Demand curves slope downward incentives matter

The typical all-you-can-eat buffet customer serves herself more than 4 pounds of food—much of which winds up in the trash, he said. The by-the-pound guest, in contrast, serves herself 1-to-2 pounds and the more she takes, the better it is for the business.

Here is the longer story (WSJ), with additional points of interest, via the estimable Chug.

Comments

I would say that...maybe 90 percent of the lunch service in Brasilia is "by the kilo."

Being American, it was an odd concept to get used to. I initially threw away 1/2 of what I put on my plate (after paying for it of course). But after a week you know learn how to eat without waste.

The average restaurant maybe has about 5 kilos of food that is paid and thrown away each day and that is usually from kids. At least that is my educated guess having lived here for 15 months.

Just back from Brazil, and yes, this seems to be widespread (I was just south of Brasilia, in a more rural area). I believe Brazilian pay by weight dining has been lauded as an example of how to reduce waste.

The fact our 'Brazilian' friend Thiago hasn't weighed in here is further proof he's from Dayton, OH.

Has it come to this? Brazilian Ohioans?

Actually he’s probably queuing up for all-you-can-eat.

Ironic given the Brazillian churrascarias are so popular.

Some, but not all, churrascarias are all you can eat, but they are usually expensive. Also one of my faves.

Comida a kilo!

A fave!

4th month down here and I can assure you that the grub at "sem balance" places is not nearly as good as the pay by the 100 gram places. It may be worth noting that many of the pay by weight places charge higher prices for the churrasco than the regular buffet.

But while we are on Brazilian cousine, some mysteries worth exploring might be why you can[t buy fresh mushrooms in the supermercado in Minas Gerais given all the abandoned mines, or celery ? And why no celery in supermercados? Dissertation topics pelo vagão puxado a cavalo down here.

This is a great example of why our current healthcare system is so expensive. It is basically organized under the "buffet" (i.e., 3rd party payment) model

Who wants to share a policy group with a bunch of fat people?

Trick question?

My recent (April 2017) experience with the US health care system was the result of one of you youths (texting?) running a red light and totaling my leased, brand-new Toyota Rav4.

Wife and I spent about five hours in an ER for X-Rays and etc. We only had bumps and bruises. Too bad.

Notably, there were the three or four morbidly over-weight (wheel chairs, oxygen) women, with their extended families in various stages of secular weight gain. They seemed to be well-acquainted with the process and staff.

PS: I replaced the Toyota with a Subaru Crosstrek and added a MAGA bumper sticker.

I had to reread. My (dyslexic?) first read assumed you had a Suburban, not Subaru!

"a Subaru Crosstrek and added a MAGA bumper sticker."

Ok, that is funny.

"... well-aquainted ..."

Hmmmm ... regulars no doubt.

A friend of mine from the American "down under" calls the emergency room the "clinic", which he utilizes free of charge.

https://www.kidney.org/atoz/content/hispanics-kd

Deductibles and copays help alleviate that.

They are not "payers" they are "insurers" who happen to take care of the bill for you as a convenience.

The problem is that insurers don't charge people premiums based on their risks, mostly because law prohibits it.

I agree that deductibles and copays help alleviate the problem. But they are not enough

This explains why we do not have many buffets in US. I typically serve 1 to 1.2 pounds of food in a buffet. I think that 4 pounds is a mistake in the authors' calculations.

All-You-Can-Eat places don't survive in the NYC area. Think shopping bags/

Why the emphasis on women overeating?

When I think of "all you can eat" buffets I think of the Far Side cartoon by Gary Larson which showed a morbidly obese man walking towards such an establishment and the look of despair in the owner's face.

LOL excellent. I always think of the Saturday Night Live skit where the diner says "wow that was a lot, I'm really full" and the manager walks over and in a sinister voice with the scary music rising says "Sir, you misunderstand, it's not all you want to eat...it's all you CAN EAT!!" as his henchmen proceed to force even more down his gullet.

Your cartoon came to life. Years ago when he was in high school, my son and his football d-lineman buddies would attack the Pizza Hut lunch all-u-can eat deal. I could not fathom how the place stayed in business.

Most of the costs in a restaurant are overheads like the rent and staff. The actual costs of the raw ingredients are a small percentage. So it could make sense for a restaurant to charge a larger upfront fee and provide unlimited food.

Yeah, it's a classic problem of pricing at marginal cost vs average cost. We can see that for restaurants there's a clear market domination of an average cost pricing model instead of a marginal cost model or all-or-nothing (i.e. all you can eat) pricing model. But with some niches for all you can eat restaurants.

The all-time best title for an economics paper was Walter Oi's "A Disneyland Dilemma: Two-Part Tariffs for a Mickey Mouse Monopoly". Maybe an updated study could be "A Diner's Dilemma"; or "A Cafeteria Quandary: All-or-Nothing Offers at All You Can Eat Buffets".

I was going to say 4 lbs sounded crazy, but a mistake is certainly possible explanation.

Sarcasm> Except for labor.

A downward sloping aggregate demand curve means that as the price level drops, the quantity of output demanded increases and the national income increases. Who is better off if national income increases as the result of the fat lady bagging four pounds of food?

Rayward, I love you man.

Supply curves slope upward.

Bussers at the buffet restaurant? The more food is consumed the busier they are. More jobs for unskilled labor. As mulp would argue, if you pay the bussers four times the minimum wage, they will spend more at buffet restaurants, creating a virtuous cycle.

Why are you attempting to mix micro and macro?

This is why you offer smaller plates and unlimited trips. A bag check is a good idea though.

Years ago during frequent visits to a hospital town an elderly relative got to liking an all you can eat chain down here called Golden Corral. Once I noticed, as we left, a sign I had missed on the way in, prohibiting the stuffing of food into ladies' handbags. "As if," I sniffed.

I get it more now. No, not the food; but ya know, a decent country cook, she fixed 3 meals, and handwashed up, just about every day for 65 years of marriage, with only a break during the window when she had gone to work at a government office, and her husband had retired, and so he fixed her a hamburger every day for lunch.

You can get where you wish your family ate more in the manner of snakes, once every couple days. Here's your chance to fill up. Possibly we could have cereal for dinner, what fun!

There's a first money possible. This finding suggests that successful buffet restaurants charge their customers a price that covers 4 pounds of food, so the customer who takes less than that is getting shortchanged.

I use to go to an all you can eat Sushi place in Los Angeles where they would check for uneaten rice balls and charge you extra for every such rice ball they found.

Some foods cost more than others. At all-you-can-eat buffets this is often managed with portion-control for the more costly items (i.e., you've got to ask for a slice of that Prime Rib, and you won't get another until you've eaten it and waited through the queue again).

By-the-pound is how supermarket salad bars work, so I suppose it's not all that innovative to offer this with seating and perhaps some level of table service.

But, I can see where it might make sense at such places for the basic buffet to exclude a few costly items, which would then be available ala carte.

For otherwise the buffet can't afford to offer such items, and the quality of the nosh is reduced.

(In MY buffet, the costly items can be obtained only via a claw machine. And you'll have to pay each time you use it, even if you can never quite get what you're really after.)

'By-the-pound is how supermarket salad bars work'

For more than a generation - Giant used to have quite a good salad bar in its stores in the DC region.

I suspect that the by-the-pound system has higher transaction costs than a pure pay-as-you-enter system, which undoubtedly also eats (!) up some of the savings.

Customers probably also spend less overall by-the-pound. That is, most buffets are priced at mid-to-high restaurant prices but serve low-to-mid level food.

The literature on the all you can eat buffet is quite extensive,

"For example, a 2008 Cornell University study examined the effects of lowering the price of an all-you-can-eat pizza deal. People still had the option to cram as many slices as they could into their gullets, but when paying less, the same customers tended to eat considerably less. In these cases, the researchers concluded that people ate towards their sense of value rather than their appetite. And in 2012, Michael Leonard, an economist at Kwantlen Polytechnic University in British Columbia wrote a fun, short piece about the economics of Sin City buffets, after a trip to Las Vegas with his son led him to musings on fixed costs, the over/under on the establishment’s marginal revenue, and the differences between cost, price, and value." https://www.good.is/articles/economists-vs-buffets

When firms compete using these tactics it falls into the category of Behavioral Economics Industrial Organization.

Cable plans. Advertisements for all inclusive resorts where features vary so comparison is difficult.. Adding useless features on a product relative to the product that you could get by with. Disney packages.

Creating complex ala carte choices and offering a bundle in leiu
thereof, thereby reducing cognitive burden.

As a relatively skinny guy, the one or two times I went to an all-you-can eat, my intention was to eat as much as the fat folks.

People (Americans, no less!) can't manage 4 lbs in one meal?! I go for 8 or 9 lbs at buffets and don't leave a crumb.

When Tyler posts this kind of thing, it feels a bit like he sees it as some sort of victory for his particular philosophy/economic position. But I don't think anyone really disputes that incentives matter or that demand curves slope down...

I don't have a wsj subscription, but I thought it might be about the horror of 4 pound lunch trays.

Put the customer on a scale and charge them by the pound.

I've been to Texas barbecue that charged by pound for the meat, free sides. I liked that. I don't like per pound market deli lines where meat and potatoes cost the same.

I stopped enjoying all you can eat as I got older, especially after learning the 30 gram rule.

https://www.bodybuilding.com/content/measuring-your-macros-what-30-grams-protein-looks-like.html

Now I'd rather have four meals in a day than one AYCI.

In the larger US cities, all you can eat have largely vanished and have been replaced with by the pound. The latter are incredibly expensive in general and even moreso if you load up with carbs or vegetables. Terrible value yet they all seem to be doing well. That said, since most city restaurants have inflated prices you probably get more food per dollar.

I don't recall the last time I've seen an all you can eat buffet.

I still see a few. They fed everyone here after a Chinese funeral a little while back. Practical.

Gold Hibachi Buffet

https://yelp.to/qTKq/AXtN0GlarV

Ah, interesting. Fixed price buffet or per pound to-go.

By the pound...

Would it work for funeral parlours? Or two-for-one?

All-you-can-eat buffets still seem to be common at lower price Indian restaurants, at least in Seattle and Portland.

And in Seattle in recent years there's been a growth of a new (to me anyway) type of all-you-can-eat buffet: gigantic pan-Asian buffets. Fairly pricey, but once you're inside you get a huge selection of mainly Chinese dishes but also a large sushi selection. Plus a smaller selection of American foods and Chinese desserts, and a huge selection of American desserts. Expensive items such as crab legs will attract a line so perhaps they keep a lid on costs that way: there's only one person at a time trying to snap up the crab legs, and there's only so many legs they can fit on their plate at a time.

In many restaurants in India all you can eat meals are not buffets . You get served each time you want an item . I find far more food wasted in buffets since people serve themselves more than they need.
I heard of an institute which offers subsidised lunch for the employees and a canteen manager complained about the large amounts wasted. A new director in the institute told the manager to ask people who wasted food to pay up the full amount , a substantial sum. Waste was reduced to almost zero. Demand curve does slope downward

Why increasing university graduation rate is a positive metric? The graduation rate can be arbitrarily set. For a given average quality of the graduating students, the higher the graduation rate the lesser the graduate quality. There are common standard tests across many universities such as GRE, and the university sector best practice graduation rates with respect to the average common standard test scores of the universities can be determined.

A rough check shows that there are universities more than +2 SD above the best practice graduation trend. The employers of the graduates might be interested to know who are the positive outlier party schools.

If you understand this concept then you might have a clue about how to fix US healthcare.

Eat a salad now, have more sex later.

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