How to arbitrage the salad bar?

by on March 18, 2011 at 1:48 pm in Economics, Food and Drink, Uncategorized | Permalink

Nate Silver has a tip, based obviously on the assumption of additive separability of utility:

4. Go crazy on toppings. Check out how high the prices for walnuts, almonds, gorgonzola crumbles and croutons are in the graphic above. Much to its credit, Whole Foods doesn’t stock the best salad topping of all — bacon bits, obviously — in its salad bar. Why? Because it costs a whopping $21.28 per pound. With any luck your local salad-bar merchant isn’t quite as savvy.

I don’t want free toppings!  And you have to pay me to eat bacon bits.

Norman Pfyster March 18, 2011 at 2:02 pm

You don’t like bacon? My respect for your taste and judgment declined precipitously.

Brian March 18, 2011 at 2:04 pm

He hates bacon but loves tocino.

MC March 18, 2011 at 2:58 pm

Brian FTW

Rahul March 18, 2011 at 2:07 pm

My respect for his self-discipline went up.

jh March 18, 2011 at 2:38 pm

It’s not self-discipline if you don’t like it.

BillWallace March 20, 2011 at 1:39 pm

Bacon made with good pork is good for you.

Newt March 18, 2011 at 11:38 pm

Bacon bits are a soy product with flavorings extracted and synthesized at a chemical factory. They are 100% vegetarian. You may love them or hate them, but please do not confuse them with bacon.

Steko March 19, 2011 at 1:01 am

Quit buying your bacon bits at Whole Foods imo. Oscar Meyer uses real bacon and they’re effing delicious.

IVV March 18, 2011 at 2:05 pm

I remember a Chinese buffet that had to specifically place limits on mushrooms. Because, sure enough, you could watch people go up to the buffet, pull all the mushrooms out of whatever dishes they were in, and leave.

The big thing about arbitraging the salad bar is about how you buy the salad. If you pay by the pound, then load up on items that have a high per-pound cost. If it’s a fixed cost for a single trip, make a big salad that brings you the greatest satisfaction, no matter what the cost of the components are. If it’s all you can eat, then you might want to go for high cost per-calorie or per-volume.

Just be creative. Make a salad of chickpeas topped with bleu cheese crumbles and roasted red peppers. Or tomato cubes and feta drizzled with balsamic. Tuna and mandarin slices with croutons. Chicken and beets with a light cream dressing (yogurt’s good, if it’s offered).

Steko March 19, 2011 at 1:09 am

“If you pay by the pound, then load up on items that have a high per-pound cost.”

This is absolutely wrong. In every case you should make the salad you want to eat if you’re making a salad to eat. Unless you’re a sadist and you derive the greatest satisfaction by screwing over the salad bar owner.

Now if the salad bar offers a better deal then the shelf on say walnuts then you buy your walnuts at the salad bar but that’s not making a salad to eat.

IVV March 21, 2011 at 1:34 pm

You don’t have to be a sadist, just an arbitrageur. Since we’re talking about arbitrage, we’re talking about emotionless trading effects, not wicked good salad.

And, as I said, I’ve witnessed people do precisely that, with mushrooms. You yourself proposed it with walnuts. No sadism is involved.

David March 18, 2011 at 2:44 pm

I have heard that Yoram Barzel used to talk about this very issue in class at length, wondering why people didn’t just load up their plates with ginger.

charlie March 18, 2011 at 3:22 pm

I regularly stop at Whole Foods, buy one slice of bacon (about .80), add some croutons/cheese at the salad bar, then get my own olives and bag of spinach.

Easy salad.

jon March 18, 2011 at 3:51 pm

Raspberries have a very high price / weight ratio, are commonly found in NYC buffets, and are delicious independent of the other items in the salad bar. They are almost always cheaper to buy at a by the pound salad bar than in pint containers.

Elliot Rosewater March 18, 2011 at 3:56 pm

I first year of uni we would all go down to the sandwich bar are load up on bacon. They charged by weight under the assumption kids would get “normal” sandwiches. So you can imagine how much bacon we got

chris March 18, 2011 at 3:57 pm

I don’t want free toppings!

The toppings aren’t free — they’re 7.99 a pound. That’s the whole point of the article — everything is 7.99 a pound if you get it at the salad bar, which is a really terrible deal for most ingredients.

However, Nate somewhat overlooks the actual value of the salad bar, which is the ability to buy ingredients in arbitrarily small quantities without having to store the leftovers until you use them up or they go bad. (And even if you can store them all and use them within reasonable time limits, you pay a time cost dealing with all the packaging for each separate ingredient every time you want a salad.)

Most of the price is convenience premium, which is either worth it to you or not, depending on your circumstances, but claiming that you could have bought the ingredients separately cheaper is missing the point — indeed, sometimes it’s false, because buying the smallest available package of each ingredient would cost far more than the salad bar.

Ed March 18, 2011 at 4:06 pm

I think Tyler’s point is that if you get too much of a “good” it becomes a “bad”. So yes, there is a sneaky way (that takes some planning and time) to get a ton of bacon bits for almost free. That doesn’t help you if the value of bacon bits to you is negative five cents per bit. It doesn’t help you if the value of bacon bits is positive at first, but tips to negative if you get too many in one day.

Its sort of the same with “buy one, get one free” specials. I pay a storage cost for the extra one. If you live in Manhattan you realize this quickly, just having more things is a negative because of the size of your apartment. That is one way people in Manhattan can afford the ridiculous rents, the same apartments keep them from buying and storing all the other things people who live in cheaper areas buy. For bacon bits, think of your body as a Manhattan apartment.

Tom March 19, 2011 at 9:25 am

“That is one way people in Manhattan can afford the ridiculous rents, the same apartments keep them from buying and storing all the other things people who live in cheaper areas buy.”

Yeah, poor suckers who have a basement don’t get to pay 2x as much for an item, and don’t get to visit the store nearly as often.

Peter March 18, 2011 at 5:04 pm

One key to getting your money’s worth at a salad bar, and especially at an AYCE buffet, is to avoid starving yourself for hours beforehand. Otherwise you’ll chow down at a very rapid pace when you first arrive and won’t end up being able to eat as much as if you ate at a steadier pace.

JCL March 18, 2011 at 5:09 pm

“How to make a huge salad you don’t want to eat, while raising costs for the vendor in the process for no good reason.”

See also: Subway.

JCL March 18, 2011 at 5:12 pm

Since when did it ever make sense to determine what foods we eat based solely on price and not nutritional value or price/nutrition ratio?

Scott March 19, 2011 at 8:49 am

Who said to only use price? The linked article doesn’t say to get a heap of the single most-expensive item available. It merely suggests that when there’s a close substitute to an item you like, go for the more expensive one.

The Unqualified Economist March 18, 2011 at 5:57 pm

I think Tyler’s point is he does not want ‘bacon BITS’ — the synthetic ugly poser to actual chopped bacon.

Jacob March 18, 2011 at 6:14 pm

I think the point here is that if you were in the market for, say, gorgonzola or walnuts ANYWAY, then you’d benefit by just buying it from the salad bar rather than elsewhere in the store. If I wanted a pound of walnuts to make cookies, I could buy them for $8 from the salad bar rather than more than $8 prepackaged.

miu miu March 18, 2011 at 6:20 pm

That reminds me of The Economics of Block Booking you let us read in your class..

Sbard March 18, 2011 at 7:44 pm
Mark Haslem March 18, 2011 at 10:48 pm

Well if you are trying to maximize value by adding expensive high fat ingredients like nuts and bacon don’t forget to factor in the costs for a triple bipass.

Matthew March 19, 2011 at 9:49 am

Actually it is high carb and especially high sugar diets that cause heart disease, not nuts and bacon.

Sophie March 18, 2011 at 10:54 pm

I think the salad bar is another wonderful example of American exceptionalism – not understood by anyone else, anywhere, (gastronomically rather than economically speaking….).
I mean if you want to lose weight/ be healthy – you shouldn’t be at a salad bar, going crazy on toppings esp bacon bits in any case…and if you don’t want to lose weight/be healthy, well, there’s better options out there …
In short, I don’t understand the concept of salad bars, even before geting onto the whole issue of whether I can get a good deal at one.

Rahul March 19, 2011 at 12:04 am

Need not be about quantity. It is also about customization; the ability to craft a small salad the way you like it.

Steko March 19, 2011 at 1:22 am

“I don’t understand the concept of salad bars”
The point isn’t generally to eat a ton of food. The point is to save money on preparation/service so that better value can be delivered elsewhere.

Scott March 19, 2011 at 8:39 am

I do this at Subway. No matter what the sub is, I get every topping except olives, which I detest (and onions if I’m going to be seeing my girlfriend that day).

Bugeater March 19, 2011 at 8:43 am

There’s a salad bar at the grocery store a mile or so from my house, and my typical practice on weekend mornings is to stock up- not for an actual salad, but for omelet ingredients.

Real bacon bits are a great choice here, as they don’t weigh a whole lot, and you don’t need tons of them to add lots of flavor to eggs. Similar are things like peppers and mushrooms. Per weight, chicken and ham aren’t as good a deal for this purpose.

You can make a really tasty 6-egg concoction (two adults and a toddler) for $4 of ingredients plus the .80 or so for the eggs.

Dave Barnes March 19, 2011 at 9:30 am

@Bugeater,
Awesome.

jj March 19, 2011 at 10:42 pm

Cute post, but clearly this is not arbitrage. The standard definition of arbitrage is a zero-net investment, risk-free profit. This satisfies none of the three criteria. If you could enter into a contract to resell the toppings, perhaps.

jb March 19, 2011 at 11:18 pm

jj,
You’re selling the toppings to yourself in this instance. A broader definition of arbitrage is “A discount or profit earned with zero net investment on your part by manipulating price differentials.” So if you assume that you value the toppings at the shelf price, buying them cheaper at the salad bar price is indeed a profit.

Ivan March 20, 2011 at 1:27 am

7.99 per pound is highway robbery anyway

lasvegasaccountant March 26, 2011 at 4:57 pm

It definitely doesn’t take very much to get over $10 at the salad bar, hence the saying “Whole Paycheck”.

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