How to Give Away Food
“Chef Victor Albisu is so happy to open his second Taco Bamba next month, he’s giving away food,” began the story in the Washington Post. The generous chef, it turns out, will offer the first 100 customers at the new location (in Vienna, Va.) a free taco a week for one year. Then the reporter begins to do the math:
“Let’s see: 100 tacos a week, times 52 weeks a year. . . well, that adds up to a lot of free tacos, right?
“I don’t really want to think about it,” Albisu said.
Was the chef being candid, fearing his food cost was about to balloon because of a ridiculous stunt? Or was he being disingenuous, knowing full well he was making a smart move on relatively small investment?
To find out, I turned to Results Thru Strategy’s Len Ghilani, a veteran operations executive. Ghilani’s verdict: Probably disingenuous. “I don’t think it’s a dumb mistake,” he said. Here’s why:
Taco Bamba’s website says each tacos costs $3 (tradicionales) or $4 (nuestros). Let’s assume he’s giving away the cheaper version. “It probably costs him $1 to make a taco. So if he’s selling tacos for $3 and it costs $1 to make them, he’s making a $5,200 investment. That is not a big investment,” Ghilani maintained, particularly since the chef can write it off as a marketing expense.
What’s more, the chef has only to sell 33.4 more tacos per week to recoup his dollar per-taco cost, he calculated. That should not be terribly hard for the new restaurant. Albisu’s first outpost, in Fall Church, Va., maintains a 4.5-star Yelp rating after nearly 1,000 reviews.
“A $5,200 annual marketing spend is nothing,” noted Ghilani, who recently helped a client distribute 1,000 coupons for a free large pizza. “I bet he accidentally drops more tacos on the kitchen floor than he gives away.”