BREAKING THE EAT – ALL – YOU – CAN BUFFET CODE

The most frequently asked question whenever one is in an Eat – all – you – can buffet restaurant is that “how does the restaurant make money?” I mean given the huge selection of food available on the buffet table and the “unlimited” amount of food that a patron can consume, most diners would think that they’re getting “the better end of the deal” and that the restaurant would surely go for broke feeding every patron till their belly ache. Actually, the truth is there is no such thing as a free lunch (both figuratively and literally) and restaurant that offered such fare are actually making quite a profit. To understand how an Eat – all – you – can buffet restaurant are making money, it is important to fully grasp two important issues central to this concept. The first one is the costing of foods being served in restaurants and the second issue being the difference between “unlimited” and “eat – all – you – can”. In a regular ala carte restaurant, food (or entrée) are priced based on servings or serving size. To illustrate, whenever a patron orders ala carte, the food is served on a dish, which represents one unit or serving that is enough to satisfy certain number of people usually 2. In some restaurant, they offer varying serving sizes of the same entrée to satisfy varying number of patrons. So there is a regular size that is good for 1 – 2 persons and a larger size good for 3 – 4 persons and still larger serving size for more persons. Pricing of the dishes in these ala carte restaurants are based on servings or serving size. In an Eat – all – you – can buffet restaurant, there is no serving limitations nor there is serving sizes. Regardless of any type of restaurant, the method of costing food or entrées is the same; that is they are based on weight. Raw foods like meat, seafood and vegetable are purchased based on their weight. In a regular ala carte restaurant, an entrée’s serving size is determined by weight and costing is based on all inputs that go into preparing the entrée in it’s specific serving size including labor, cooking fuel, the raw food including ingredients. In an Eat – all – you – can buffet restaurant, since there is no serving size or serving limitations, the cook could prepare the entrée in “bulk” (in short, in a very large serving size) even though there is a practical limitation to the size of that “bulk” (such as the limiting size of the cooking utensils and the time needed to fully cooked such large size). At any rate, in an Eat – all – you – can buffet restaurant, each entrée at the buffet table has a certain cost based on weight (as in per kilo). In the Philippine setting, the cheapest entrée on the buffet table would be steamed rice. A kilo of local variety uncooked rice costs around Php20 – 30 per kilo while that of imported jasmine rice variety cost somewhere Php50 a kilo. Add labor and electricity plus water, a kilo of steamed jasmine rice could cost anywhere from Php65 – 75. Anyway, not all entrée is as cheap as steamed rice but some entrées would definitely cost more than others. Taking note of that in mind, it’s time to explore the second issue. Though an Eat – all – you – can buffet restaurant may seem to offer an “unlimited” food for the patron to consume, the reality is there is a limitation, a natural limitation, which in this case is the size of human appetite hence the term “Eat – all – you – can”. Now the question is how big is an “average” human appetite? 100 grams or food? 200? Half a kilo? Take note also that human appetite tends to “increase” when there is an abundance of food available or when the atmosphere is “conducive to binge eating” as in the case of Eat – all – you – can buffet. Despite that, assuming that a patron consumes ONLY the most expensive entrée on the buffet table to the exclusion of other entrées, we now have a “maximum cost per patron”. From this “maximum cost” add a certain mark up to cover overhead expenses, we now have our buffet price. The mark up in this case is our “minimum” expected profit. This is because in reality, patrons don’t just consume a single dish all throughout, they actually sample practically everything on the buffet table. As such, the profit can only get “fatter”. However, all of this computation is based on an assumption of an “average” human appetite albeit an increased version of it. What about those patrons who have above average appetites? Well, this is where statistical theory comes in, The Law of Large Numbers. What this theory suggests is that while there are patrons who have above average appetites, there are also patrons who have below average appetites and that in large numbers, the two just simply “even out”. Furthermore, at the end of the day, what really matters is how much profit does the restaurant make? And profits are not computed on an individual patron basis but by bulk. As an example, assuming that there are 1,000 patrons taking their meal at a certain Eat – all – you – can buffet restaurant and assuming also that the average appetite is half a kilo, that would theoretically require the kitchen to prepare around 500 kilos of food just to satisfy the appetites of the patrons but in actuality due to the “relatively good appetite” of some jolly old guests, the kitchen dishes out 550 kilos of food. Supposed that the average cost of the dishes is Php200/kilo and the restaurant charges Php300/person, the restaurant would still make a profit of Php300/person x 1,000 person – 550kilos x Php200/kilo = Php190,000 (exclusive of overhead costs). Although the restaurant made Php10,000 less than “normal” (the profit should be Php200,000 assuming average appetite) but still, it makes money. Having gotten a picture on how an Eat – all – you – can buffet restaurant makes money, it is thus easier to understand the various policies and practices that an Eat – all – you – can buffet restaurant implements. One such policy is No Sharing, which may sound absurd given the fact that the offer is supposedly “unlimited”. Well, the reason is because the pricing of the buffet is based on an individual’s appetite size, sharing with a NON – PAYING sit – in guests would render the “limiting” assumption invalid but sharing with another paying patron is actually favorable to them. The same reasoning applies also to the policy of no leftovers because it exceeded the assumed limits of the appetite size on which pricing is based. The use of shallow but heavy plates in an Eat – all – you – can buffet restaurant has its purpose to deceive the senses. With a shallow plate, a patron could easily “fill up” the plate thus tricking the patron into thinking that he/she has enough. The same goes with heavy plates. In short, what all this analysis on the business model of an Eat – all – you – can buffet restaurant suggests is that “The House Always Wins” regardless how much one eats (except of course if there are too few guests patronizing the establishment such that the restaurant cannot recoup the overhead expenses from the net margins). But then again, do we really need to “Beat the House” when dining in an Eat – all – you – can buffet restaurant? I remember a classmate and a friend of mine in business school who offered her thoughts on Eat – all – you – can buffets. To paraphrase, she said that we pay not to binge eat but rather we pay for the variety of dishes available, which is quite true. When we dine at a regular ala carte restaurant, because of the price, we can only order a limited number of entrées but in an Eat – all – you – can buffet restaurant, with the same “budget” or a little bit more, we actually have more choices to choose from in order to satisfy our craving and that is really the benefit of dining in an Eat – all – you – can buffet restaurant. However, if one is really mischievous enough as to “dare to BREAK the House”, there is actually a way…….. but not by eating more. The formal business classification of a restaurant is food service companies and as such, it is surprising to most people that restaurant doesn’t really “sells” food or dishes or entrées or meals but the services that goes into preparing and serving the food itself. And that services includes among others: buying of raw foods and their ingredients, preparation including chopping, slicing, dicing, marinating….., cooking and preparing the food/dish/entrée, setting up the place creating the conducive ambience of food enjoyment or simply for occasions, the serving of the food/dish/entrée, the cleaning of the table, washing of the utensils, maintaining a sanitary environment, the whole enchilada. It is the service that is basically why we would venture out to dine in a restaurant and willingly part our hard earned cash. We like to eat Chinese dishes or Italian food but we don’t know how to cook Chinese or Italian or perhaps, we’re a lousy cook or better yet, we’re too lazy to cook. The solution, we dine out at a Chinese or an Italian restaurant. We don’t have time to cook because we’re too busy so we dine out. We had a party but we are so overwhelmed with the preparation and so we make a reservation with a restaurant. The kitchen is stockpiled with dirty dishes that reaches to the ceiling and waiting to be cleaned, the solution………………… we dine out at a restaurant. It is by understanding the nature of the restaurant business that would provide us with a strategy “to beat the house” (which in this case is the Eat – all – you – can buffet restaurant). The strategy is actually simple. Rather than filling up the plate with food per trip to the buffet, get only a small portion of the food per plate but “get as many plates” by returning more often to the buffet table. In that way, you practically eat the same amount of food that your stomach can digest but the restaurant waiter has to remove more plates, the dish washer has clean more plates than the usual load, both of which would probably necessitate hiring more hands just to keep up the service quality. Furthermore, because more plates are needed to “circulate”, the restaurant has to make additional investments in buying more utensils. As a result, financial wise, the restaurant in an effort to maintain the service quality would have to absorb an increase in their overhead costs which consequently reduces their profitability while at the same time requiring them also to shell out more money just to satisfy the patrons’ whims. And that is how you make the “House (in this case, the Eat – all – you – can buffet restaurant) run for its money”. On a more serious note however, this concept of Eat – all – you – can or its equivalent is actually a very “clever” business model. By offering unlimited use, the sellers stoke the buyers’ greed and entice the latter to patronize the formers business. The sellers’ offer of unlimited use is actually a ruse because in reality there is a “natural limit” to the use of the service or product that the sellers offer and the sellers priced their offering based on the maximum limit, thus guaranteeing their “minimum” profitability. Pretty shrewd but not bad.