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The economics of all-you-can-eat buffets

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Re: The economics of all-you-can-eat buffets

#81

Post by Swizec »

ben509 wrote: post #60
lotsofpulp wrote: post #30

Earlier quoted context omitted.

>but as a business owner in a different field I'm left wondering why anyone would even bother. Because they don't have a choice.

They have a choice. An economic profit is defined as making enough profit (and intangible benefit) to not want to do something else. For a small business owner it's "am I better off selling it off and getting a regular job?" For a larger chain, it's "is there a more profitable line of business?"

> For a small business owner it's "am I better off selling it off and getting a regular job?"

There is a lot of ego in a decision like that. Easy economically, very very hard emotionally.

Re: The economics of all-you-can-eat buffets

#83

Post by Benji_San »

theironlily wrote: post #63
Jommi wrote: post #56

I'm still at awe of the Sushi Buffet thing that you can see all around in Helsinki, Finland. So far I have not seen anything like it, anywhere else in the world. Usually the price you pay is 10€ for an unrestricted and no time limit access to eating sushi. And the sushi is incredibly okay! It's nothing compared to stuff you find Tokyo ofcourse, but the price for quality is literally unbeatable. And all this is happen…

Perhaps the restaurant uses a lot more rice for the rolls and the nigiris, or offer to fill up patrons with green tea or miso soup. Or, they are constantly busy and make their margins by the sheer number of patrons coming in for the incredible deal!

There are also quite a few all-you-can-eat-sushi buffet places in Turku, all with the same price of around 10€ during lunchhours.

A interesting part that was left out from the initial post is that we have these "lunch coupons" in Finland. AFAIK most employers provide these for their employees either as part of the total compensation or allow the employees to buy them tax free. The idea is basically that you get lunch for the coupon, the max valued coupon is currently worth 10,70€. Seeing how more or less all restaurants that serves lunch accepts these coupons I don't think it is possible to charge much more than the max valued coupon.

Re: The economics of all-you-can-eat buffets

#84

Post by narag »

detritus wrote: post #62
narag wrote: post #54

There's one Argentinian buffet in Madrid (in Plenilunio mall if someone is interested) with an unusual system: they bring the food around the tables and you pick what you want. Most of it is barbecued meat. I avoid going there because I can't help eating too much every time.

Sounds like an Argentinian version of a Brazilian rodizio.. https://en.wikipedia.org/wiki/Rod%C3%ADzio

There's one of those in another corner of the mall, I should try one day. But are rodizios usually all-you-can-eat too?

Re: The economics of all-you-can-eat buffets

#85

Post by Nursie »

devchix wrote: post #74
glangdale wrote: post #23

I've seen a number of instances where "all-you-can-eat" rapidly devolves into "all-you-can-find" - where expensive items simply don't get refilled until the big eaters go away. We went to a Churrasco place one time with my startup team and the staff more or less spent half the allotted time essentially hiding from us. It was comical, but expensive. The other aspect of buffets is that frequently the food is quite drea…

The "better" all-you-can-eats are priced accordingly. The Bellagio in Las Vegas had a seafood thing that cost north of $40, if I remember correctly. The crab legs get constantly refilled, they also had giant prawns. This was years ago so it may not exist any longer. Founding Farmers in DC has a brunch thing, also expensive, but the lox tray is never empty. The surprise in the bill is the cost of drinks, espressos and…

Buffet style places are popular in singapore, but often cost around SGD100 per person.

Re: The economics of all-you-can-eat buffets

#86

Post by milesskorpen »

brownbat wrote: post #70
asdfasgasdgasdg wrote: post #48

Earlier quoted context omitted.

https://www.investopedia.com/ask/answers/052515/what-average... This article claims that banks make 24%, and they are hardly a monopoly. It also claims the overall average is 8.5%.

I can't figure out where that article gets its numbers from or which banks it's referring to. The industry standard measure for bank profitability is something called ROA, return on assets, and it's an extensively studied academic topic, with the general consensus that an ROA greater than 1% is pretty good. https://greyhouse.weissratings.com/ROA-ROE-and-What-These-Ke... https://www.fdic.gov/regulations/resources/cbi/…

Assets aren’t revenue though; I don’t think profit margin and ROA are comparable.

Re: The economics of all-you-can-eat buffets

#87

Post by marcosdumay »

mxcrossb wrote: post #64
katzgrau wrote: post #16

The only thing I found more interesting than all-you-can-eat buffets actually turning a profit is that there are business people who are apparently content running a business with such slim margins. This article quotes a 5% margin. I know food industry margins are low in the first place, but as a business owner in a different field I'm left wondering why anyone would even bother. The same business prowess and attenti…

I think the average margin might be misleading. After all, most restaurants fail pretty quickly. That number could be skewed by the unsuccessful businesses. But I think it’s an interesting point. Why fight all day long for a 5% margin when you could put your money in index funds?

It's a 5% margin on the sales, not on the capital.

The least you can expect is that a business sale is much larger than the capital stopped at it. Otherwise it is in great trouble, even on high margin markets.

Re: The economics of all-you-can-eat buffets

#88

Post by CydeWeys »

jasoneckert wrote: post #68

I stopped going to all-you-can-eat buffets years ago for the simple reason that you don't stop eating when you're full - you stop eating when you hate yourself. If the number of all-you-can-eat buffets drops, it's likely because society is starting to advocate healthier lifestyles in my opinion.

For the same reason there's certain foods that I almost never allow myself to buy at the grocery store (like Pirate's Booty) -- I will eat it until it's gone and then feel bad.

I probably go to an all-you-can-eat buffet once every couple years, and that's enough. Interestingly I'm not including Indian buffets or hotel breakfast buffets in that count; those don't trigger the same "you must eat everything in sight" urges for whatever reason.

Re: The economics of all-you-can-eat buffets

#89

Post by dasil003 »

CPLX wrote: post #38
katzgrau wrote: post #16

The only thing I found more interesting than all-you-can-eat buffets actually turning a profit is that there are business people who are apparently content running a business with such slim margins. This article quotes a 5% margin. I know food industry margins are low in the first place, but as a business owner in a different field I'm left wondering why anyone would even bother. The same business prowess and attenti…

This may come as a shock but software is the exception. The vast majority of the business world operates this way. The fun part comes when you realize that absent monopoly conditions this is the natural stable state of a mature market, and think about what the future of software might look like, and what the current public policy fights are about.

Software is not really an industry though, it’s just sometimes grouped that way because it’s relatively new. The thing that makes margins low in general is commoditization and the relatively high COGS of physical materials and manufacturing costs. In pure software plays COGS is generally extremely low so there is no cost floor (hence freemium), but also the product can be literally any conceivable logic or data processing which means it can only be commoditized along more specific market lines.

Consider for example the forces driving Uber/Lyft margins vs Google/Facebook margins.

Re: The economics of all-you-can-eat buffets

#90

Post by goatherders »

katzgrau wrote: post #16

The only thing I found more interesting than all-you-can-eat buffets actually turning a profit is that there are business people who are apparently content running a business with such slim margins. This article quotes a 5% margin. I know food industry margins are low in the first place, but as a business owner in a different field I'm left wondering why anyone would even bother. The same business prowess and attenti…

If I recall correctly Walmart operates with low single digit margins for most goods. They make up for it with favorable vendor terms; I read that a can of green beans sold by WM will turn over 6 times before they have to pay the vendor for the first can.
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