The economics of all-you-can-eat buffets • Hacker News Board

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

#241

Post by Shaanie » Mon, Jan 27, 2020, 12:13 PM UTC

bobthepanda wrote: post #227

bobbiechen wrote: post #213

Earlier quoted context omitted.

Right. There's a startup which uses cute small robots to deliver food in Berkeley right now [1]. There are still a lot of humans in the loop - handling the actual pickup, remote-controlling the robots from Columbia - but even so that could save money compared to having a local driver in a car to make the whole delivery. [1] https://www.sfchronicle.com/business/article/Kiwibots-win-fa...

Interesting. What happens if someone attempts to rob the robot?

Presumably the same thing that happens in most normal robberies; the robber gets the item but gets reported to the police. Presumably the delivery robots have cameras, making it easier to identify the criminal.

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

#242

Post by imtringued » Mon, Jan 27, 2020, 12:15 PM UTC

lonelappde wrote: post #202

mcguire wrote: post #174

Earlier quoted context omitted.

You might think that, but errors and fluctuations tend to routinely cause high margin businesses such as software to collapse in large numbers. Think of the dotcom bust. I suspect part of the problem is these businesses flourish when the conditions are easy, but many don't have the experience or exceptional margins to survive long enough to adapt when conditions change.

The dot com bust was negative margin businesses.

When I look at Uber I don't think anything has changed.

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

#243

Post by imtringued » Mon, Jan 27, 2020, 12:17 PM UTC

csomar wrote: post #234

danans wrote: post #112

Earlier quoted context omitted.

> that 5% margin doesn't include their salaries. This is something that often seems lost in this discussion. The profit margin is usually after the owners themselves have taken a salary. If they are paying for themselves appropriately, and the margin is 0%, this is often described as "making no money". What's making no money here is the business as an entity, not the owner, despite the frequent rhetorical conflation…

They might also be optimizing for taxes by heavily re-investing, charging personal stuff on the expense account (like car/gas/travel)... That makes it look like they are doing badly while they are doing okay.

This would be clearly visible to investors because the company is accumulating assets.

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

#244

Post by leetcrew » Mon, Jan 27, 2020, 12:31 PM UTC

Latty wrote: post #238

leetcrew wrote: post #214

Earlier quoted context omitted.

it's pretty hard to make delivery work if you (the business) have to pay the delivery person yourself. the key issue is that one person just can't deliver that many orders in an hour. food has to be sent out soon after it is made so it doesn't get cold (although you can do some amount of staging by keeping it on top of an oven). once the food is in the car, you have an even harder time constraint to have it still be…

Here in the UK, delivery was standard well before apps—almost every local take-away offered delivery if you phoned up and ordered. Maybe just because the UK is smaller and so they need to cover less distance? I often see people talking about grocery delivery the same way, when all the major supermarkets have been doing it as standard here in the UK for years.

it could be that the UK is mostly dense enough. there are a few very dense parts of the US where you've been able to get pretty much anything delivered (eg, NYC) for a long time.

I don't know much about grocery delivery, but I can think of two reasons offhand why it would be more viable. the first is that the delivery window for groceries is much more forgiving. if you have a cooler, you can keep refrigerated/frozen items at the correct temperature indefinitely. this allows you to load a lot more stuff in the vehicle and plan a more efficient route. the second is just a guess, but I'd bet the typical grocery order is larger than a typical food delivery order, so you make more money per stop.

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

#245

Post by imtringued » Mon, Jan 27, 2020, 12:37 PM UTC

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?

>Why fight all day long for a 5% margin when you could put your money in index funds?

Are you serious? You're making such a critical mistake. The business owner isn't paying for the products. The customers are. Every time a customer spends $100 you get $5 in pure profit after paying all the salaries (including your own) and all other costs. The 5% margin is applied on the money your customer is spending, not your own money. If you have $100 and get a 10% ROI then you would have to wait a year to get $10. If you have 10 customers each paying $20 for the all you can eat buffet then you have $200 * 5% = $10 profit.

Let's assume you spent half a million on your fancy restaurant. How long does it take to pay that back? You don't pay it back from the profit. The cost has already been taken into account and therefore lowered the margin which means the margin clearly doesn't influence the ROI. The final profit is $1 per customer with 300 customers per day which translates to $75k of pure profit per year or a ROI of 15% in the first year. The real numbers probably look completely different. 300 customers is probably a below average day. The restaurant may be more expensive or cheaper to set up (especially if they are renting instead of owning).

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

#246

Post by JacobAldridge » Mon, Jan 27, 2020, 12:39 PM UTC

ghaff wrote: post #229

JacobAldridge wrote: post #219

Earlier quoted context omitted.

As a paid speaker who goes to a lot of conferences, I always eat way less than if I’m out at a social gathering. Partly it’s the professionalism - even in these mixer situations, I’m at work and with a client that’s paying a (comparatively) lot of money for me, and demonstrating my ability to down eight plates then back up for dessert isn’t great brand positioning. There’s also the volume of food at conferences. If I…

One of the big changes I’ve made the past few years to my benefit is that, at conferences, I started making a point of not eating, especially mediocre food, at events just because it’s available for “free.” I basically never eat 3 meals a day and if I try to I start feeling really bloated.

I also avoid 3 meals a day - totally unnecessary in my case.

Alas, whether it was my upbringing or boarding school, I’m also a turkey-cum-labrador when it comes to free food and booze: I really, really struggle to stop eating. I can resist everything except temptation and all that.

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

#247

Post by chii » Mon, Jan 27, 2020, 1:03 PM UTC

lonelappde wrote: post #200

superkuh wrote: post #163

Earlier quoted context omitted.

There are less than 5000 commercial banks in the united states and it is very rare a new one is approved. They've been consolidating and the total number declining for decades. Banking isn't a monopoly but it is a very limited, exclusive, club for those with lots of assets. After all, if you're a bank you can create new money supply out of thin air by lending out money you don't have (fractional reserve). A money pri…

Fractional reserve is lending out money people give the bank. it's not free money for the bank; the credit is balanced by a debt. You can do the same thing if you convince people to leave stuff at your house and then you rent it out. Heck, every lessee on Airbnb is doing this. As is everyone who has a mortgage and an investment account.

A bank can lend out more than the total deposits they have under fractional reserve banking. This is literally creating new money.

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

#248

Post by Spivak » Mon, Jan 27, 2020, 2:11 PM UTC

colanderman wrote: post #203

gradstudent wrote: post #187

Earlier quoted context omitted.

Buffets are terrible places to eat for a vegan or even vegetarian. Options are typically limited to simple salads, various types of potato (fried, baked) and occasionally pizza or pasta: i.e. cheap tasteless carbs. Besides limited variety, the other problem is you need to choose very conservatively. Lots of options have animal-derived ingredients and the staff are either clueless or there exists commonly a significan…

Exception: Indian buffets. Almost always, veg items are kept separate from non-veg, and of that, what's vegan is usually easy enough to discern (or ask about), the two major ingredients to avoid being ghee and paneer.

Indian buffets are wonderful for vegetarians, they're a nightmare for vegans since American-Indian resturant cooking is loaded with every kind of dairy imaginable: yogurt, butter, ghee, and cream is in everything. Like you can't even have the naan at most places.

I will say it's an improvement on most restaurants simply because you can actually find naturally vegan options that aren't a sad salad but its tough otherwise since every place is different and uses wildly different recipes for a given dish.

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

#249

Post by ladyattis » Mon, Jan 27, 2020, 2:16 PM UTC

I remember a story from my dad that one of he and one of his friends use to eat at this one lunch time all you can eat buffet in the 80s. Unfortunately, one of his friends spoiled the deal by getting more to eat, he even asked the restaurant staff for a bigger spoon. In the end, they were banned (even though my dad I think had only two plates since he had a busy day ahead) from the restaurant.

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

#250

Post by Spivak » Mon, Jan 27, 2020, 2:26 PM UTC

pytester wrote: post #206

graeme wrote: post #34

Earlier quoted context omitted.

My expectation would be that if you’re used to operating in a high margin business you have ample room for error or fluctuation in conditions. In a low margin business, you don’t have such room for error, and you actually have to fluctuate with conditions. This isn’t a deal breaker: most business operate this way! But it’s scary for someone looking in from a high margin business.

This is why the National Restaurant Association always lobbies furiously against minimum wage hikes - it will never destroy the restaurant industry but it sure as heck destroys actual restaurants.

Which seems absolutely crazy to me. I would have expected them to push for them harder than your typical org since such a sweeping change would affect everyone basically the same. Nobody would be immune from raising their prices and the value differential would nudge customers away from fast food.