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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

#121

Post by ValentineC »

derefr wrote: post #114

One nice thing about buffets—all-you-can-eat or not—is that, if you want, you can eat small portions of a wide variety of things, rather than large portions of a small number of dishes. The economics of a buffet are the only reason this is really possible; it’s not like you could place an order for e.g. “five breaded shrimp, three grams of braised pork, two wontons’ worth of wonton soup, ...” from a Chinese restauran…

> it’s not like you could place an order for e.g. “five breaded shrimp, three grams of braised pork, two wontons’ worth of wonton soup, ...” from a Chinese restaurant. You could only order each of these in larger amounts, because there are fixed costs to making a dish.

This seems to work at dim sum places, maybe because most dim sum seem to be portioned into, and then steamed, in small bamboo baskets.

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

#123

Post by mixmastamyk »

isoskeles wrote: post #102
virtuallynathan wrote: post #92

Earlier quoted context omitted.

I’ve started going more, but mostly to Brazilian steakhouses. You will stop eating steak exactly when you are satiated. I actually lose weight if I go a few days in a row.

Do you avoid the cheesy biscuits?

Pão de queijo, definitely not.

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

#124

Post by sabujp »

back when i lived in the south, I would go to all you can eat chinese buffets and just eat crab legs. They even had scallops on their mongolian bar! They always lost money when I came in. These places are impossible to find and I don't think exist anymore for less than $20.

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

#125

Post by brownbat »

pintxo wrote: post #100
brownbat wrote: post #70

Earlier quoted context omitted.

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/…

24% sounds very much like return on equity. While the 5% for the restaurant are somewhat likely return on revenue.

Alright, yeah, I pulled up basic formulas on profitability ratios to check my math: https://thismatter.com/money/stocks/valuation/profitability-...

I've talked myself into: maybe 24% is technically "profit margin," but only because banks are weird and profit margin makes no sense for them.

If you have a grocery store and you sell $100 of fruit, maybe $1 is profit. It makes sense to say you have a 1% return on investment. $1 Profit / $100 revenue.

That makes sense.

But a bank loans out $100 at 5% interest. It collects $5 next year while the loan is still outstanding, of which $4 go to operating expenses.

That is $1 profit on $5 of revenue, so 20% profit margin, by the formula. But it took $100 to get you there, just like the grocer, so 20% feels inflated for basically the same result. (In other industries you don't sell a peach only for the buyer to later give you a new peach back, so that throws all of this off.)

(You raised ROE, which I think typically ROE for banks is 5-8%, and it's really dependent on random factors like how they treat shareholders, so you might be right? But I think we can set that aside too.)

So none of this makes sense and maybe I give up?

I can see why the industry just decided ROA is the measure here. It's not completely crazy, and seems to generate reasonable results relative to other industries.

And if we're really asking, "hey, I have $100, maybe was loaned it by a lender or depositors, and I can magically run a buffet or a bank next year, what do I expect to earn?"

Then yeah, we really want to be comparing the profit margin of the buffet to the ROA of the bank, as incommensurable as those sound. Maybe this isn't completely crazy and the industry lit has this already figured out in the most reasonable way.

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

#126

Post by sabujp »

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…

you can get all you can eat crab legs in much cheaper chinese buffets in vegas outside the strip.

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

#127

Post by ValentineC »

I organise some tech conferences. We tend to hold our speakers dinner at an upmarket all-you-can-eat buffet, mainly because we have a mix of adventurous and not-so-adventurous eaters.

We try to let our speakers and guests have an opportunity to try our local cuisine, but I'm starting to think that buffets aren't that great for doing so. Travellers new to a country/region wouldn't know what to take, unless there's a local by their side explaining the dishes to them.

As the person that foots the bill, I also usually observe how much everyone consumes — it's usually 2-3 small plates worth; probably valued at a quarter of what we're paying per head.

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

#128

Post by tempsy »

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.

I mean hopefully most people think of going to a buffet as a "once or twice a year" thing and not something you do on a regular basis e.g. Bacchanal at Caesar's Palace in Vegas or a higher quality All You Can Eat Sushi place.

I'm okay with going all out on the good stuff at either.

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

#130

Post by castratikron »

pge wrote: post #9

The other technique not mentioned here is for buffets to just stop refilling the higher cost items on the buffet if a group of big eaters comes in. then let them sit empty while the diners fill up on potatoes or what not, before finally refilling them.

Another trick is to keep drinks topped off. Fills you up.
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