Any behavioral / customer experience design proposal that interferes with business goals will not be implemented by businesses. It’s Not an Experience Unless It Actually Happens.