Economics of food buffets…(Could we use some Nudging?)

Another brilliant piece by Vandana Vasudevan of Mint. I had commented on her earlier column on Rajdhani Express as well. Such pieces help you think about applying economics at all times..

She points there is something about food buffets. We eat too much in buffets:

After the completion of Tarang, the college festival of Lady Shriram, we in the organizing committee had some leftover dinner coupons, which a sponsor had given as prizes. A coupon entitled one to a free buffet at Delhi’s Taj Mansingh hotel. My friend Malavika Banerjee nee Ramachandran (now doing dignified stuff such as the Kolkata Literature Fest) and I hit the buffet like we had just arrived from a land struck by famine. We must have been disgraceful because the manager wanted to see our IDs and probably suspected that we stole the coupons. At IIM-Ahmedabad, we had a tradition of the “corpo dinner” towards the end of the course where each dorm went all trussed up, to a buffet restaurant and ate the place out of its business.

There’s something about buffets. It brings out a primal hungry beast in us. In the US, there are “eat all you can” buffets which target customers of lower economic classes who are looking for a large cheap meal. What is interesting is that in India, no lower class person goes to a buffet serving restaurant. They cannot afford it as buffets are never served in modest dhabas but only in restaurants aimed at the higher socioeconomic classes. These are people who are not exactly starving, and yet they behave as if they are when the buffet is laid out.
Why do we eat so much in buffets?
She offers some reasons:
The most obvious reason is that customers feel they have paid a certain amount and they must get their money’s worth. Economists however say that’s foolish because whatever we have paid is a sunk cost and whether you eat little or a lot, the money has anyway been paid up. What the customer is trying to do is maximize his value, and he perceives value as a bursting stomach. It is a flawed perception because the enjoyment of a buffet is not only about quantity. We also choose a buffet for variety. A buffet is a smorgasboard of dishes cutting across cuisines and there are many types of entrees, mains and desserts to excite our palates. A buffet goes well with convivial group eating, especially when there are children. At Club Mahindra, guests are offered “fun dining” which is three buffets of breakfast, lunch and dinner. Kids and parents excitedly rush from the live pasta maker to the uttapam chef to the dessert section. So, it’s in fact not necessary to eat a lot to derive value from a buffet because by construct the buffet offers other benefits.
Why do hotels offers buffets? She nicely compares it to insurance:
It’s quite like insurance which takes money from everyone by playing on their fears but expects only a few to die or have accidents during their policy term. Similarly a restaurant plays on our greed and lures us into the buffet hall where we think we have landed a deal. But patrons overestimate the amount of food they can consume which is exactly what the restaurant is betting on. If it prices a buffet for Rs.1,000 and a hundred people eat, only 2 may eat for more than that value. The cost of each meal for the remaining guests will be a couple of hundreds, so on average the restaurant rakes it in through buffets. 
Sometimes hotels strategically push buffets over a la carte. At Club Mahindra, the “fun dining” option offers three buffets at the price of one a la carte meal, so everyone chooses the buffet. The general manager of one of their Goa properties, S. Srikantan, explained to me last summer that they do so because in a resort, the number of guests are limited. Offering many a la carte options requires procuring and storing small quantities of several ingredients not knowing who will ask for what. It also makes the kitchen inefficient. If more people opt for a buffet, the restaurant can buy ingredients in bulk, use it and move on to the next day’s menu. I asked Srikantan, a hotel industry veteran, whether food in a buffet is fresh. His logical answer was that much of it has to be fresh because the menu changes everyday, (except, I assume, for standard restaurant practices such as making a common gravy and freezing it, etc).
She wishes that she had not splurged on buffets earlier:
Nutritionists are naturally against buffets saying that the excess fat and carb in a buffet makes a calorie dense, imbalanced meal and people invariably overeat.Monks cup their hands when asking for bhiksha (alms) because the stomach can hold at a time, only the amount of food that fits into two cupped hands.
It’s hard to remember all this when mango kulfi, chocolate mousse and cheesecakes are winking at you from the dessert counter of a buffet. But it may help to know that you just can’t eat food worth the amount of money you paid for. The focus should therefore firmly be on the fun of pecking at many dishes. Wish someone had told us this when we were hitting the buffets as students and busting our seams.
Brilliant stuff.
She should also read Nudges by Thaler and Sunstein. The book shows how buffets can be laid in order to make you eat healthier foods first…Though, the case in the book was for kids cafeteria and not sure whether it can be used to nudge adults  as well..
About these ads

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


Follow

Get every new post delivered to your Inbox.

Join 1,232 other followers

%d bloggers like this: