Is there a case against small plates on restaurant menus?

by on June 29, 2013 at 5:42 am in Economics, Food and Drink | Permalink

That is the current rage in the DC dining scene, namely that you can more easily order lots of “small plates” rather than a big plate with steak and spinach.  Neil Irwin makes the case against that practice here, Matt Yglesias responds and defends small plates.

Neither mentions price discrimination or for that matter does much analysis of price.  You will recall Glazer’s Law: “It’s either taxes or price discrimination.”  And usually it is price discrimination.

Here is Alex on bundling cable channels as a form of (possibly) welfare-improving price discrimination.  Read through that stuff if you don’t already know it, but the punchline is that big plates are like a “take it or leave it” cable contract, and small plates are like the a’la carte cable pricing schemes.  The bundled contract gets some marginal channels to people who wouldn’t otherwise be willing to pay for them if those channels were sold on a stand-alone basis.   In the TV context some of us browse reality TV, Farsi news, and women’s roller derby, even if we wouldn’t pay for those transmissions per se.  In the restaurant context, the big plate gets some of us to eat more vegetables and munch on more parsley.  Who would pay much for coleslaw?  Output goes up under many of the most basic scenarios and consumer welfare goes up too.

In a more competitive market, as indeed the DC restaurant scene has become, bundling breaks down somewhat.  We move toward a system of “small plates.”  So the increasing competitiveness is good for consumers but the breakdown of bundling can be bad for them, with indeterminate welfare results, which means either Neil or Matt can be correct (but do lay out the whole story, and never ever ever reason from a plate size change!)

Those who have a relatively low marginal value for the add-on items of a meal (vegetables?) will be the ones who eat less under a regime of small plates.  How their consumer surplus fares, a priori, is more complex and is not easily settled by theory alone.  But, using some typical numbers, very often those who value the vegetables inelastically are worse off under a regime of small plates.

I wonder whether Neil Irwin or Matt Yglesias likes vegetables more?

Andrew' June 29, 2013 at 6:06 am

Having the recent misfortune of trying to find something for kids to watch amongst 99 channels of cable I hereby revoke all my support for Alex’s supposition.

Jonathan June 29, 2013 at 6:57 am

No. I don’t recall Glazer’s Law, and I can’t find any reference to it beyond this post. But I like it. Is there some fuller statement of it? The problem is that it partially contradicts Jonathan’s Law which is: It Isn’t Necessarily True in the Presence of Transactions Costs.

Steve Reilly June 29, 2013 at 7:09 am

Doesn’t the comparison with cable channels break down since the marginal cost of a vegetable isn’t zero?

Tyler Cowen June 29, 2013 at 7:23 am

Doesn’t have to be zero, though you won’t find it holding for caviar…

Zachary June 29, 2013 at 7:35 am

As a Vegan, this post speaks loudly to me. I could work for or against me. But given the relative price of the input between meats and veggies, as well as the large market of vegetarians in DC, I suspect that this will make meals cheaper for me. Maybe. Maybe not.

anon June 29, 2013 at 11:04 am

Maybe. Maybe not.

You’re probably right.

CYucutfchtfc June 29, 2013 at 11:46 am

You’re probably right.

Maybe, Maybe not.

crs June 29, 2013 at 7:40 am

“Neither mentions price discrimination or for that matter does much analysis of price.”

but Yglesias opens with: “One prominent line of complaint about the small plates is that this is a bait-and-switch that’s just gouging customers.” He talks briefly about price and then moves on to quality innovations, seems reasonable. What is fascinating is their differing views on “venturesome” eating. Irwin goes to the restaurant to eat a nice meal and Yglesias goes to explore the boundaries of his palate, to each his own. Makes sense they don’t dwell entirely on pricing structures (not exogenous) … preferences are primitive to prices. Also I think the separating question should have been who has tried more vegetables once (and a hundred) times.

Andreas Moser June 29, 2013 at 7:45 am

Small is beautiful.

anon June 29, 2013 at 7:48 am

and expensive …

Steve June 29, 2013 at 7:50 am

Yes, Tyler – can you please elaborate on what you mean by ‘Glazer’s Law.’ Google gives me nothing.

Bill June 29, 2013 at 8:10 am

Hmmm. I question the price discrimination argument based on a premise of market power.

The price discrimination thesis, as it applies to a competitive strategy as between restaurants, would rely upon 1) very local market power (but, then, if one has a locational advantage that gave one market power, like the only gas station on the corner, why small plates now, and not earlier; and 2) overall market power–but, as far as I can tell, there are many restaurants in DC, and many more if you can use the Metro to reach more–and, again, that doesn’t make sense either, because there hasn’t been a decline in the number of restaurants that would create the market power that would make price discrimination a great strategy.

In addition, small plates is a high cost model…waitresses visit your table more often, there are more dishes to wash and purchase, it takes the same chef time to make a big plate as a small one, but with more plates, there is more chef time.

I would look on the demand side rather than the supply side. Preferences for variety if you are a foodie, women preference for small plates, and everyone’s preference for wine, which you can consume more of with less food.

And, the disappearance of the breadbasket and rolls.

Enrique June 29, 2013 at 8:22 am

tapas (or “small plates”) are great because you can try many more things; one of my favorite tapas place is Pata Negra in Amsterdam … but with an entree (or large plate), such as a steak or fish platter, you usually get steamed vegetables, which I never eat anyways when I order an entree because usually the vegetables are horrible (even at “good” restaurants) … one solution to this is the “Outback Steakhouse Approach,” where you get to order the sides you want with your steak

John Faben June 29, 2013 at 2:29 pm

If you really think that the vegetables at good restaurants are “horrible”, then you probably have very unusual preferences, and your experience is not likely to be relevant to the rest of us.

Shane M June 29, 2013 at 11:30 pm

Enrique – I agree regarding vegetables. Salads have even gone considerably downhill at some places where they used to be good. I rarely will say this about the main dishes – restaurants can usually make much better meats/main course than I can at home – but my home-cooked vegetables and vegetable dishes are usually far better than the steamed things many restaurants attempt.

AndrewL June 29, 2013 at 9:01 am

what about buffets?! that’s 100% ala-carte and You can eat multiple “big plates” for 1 set price.

Of course I wouldn’t go to one unless I knew I was willing to eat at least 3 plates, so that eliminates nearly all the low-quality cheap buffets.

Mark Thorson June 29, 2013 at 11:53 pm

I never eat at buffets because I’m thin, and I figure I’d be sudsidizing all those fatties.

Mark Thorson June 30, 2013 at 8:21 pm

And when it comes to ACA, I oppose it because it means I’ll be subsidizing all those smokers and fatties.

whatsthat June 29, 2013 at 9:02 am

I would think with small plates you get more of different stuff.

Also you eat less.

student June 29, 2013 at 9:06 am

Doesn’t it matter how unbundling is correlated with restaurant (chef) quality? Vegetables tell the season. Higher quality restaurants (chefs) do more with vegetables.

anon June 29, 2013 at 11:08 am

Bet you dollars to donuts that more beautiful women prefer small plates than prefer all you can eat buffets.

student June 29, 2013 at 7:04 pm

I agree. Not sure it’s the meaningful margin.

And is a carefully composed plate considered bundling? That’s not what Tyler seems to have in mind.

OwenW June 29, 2013 at 9:29 am

Hm, I’d replace ‘vegetables’ here with ‘huge mound of starch,’ in which case it’s certainly welfare enhancing for me.

Seems to me to be simple market differentiation June 29, 2013 at 9:30 am

I tend to agree with the Slate author who says, in effect, that if you want a full plate go to a place that does that. I know in my own habits, depending on the situation I may prefer standard restaurant portions, “family style” dining (i.e. a few big plates for a lot of people — my preference if I’m going with a group of friends or family), or tapas-style small plates (usually if the food is a complement to the alcohol, rather than vice-versa).

I guess among the more sophisticated crowd that cares about how impressive the chef’s name is maybe that doesn’t fly, but for the rest of us I see little dilemma.

Amy June 29, 2013 at 9:41 am

I’m more likely to go out to a group event if it’s a place which has small plates. I don’t have the self-control for large plates, so if I go to a large-plate place, I’ll only have water or tea. Places with small plates make more money off me and I get consumer surplus from being able to eat something around my piggy friends.

Having a variety of small and large plate places offers the best of both possible worlds. Let the people sort themselves.

Bill June 29, 2013 at 11:31 am

+1 re self control mechanisms.

I went to a McDonalds just after they instituted calorie disclosure next to the price on their electronic billboard, and interviewed one of the employees.
I asked: What changes have you seen since you began “advertising” calories next to the price of the item.

What she said was interesting: fewer big size value meals, and more ala carte. The biggest change was for middle aged men; women had always ordering ala carte. Or salad.

Rory Sutherland June 29, 2013 at 10:06 am

With the bundling of Cable TV packages – and many other goods – you have to consider the cost not only in financial terms but also in terms of guilt, shame, spousal disdain and self-disgust. This is partly why hotels craftily sell a bundle of high speed wifi, normal films and adult films.

Paying £20 a month for football may, in these terms, be more expensive than paying £25 a month for a mixture of football, opera and French cinema.

When I bought my last car, there was a craftily bundled luxury package which included Adaptive Cruise Control – something I absolutely love, but which I could never justify as a £2,000 stand-alone extra. I have to say it worked on me.

NPW June 29, 2013 at 10:16 am

I was looking for a cheap commuter car with good mpgs. There was a car whose base model did not include a/c, and the bundle that had it was and additional 2500. A different brand had a car with a/c as a stand alone option. I chose the second option.

I think bundles are a marketing tactic that favors the seller. I don’t see how bundles typically favor the buyer, except to justify to themselves (or their spouse) doing what they already wanted to do.

ac June 29, 2013 at 10:07 am

“In a more competitive market, as indeed the DC restaurant scene has become, bundling breaks down somewhat. We move toward a system of “small plates.””

Is there actually evidence that this is true and not just a time-specific fad…?

Portland and Paris both have pretty competitive markets. I’m not aware if they have (for more than just maybe RIGHT NOW) had a system of small plates.

Bon Supp July 1, 2013 at 3:05 pm

And DC is hardly a competitive market. Land use controls limit many aspects of development including the number of liquor-serving businesses. Much of 14th Street has all of its licenses assigned already at under 25% of street-level spaces (this is why 2nd floor bars are starting to pop up). The high barriers to entry lead to conservative models run by well-funded operators. Hence the recycling of the “small plates” trend that has been popular in major food cities since the early 2000’s.

NPW June 29, 2013 at 10:07 am

Big plates are better. That way I get all my food and half of my wife’s.

prior_approval June 29, 2013 at 10:37 am

Buffets – large plate, small plate, or meaningless distinction?

Willitts June 29, 2013 at 12:39 pm

Interesting question.

If we think about it as a competitive game, the buffet would like you to eat less, and so they would want to make refilling your plate inconvenient I have seen this, so it is plausible. I guess it depends on the dependence of the restaurant on repeat customers since the inconvenience is a negative factor likely to create a sense of poor value; customers are lost in the repeated game.

Quantity eaten is subject to momentum, so one would think the plates should be smaller. At the buffets I’ve seen, the majority of them use large plates, so observation doesn’t comport with my prediction.

At Brazilian steakhouses (churrascaria), portion size is small and frequent and plate size is small. The meal is expensive but I never felt ripped off relative to a typical meat and potatoes joint. They minimize labor costs by having an “assembly line” approach to serving.

I’m not sure the comparison with digital TV is apt. The content has a very low marginal cost relative to the restaurant business.

x June 29, 2013 at 10:39 am

> But it becomes just awkward and weird if you are having a business meeting or ***are on a first date.***

Not sure about the economics, but after reading this I can guarantee that Mr. Neil Irwin is not good with women and he probably does not frequently have sex with new partners.

Nancy Lebovitz June 29, 2013 at 10:48 am

In Philadelphia, it’s common for restaurants that offer small plates to also offer large plates.

JKB June 29, 2013 at 11:04 am

Big plates aren’t bundling. They throw on some veggies, mostly as an afterthought, and a bit of parsley to fill out the plate. If a place actually does good vegetables, those will appear as a small plate item. And will probably be more adventurous since there will be less wastage.

Small plates do run up the check because many aren’t starchy carb heavy so you’ll sample a few more. But they are great for the drinks crowd who heretofore were left with some sticky appetizers, which really aren’t sized for individuals. Plus people tend to go “Chinese restaurant style”, ordering a few more small plates than people to share.

I’d guess this is a reaction to a large single, non-dating, drinks and grazing scene. Plus a continuation of the mid-20s childhoods where parents would hit 3 or 4 drive-thrus to get everyone the food they wanted instead of the old system of “we are going here and you’ll just have to eat something they have.”

derek June 29, 2013 at 11:06 am

I’ll throw in another hypothesis. I’m no where near Washington DC, but the markets for the inputs restaurants use are pretty consistent over areas, excepting some specific local input. Restaurants have faced real inflation on their inputs; energy costs and food costs have both seen spikes. In 2010 some food items more than doubled in cost. Due to low demand, it has been very difficult to pass on the cost increases.

In response the restaurant breaks up it’s offerings, putting a price on each. The stuff they used to package with the steak, much uneaten and thrown away, now is sold. The change is painted as a cultural movement.

Food cost increases bring down authoritarian governments in the middle east, and in Washington the expensive plates of food get rearranged. I blame Bernanke.

Ed June 29, 2013 at 11:09 am

I think the issue with both the plates and the cable channels is who does the management.

With more bundling, the seller does the management. The restaurant providing big plates only assembles the food in a (hopefully) pleasing combination for the customer. The customer ony has to select from a few options. The restaurant can institute efficiencies in preparing and serving the plates, cutting their costs and maybe making the big plates cheaper than alot of small ones.

With more a la carte, the customer does the management, and since the customer may be choosing a combination that is not efficient for the restaurant to deliver, the overall cost might be higher.

I think customer choice is oversold by advocates of the small plate approach. A much better argument is restaurant incompetence. I actually prefer the small plates/ tapas approach as a customer, but mainly becaue I don’t trust the restaurant to do things like vegetables properly, to not give me too much starch or overload the portions. The better the restaurant, the more inclined I am towards big plates.

There is also the issue that plate size is relative across restaurants. I distrust what a restaurant means by “small” when they offer a small plate (is the appetizer an overpriced snack or a meal in itself?) but if the practice became more common presumably the size of the small plate would be more standardized.

With TV, would you rather have the Big Network programer offer you your menu of choices (which you select from by watching/ taping at certain times), or do you prefer to do your own programming from selecting among 99 channels or some sort of internet stream? My preference is the 99 cable channels, because I think network programming sucks, but open-ended internet stream thing is too much work for watching television. But I could be pushed in one direction or the other by changes in the quality of network and cable programming.

Willitts June 29, 2013 at 12:28 pm

Personally I avoid tapas precisely because I think each selection is overpriced for a full meal. I guess for some people the price is opaque or they pay for the ambiance.

Dim sum is a la carte pricing and is overpriced in many places, but where they have lots of competition either the prices are more moderate or you have a choice of venues.

I believe that higher labor costs have caused substitution toward relatively less expensive capital; this is what spawned the super size movement. Tapas seems to be a counterexample because it requires more labor per unit of capital. Maybe tapas is profit maximizing in places where the rent is too damned high and thus minimum wage laws are not a binding constraint. Fixed capital costs are so high that profit maximization involves increasing output as much as possible.

mulp June 29, 2013 at 2:46 pm

Uh, they reinvented dim sum?

Or the automat?

Sushi?

Or are they sticking with the high overhead model which depends on covering the fixed price of a seat at a table with the first item which is basically mandatory, and the profit on the extras: drinks, desserts, side dishes, appetizers,…?

Ever try going regularly to a restaurant that serves $20+ main dishes with great appetizers, and ordering only appetizers? Even priced at $8-10, they are intended to be eaten while the main dish is prepared and to encourage drinking $5+ drinks. Only if you tip well – as if you ordered the $20+ dish do you avoid the hassle.

Of course, the best meals from a food and presentation standpoint are totally determined by the chef hosting the dinner with guests having no choice in the matter. Think the dinner party, the family style eateries, the elitist chefs who charge hundreds of dollars and tell you when to show up or else lose your place in the years long queue.

For TV, the model was three networks offering multi-course dinners and you picked where you ate based on the style: Italian, Chicago stockyard, Mexican, maybe changing where you ate by night to please each member of the family. Then with cable, the opportunity for food court was offered, so the family stopped eating the same thing, but basically ate at the same time. Now we are in the fast food era where you eat what you want when you want and you never enjoy dinner or TV as a family or as a group of friends. No one goes out to eat as a family or with friends because you picked up exactly what you want fast food or delivered and never have to compromise. Likewise, you never suffer through the movies or play or concert you didn’t want to go to because your choice was too serious or too violent or too political or too insulting slapstick comedy.

It is all about individual choice, with zero compromise to build community – screw community.

CD June 29, 2013 at 2:46 pm

I think the unbundling goes further. What I’m seeing (thinking of Avec in Chicago and Whale Wins in Seattle) is a model in which service is a bit perfunctory (adequate, but not solicitous) and comfort/ambience are scaled back. You get high-quality food at prices lower than if they were bundled with opulent service and comfort.

If you mainly want an elaborate cozy being-served experience (which I think is why many people eat out), you don’t want the small-plate joint.

The small-plate places are good for veg in that veg dishes tend to be better and you can concentrate on them if you want. OTOH my sampling so far suggests that fish and meat dominate these menus. They lend themselves more to intense flavor.

The bit about mounds of starch above is spot on. I can make rice or pasta as well as most restaurants. What I can’t do so easily is source an unusual fish or high-quality pig and do the painstaking prep and cooking needed to bring out its best.

Axa June 30, 2013 at 6:04 am

Where’s the relationship with cable TV? One night you can go to small plate restaurant and the next one you go to a big plate one. The day restaurants make you sign a contract and demand a monthly fee, it’s ok to complain, not before.

For now, it’s great to have a lot of options. I can only tell that Neil Irwin goes to places he hate just to have something to be angry about. Maybe that thing known as internet where restaurants post their menus is still a mystery for this guy.

JoeDog July 1, 2013 at 10:06 pm

Hunger is a nuance that distracts from more productive activity. I thought science was going to solve this condition with food pills. Well science? Where’s my food pill? The plate doesn’t get much smaller than that and the meal’s complete in 15 seconds. Done and done.

Dose To Kill July 3, 2013 at 1:29 am

They’ve totally taken care of this for us. I believe science calls it “speed.”

But seriously folks, where’s my jetpack? I’m can’t fly out for tapas without my jetpack.

Thank you! Thank you! I’ll be here all week, ladies and gentlemen; you’ve been a terrific crowd.

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