Hedonic pricing model on cafe menu pricing in Singapore

• Main Authors: Ng, Agnes Shu Lei, Chern, Yeh Chi, Ho, Sylvia Si Hui
• Other Authors: Margaret Triyana
• Format: Final Year Project
• Language: English
• Published: 2016
• Subjects: DRNTU::Social sciences::Economic theory::Microeconomics
• Online Access: http://hdl.handle.net/10356/66539
• Institution: Nanyang Technological University

Our study aims to investigate key cafe characteristics in Singapore and their association with prices to serve as a guide for cafe owners to make better decisions for their cafe menu pricing. Our study also aims to fill the research gap, as there are few studies in the restaurant and cafe literature that utilises the hedonic pricing model to guide cafe menu pricing decisions. With the collection of data of the characteristics of the cafe from 243 cafes based on a compiled list in Singapore, we applied the hedonic pricing model to investigate the association of the cafe characteristics with coffee price. As the online ratings are collected from two separate sources, HungryGoWhere and TripAdvisor, we conducted separate regressions and found that seating capacity, quality rating, ambience rating, air-conditioning, Wi-Fi and chain have a consistent positive association with coffee price. In addition, distance, value rating, outdoor seating and availability of power outlet have a consistent negative association with coffee price We also did an extension study on dish price to reinforce the results that we obtained from our main findings. We found that the characteristics that have a consistent positive association with price are seating capacity, ambience rating, air-conditioning and Wi-Fi. Outdoor seating has a consistent negative association with price. Therefore, our findings of the key cafe characteristics will be able to assist cafe owners in their cafe menu pricing.