When do you see free refills on drinks?

by on May 2, 2010 at 5:05 am in Food and Drink | Permalink

Jacob, a loyal MR reader, asks me:

When I last visited New York City, I was annoyed that most restaurants there do not offer free refills on soft drinks.  Why is this?  An easy answer is that it is due to the fact that most restaurants do not have soda fountains, but this explanation is unsatisfying as it does not explain the underutilization of soda fountains.  In Europe it has been suggested previously on the blog that this phenomenon is due to high taxes on sugar, etc. but I do not think this applies in NYC.

Since I don't ask for refills, I can't vouch for the empirics, but let's say that's true.  The first-order economic prediction is that drinks are sometimes used to charge for table space in the restaurant, a'la the Lott-Roberts paper.  The more that land costs, the more that table space costs the restaurant.  New York City establishments are usually crowded.  That means they want to keep on charging you for holding the table and that means no free refills.

That's just a guess.  Do they have lots of free refills in North Dakota?

1 Dan May 2, 2010 at 5:29 am

It would be somewhat shocking at this point not to get a free refill in Wisconsin.

I would also find it somewhat shocking not to get a free refill in San Francisco (my more recent home). Both the empty dives and the packed spots.

2 Tim May 2, 2010 at 5:34 am

Perkins (at least in Madison, WI) has free refills. Or as they, you can order a bottomless cup of coffee, or a bottomless Coke.

3 Ilya May 2, 2010 at 6:14 am

Your proposed explanation sounds right to me. When I was in Tokyo in the mid-90s, free refills were nearly unheard-of, even at American chain restaurants like Subway. The main exception was at “family restaurants” such as Denny’s, which were famous for offering free refills of (non-potable) coffee.

More generally, the idea that restaurants were essentially letting you rent a table was something that everybody understood and treated as a consumer calculation. MacDonalds was well-known for letting you stay forever once you’d bought something (even though there were no refills), and so it would often be full of students with all their books laid out next to a bag of fries and a drink.

Even karaoke sometimes served the same purpose; if you stayed out drinking past the last train, a common solution was to rent a karaoke room just to have a place to stay for the four or five hours until the first morning train. (Or until you could go back to work in the morning …)

Starbucks is an interesting point of comparison here. Old-timers may recall that they went through a phase (in the late 80s or early 90s?) of making their seating and lighting as uncomfortable as possible to encourage turnover. Then they shifted abruptly to the strategy of cozy, space-inefficient armchairs. My guess has always been that their research revealed most people will buy their drink whether or not there’s a seat, so they can afford to have an environment where seating is tempting and even a bit “aspirational”.

4 Bob Knaus May 2, 2010 at 7:02 am

Free refills are almost unheard of in the Bahamas, even at “family” restaurants. Only in a couple places in the Abacos, and only on iced tea, and your limit is one free refill of that. You can usually get (grudging) refills of tap water.

Part of that is due to scarcity of soda fountains, which I attribute to frequent brief power outages. The cooler full of canned sodas will stay cold and functional even with the lights out.

There is an economic reason for the power outages too… the government policy of one power rate nation-wide. But try telling a Bahamian that the key to more reliable power in the Family Islands is to charge more for electricity there than in the capital, Nassau. Won’t fly.

5 J May 2, 2010 at 7:33 am

In London most of the restaurant do not have free refills. However, Nando’s (a chain restaurant, some in the middle of London) has. So just land prices cannot explain the heterogeneity.

6 Ruth May 2, 2010 at 8:01 am

No free refills in Santa Barbara 🙁

7 freeman May 2, 2010 at 8:29 am

About 10 years ago free refills were more or less unknown here in Austria.
In the last years most rural McDonalds restaurants and some restaurants in retail stores adopted that policy.
But you won’t find a fountain in a restaurant in downtown Vienna.
I guess it works when the customers mainly come to have a quick lunch and then leave again. If the restaurants are frequented by people with a lot of spare time (e.g. students) it doesn’t.
Land prices may also be a factor, but I think not the only one.

8 Jason May 2, 2010 at 9:37 am

In my experience living in Oklahoma, refills are always free & sometimes not asked for. Many places offer a drink-to-go (also free) or simply have the soda machine accessible to the customers so they may help themselves. We are also fat & unhealthy as a population, though I’m absolutely positive there is no causal relationship present in that toss away observation.

9 piannaf May 2, 2010 at 9:53 am

When I lived in Connecticut, I had free refills just about anywhere.

I’m in Brisbane, Australia now which has a lot of space but very high rent. Have to pay extra for condiments, utensils, and even tap-water at most places.

10 billb May 2, 2010 at 10:14 am

Austin, and Texas in general, has free refills whether the fountain is a self-serve type, it’s behind the fast food counter like some McDonald’s, or it’s on the “gun” behind the bar at a nicer place. The one exception to this seems to be the Vietnamese and Korean restaurants here in town that serve a can of soda and a glass of ice instead of a fountain drink. They’ll charge you for another can. Iced tea and water is still freely refillable at these places.

11 k May 2, 2010 at 10:38 am

There is no such thing as a free refill.

12 Zubon May 2, 2010 at 11:05 am

Michigan: free refills except on alcohol and milkshakes.

Movie theaters offer free refills on soda and popcorn, but how often does anyone take them up on it? Unless you are seeing several movies or going with a large party that will be sharing (and has someone willing to leave mid-movie for more), you are not getting through that much and then more. It must make the $5+ popcorn or beverage look like a better deal.

13 Yancey Ward May 2, 2010 at 11:26 am

Though I am of the same opinion as k, there is no such thing as a free refill, having traveled much of the country, automatic and unbilled refills are the norm in the US for all non alcoholic drinks. Indeed, I cannot remember the last time I had to pay directly for a refill.

14 Practiz May 2, 2010 at 11:38 am

In Israel there were never free refills anywhere. The only exception was when Subway entered the local market – they employed free refills for a brief time but stopped the practice. the general assumption was that this was because Israeli consumers saw free refills as a suckers deal on the part of Subway and took full advantage of the sucker.
In general, I have found Israelis think that free refills could only exist in countries where consumers are not savvy enough to take advantage of loop-holes.

15 Christopher Monnier May 2, 2010 at 12:10 pm

I wonder what the history of “free refills” is. Growing up in Wisconsin in the 80s and 90s, I remember when Burger King differentiated themselves from other restaurants (primarily McDonald’s, I presume) by offering free refills. It seemed to good to be true, as I remember not having to pay significantly more for a refillable pop (I’m from Wausau, right on the borderline between “pop” and “soda”) from Burger King than a non-refillable pop from McDonald’s. Maybe it was just routine inflation, but I seem to remember that when McDonald’s went to free refills, Burger King and McDonald’s increased their prices significantly, presumably pricing in the cost of “x” refills into the cost of a pop, where x is the average number of refills per customer.

Also, I remember that until the mid-to-late 90s, Subway outlets in Minnesota and Wisconsin charged $0.25 per refill. And, still true today, if you stay in a Subway for more than 5 minutes, your clothes smell like the bread they’re constantly baking.

16 astonerii May 2, 2010 at 12:31 pm

Weird, in all the places I have lived in the USA all the restaurants I have been to have had free refills. On vacation I can only remember being charged for a refill in Ukraine, Philippines, Japan, Poland, Greece, and Italy while England and France had free refills.

17 addicted May 2, 2010 at 1:09 pm

The simple reason, I think, is the large number of international visitors.

In fact, while I was a student in Atlanta, I would almost always wonder why a family of 4 would buy 4 different drinks (and the large ones at that. Now thats an interesting article. Why do so many pay a couple of dollars more when they can get the same thing for much less?). I think the US is missing a culture of sharing that many other countries have.

In other words, most international tourists would buy 1 drink, and share that amongst the whole family. This would severely cut into the companies’ profits considering how much money they make of these drinks.

18 Stormy Dragon May 2, 2010 at 1:32 pm

Does the ratio of take out business to eat in business have an effect? If most of your customers are leaving right away, they’re not going to be able to take advantage of the free refills anyway, so it becomes relatively less costly to provide that service.

19 John May 2, 2010 at 2:22 pm

I love how @douglas thinks free refills are a sign of high moral virtue, while @addicted thinks free refills are a sign of selfishness.

My family never got suckered though, we always only bought one soda and refilled it, but I agree that could have something to do with it, my family was rich and did that but I knew tons of poor families that didn’t, which always confused me. I also agree with Tyler’s assessment, and I think the anecdotal evidence from the comments bears it out… no refills in Japan, Hong Kong, or New York.

I also think it’s adorable that some people hate NYC as much as @douglas… here restaurants all either hate you or the mafia forces restaurants to not give free refills, whereas of course McDonald’s makes them available out of its benevolent love for mankind. I would advise him that the only mafioso governing soda prices here is the landlord. No one from out of town seems to understand the pressure store owners are under to pay the rent. It’s a competitive market here, if you’re not going to maximize your take, somebody else will.

20 heyref May 2, 2010 at 2:55 pm

In my experience in Boston (where I eat more fast food than I usually care to admit), there are free refills anywhere that has a self-serve fountain. I imagine Michael Cain is onto something about the cost of policing refills at those stations and the savings from having customers get their own drinks.

Places with drive throughs (which is most of them outside of downtown) have to have fountains behind the counter for drive-through customers. So, if they’re short space (because land is expensive or for some other reason), they might forgo the self-serve fountain. If there is lots of space, they can cut costs by having one. So, maybe they’re not exactly renting out tables, but paying for the extra labor to pour drinks by not giving out free ones.

21 aguynamedbry May 2, 2010 at 3:54 pm

Born and raised in Fargo (18 years) – nearly all refills were free, and if they weren’t the servers would warn you.

Seattle had many free refills, just moved to NJ – so far it appears that refills are as much as the original order, but if you stop at 1 it’s less than the many bottomless cups in the Seattle area.

22 Shane M May 2, 2010 at 4:09 pm

I’m in Nashville, and there are free refills at most places except low end fast food. My interpretation is that the free-refills enable servers to earn a better tip at the sit-down places – especially the buffet lunch places that get you in/out quickly and there’s very little other service other than cleaning the table.

Lenny’s subs – free refills if I go up to the counter, but no tip
Pizza Hut buffet – free refills – buffet so drinks are a way to earn tip
Local Mexican spots – sit down meals – free refills along with free chips/salsa. Waiters here really should earn better tips due to extra service.
Chinese buffet – free refills – good service
Arby’s – free self-serve refills
Local toasted sub shop – free self-serve refills

I actually prefer the self-serve refills.

23 Nylund May 2, 2010 at 7:33 pm

Here in Texas, drinks are endless. Sometimes they just give you a huge 32 oz cup off the bat, sometimes they come by and refill it, but often, about every 5 minutes, someone will just replace your glass with a new one (even if you’ve only had a few sips from the old one). Coming from NYC it seemed odd, not to mention glutenous and wasteful. But generous, yes. Space is not an issue here. Most places almost always have free tables, so this anecdote would support your hypothesis.

24 Adam May 2, 2010 at 8:33 pm

Restaurant quality is another key variable I do not see being discussed. All around the US, nicer restaurants are less likely to offer free refills (as a way of price discriminating against the rich, who will not want to seem skimpy?). A higher percentage of nice restaurants exists in NYC than elsewhere in the States, no? Just like other things sold in NYC, drinks are more expensive because “discriminating”, elite customers aren’t likely to fight it with their wallets.

25 Frank May 2, 2010 at 10:04 pm

Just another example of price discrimination!

26 Duncan May 2, 2010 at 10:43 pm

I’ve lived in Wisconsin, Indiana and Ohio for a combined 18 years; I can’t think of a single time I’ve ordered soda in a restaurant in any of Midwestern state and not been offered free refills. I’m fairly certain there’s no restaurant in Madison, WI which has soda but not free refills.

27 Dumbagent May 2, 2010 at 11:26 pm

Free refills is primarily a United States phenomenon, only recently spreading to other countries (albeit very slowly).

Real estate could be part of the reason for the lack of free refills in new york, but it also depends where. Many restaurants in Manhattan can count on a certain volume of tourists coming in and don’t have to worry about repeat business. I doubt any of these customers base their decision to eat at these establishments on whether there are free refills or not.

28 BKarn May 3, 2010 at 12:51 am

“First of all, Australia is quite warm by US standards.”

Some simple temperature data from the southern half of the United States would be informative before you go insisting this is the case to anyone else.

I’ve spent much of my life in the southern portion of the country from one coast to another, and while I’m sure at some point in my childhood there were incidents in which we had to pay for refills, I’ve generally gotten them as far back as I can remember. I’ve always assumed one of many reasons was to give the impression of higher demand, by way of cars in the parking lot and people in the store. In my days working in fast food over two decades ago, aside from the lunch and dinner rush we always had more than enough tables. When more competitors began popping up, management staff would even move their cars in and out of the main parking lot so that it never looked like “no one is eating here.” Additionally, we *greatly* preferred to service customers through the drive through anyay, and did a tremendous amount of business that way, so there was typically little concern about making the place seem too crowded.

29 bjartur May 3, 2010 at 10:53 am

Minnesota: free refills on pop virtually everywhere, but lemonade seems to be the transition drink–sometimes free, sometimes not. If it comes out of the same fountain as the pop then refills are generally free, but if it’s a higher quality lemonade you’ll generally have to pay for refills (e.g., at Big Bowl). Sometimes with the higher quality lemonades if you ask for a refill and it’s not free the waitress might alert you that they charge for refills but give it to you free “this time” anyway, understanding that you probably expected a free refill when you ordered it (and probably hoping for a higher tip for the special treatment). On the other hand sometimes the high quality lemonade has free refills too (e.g., Lakeshore Grill at Macy’s), so there’s a lot of uncertainty here. But if the lemonade tastes mediocre then free refils are definitely expected.

30 Nuntius May 3, 2010 at 12:57 pm

Free refills on fountain beverages are a cheap value proposition for most chain restaurants.

Most of these fast-food places are making all of their money on the sale of beverages – the margins on the actual food (burgers, french-fries, etc) are razor thin.

Soda, on the other hand, is about 4 cents for the syrup and 5 for the cup, perhaps a few cents more for ice. You can then charge $1.99 for the drink, and giving someone a free refill will seem to them to be a free $1.99 – nice, right? And it only costs the proprietor about 5 cents. Win-win situation, until you have to start factoring in some externalities (say, the cost of insulin shots).

31 Phil May 3, 2010 at 2:37 pm

I’ve yet to run into anywhere in North Dakota you can’t get a free refill. Even the movie theaters (as somebody already pointed out) have free refills.

However, right across the river from Fargo on the Minnesota side I have run into a small fine dining establishment that did not offer free refills. They also neglected to tell me and my sodas cost more than the meal I had (this was at lunch so the meal was relatively cheap).

I remember when Hardee’s first started the free refills, I was probably still in elementary school at the time, me and a few friends went and had a soda drinking contest. We got really, really sick.

32 Alex May 4, 2010 at 12:07 pm

I suspect free refills enable vendors to sell their drinks at a higher price, and drives up their margins proportionally.

For example, portions in the US are very large. People can charge a high price for large portion meals because people believe there is value to be had. This increases margins.

Shouldn’t the real question be: If refills are free, why would anyone buy a larger size?

33 A May 31, 2010 at 1:42 am

Growing up in the DC suburbs, I’ve encountered two places free refills for soda was not assumed: extremely cheap takeout places, and sit-down restaurants that offered premium bottled sodas (IBC or Jones) or chilled mugs.

International businesses not only have differing consumer habits, they don’t have the nearly free corn syrup we have. If you’re willing to spend a few thousand dollars on the setup, fountain sodas are something on the order of 1-10 cents.

There are obviously dual equalibria at work here wherein local expectations are the primary driver. Searching for a reason NYC made the jump (and it doesn’t appear any other continental US city did), I’m inclined to go with some combination of non-Southern weather, high rate of foreign consumers (who have no free refill norm), high cost of living relative to soda expenditures, and prevalence of independent restaurants.

34 Mike McIntosh December 10, 2010 at 12:17 pm

I live in Cincinnati. I think that “free refills” is a midwestern thing. Expensive restaurants in Cincinncti give free refills because you are spend a lot of money. And chain resturants do too! But in the Northeast, New york and Boston and Philly, forget about it. A coffee shop in N.Y.C. won’t do it because you are not spending much money. It depends on the region of USA you are in. Europe, definitely NO!

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