How ‘All You Can Eat’ Restaurants Turn a Profit
Demystifying the business model that doesn’t seem to make sense
When most of us think back, we can usually remember many happy times spent at a buffet restaurant.
For me, some of the happiest times in my childhood was spent at the restaurant Sizzler.
Sizzler offered a large buffet and amazing cheesy bread that we always looked forward to.
But one thing I always wondered when I was a kid was how Sizzler ever made any money. I always did my best in my attempt to eat the restaurant dry, and in my mind it seemed to have worked.
Sizzlers eventually closed down all over Australia, followed suit by many other ‘all you can eat’ buffet style restaurants. Does this mean the business model was flawed from the beginning?
Not at all, the model works.
The business model still exists in many restaurants today, most of which offer ‘all you can eat’ on select menu items.
The main reason for the decline of some chains, including Sizzler, is that this style of restaurant has fallen out of fashion. They’ve also been tainted with bad reputations based on the first reason for why this model works.
‘All you can eat’ restaurants started gaining terrible reputations during the early 2000’s for serving low quality food. After rumours started circulating of sickness-inducing menu items, it wasn’t long before people stopped going altogether.
Some restaurants do cut a lot of corners with the food they display in the cabinets. Some have been known to use frozen pre-made meals, others have been known to swap out high quality fish for cheaper varieties.
Another issue was how long the food stayed on display, frying to a crisp under the warm lights before being swapped out.
Bad press shut down many of the restaurants, others simply moved into hotels and casinos where people ask less questions.
In spite of the rumours though, serving crappy food was never enough to make these businesses work. Their true schemes were far more impressive.
One of the cheapest supplies for any large restaurant is the soda.
Soda’s such as Coca Cola are shipped to the restaurants in syrup form, held within plastic bags. A restaurant employee merely needs to cut the top off the bag and feed it into the soda dispenser, the dispenser is then able to cut it with water as it’s poured into the customers cup.
A very small portion of the soda is the syrup, the rest is water. This means that each cup of soda costs only cents for the restaurant.
(Making it all the more annoying at the movie theatre when a cup of coke costs upwards of 10 bloody dollars).
‘All you can eat’ restaurants make sure that there are as many soda dispensers as possible around the dining room, and that your cup is enormous.
They’ll also usually up-charge your meal for the soda. So you’re paying for a soda “package” on top of the cost of the buffet.
They don’t do this because they need the money, they just want you to treat the soda as a high priority.
They want you to go out of your way to drink as much soda as possible, to get your moneys worth. This will mean that you’re eating less food and saving the restaurant money in food costs.
The soda is filling your stomach with gas, ensuring you’ll eat less. This is great for the restaurant as the food costs a lot more than the soda.
On a buffet line, have a look at the order in which your food has been arranged.
Highly filling, inexpensive carbs such as heavy pastas will be first in the line. They know you’re starving and that you’ll fill up your plate with these foods before arriving at the more expensive options such as steaks, fish and salad.
If there’s a seafood option, it’ll be right at the end of the line.
‘All you can eat’ restaurant plates are much smaller than normal plates, so it will fill up fast. They’re betting you’ll have no more room on the plate before you get to the end of the line.
Often you’ll tell yourself that you’ll go back, but the majority of us can’t eat more than one full plate, two at the most.
We tell ourselves all day that we’ll eat ourselves silly, but often we can’t. Often we sabotage ourselves by starving all day long, not realise that we’re shrinking our own stomachs.
We then go to the restaurant and hope to fill it to bursting, only to find ourselves feeling sick after a regular portion of food. Unfortunately our stomach isn’t like a balloon that can be shrunken down, then filled to the brim on a whim.
Sizzler always made sure to give us cheesy bread at the beginning of our meal because of it’s enormous amount of carbs.
Between the cheesy bread, pasta and soda; I paid $30 to eat, but probably only ate $8 worth of food.
Oh, $35 after paying for the “soda package”.
Less and cheaper staff
A conventional restaurant has a fairly large labour overhead. There are so many professionals involved in the operation of the restaurant, it can sometimes be the reason for a restaurants downfall.
However with an ‘all you can eat’ restaurant, the customer is expected to wait on themselves. The only staff needed are those cooking the food, and front of house staff who keep things clean and swap out dishes.
The staff needed to clean and turn over dishes don’t need to be highly trained and skilled wait staff, they can be almost anyone. Kids fresh out of school can do this job, or anyone else that’s willing to work for the minimum wage.
Labour is one of the biggest costs for a restaurant, so reducing that cost is the most important money saver of all.
Modern ‘all you can eat’ options
The modern ‘all you can eat’ option isn’t an entire restaurant that offers this style of eating, although these do still exist.
Instead, the far more common sight is a conventional restaurant that offers ‘all you can eat’ menu items. A good example is Red Lobster.
Red Lobster offers ‘all you can eat’ shrimp during 6 weeks of the year. They don’t make money by giving you cut-rate shrimp, lowering staff, or placing the shrimp in strategic locations. Rather, they entice you to come by creating false scarcity.
Just like when Disney use to put their movies in the “vault” for 10 years to entice you to buy their movies on DVD “while you could”, Red Lobster only offers their shrimp deal a few weeks out of the year. They hope that people will come in droves while it’s an option.
They don’t make money on the shrimp themselves, they make money on everything else you have to buy while eating the shrimp. Things such as the soda, your entree, and a desert.
Much more important than the food though, is that they’re hoping they’ve made a repeat customer.
They’re hoping that you were so impressed by their limited time shrimp deal, you’ll come back once the shrimp deal is over.
If they’ve turned you into a repeat customer, that’s worth losing any amount of money on a one time shrimp deal 6 weeks a year.
And that’s how it’s done
The business world is a cruel and heartless race to the top. It takes more than one strategy to succeed, and businesses need to constantly adapt to stay alive.
We’re all pawns in their game whether we like it or not. Have you been played recently?