How All You Can Eat Restaurants Make Money

– It's all-you-can-eat
pancake time at IHOP. – Endless shrimp is back at Red Lobster. – all-you-can-eat of this for $6.99? – [Narrator] Unlimited food. These restaurants give you all-you-can-eat for one fixed price. Sounds like a pretty good deal, but how do these
restaurants make any money? The way buffets typically work
is each person pays the same fixed price for access to a
line of self-serve dishes.

You grab a plate, fill it
with food, eat, and repeat. As many times as you want. – This started in the 70s and the 80s, and they were very popular. I think it was kind of sign-of-the-time. They were a family style restaurant, they did not serve alcohol, but it was a lot of food
for not a lot of money. – [Narrator] Popular chain
restaurants that use this model are Golden Corral, and Home Town Buffet. Other all-you-can-eat
buffets specialize in one type of cuisine, like
Chinese food, Indian food, or different types of pizza.

The most obvious money saver
for a buffet restaurant is there's less need for servers. – They don't need full
wait staff because you're getting your own food and
bringing it to the table. – [Narrator] But these
restaurants apply another strategy that's hidden in plain sight. Pay attention to the
layout of a buffet line. Buffets often put cheaper,
or more filling carbs towards the beginning of the line. – They would have a lot
more menu items that had good profit margins on them. Then all of the sides and the
carbs came before the entree so that by the time you got your entree, your plate was full. – [Narrator] And to try
and stop people from taking more than they can eat, these
restaurants might provide smaller than average dinner plates. Or really big soft-drink cups,
so you can fill up on soda. But that doesn't always stop people from piling it up vertically. Or going back for another plate – [Garfield] This will be as an appetizer. – [Narrator] So some buffets
may cut corners in other ways to make sure they aren't
losing a bunch of money. – Because of the tight profit
margins, the food quality wasn't as great as it
probably should have been or could have been.

– [Narrator] Riggs says this
contributed to their decline. Between 1998 and 2017, the
number of all-you-can-eat buffets dropped by 26 percent. Even though the number
of restaurants overall rose by 22 percent. Part of the reason for
the decline in buffets, was the expansion of
casual dining restaurants like Applebee's, TGI
Fridays, Olive Garden, and Outback Steakhouse. This is the type of restaurant
that typically offers all-you-can-eat specials
on particular items. – For example, you take Red Lobster, they will have their
all-you-can-eat shrimp. They're not inexpensive
and consumers like those and they think they're getting
a good value for the money. They're around for about six weeks, so there's a sense of
urgency that's created. – [Announcer] But hurry, endless
shrimp won't be here long.

– The hope is that once consumers
get inside the restaurant, they will add more things, they'll try, they'll be
satisfied, and will return. Because the only way you're
going to drive your business in the restaurant industry today is through building loyalty. – [Narrator] With just a few tricks, like using smaller plates,
putting cheap items towards the front, and using
drinks to off-set other costs, all-you-can-eat restaurants
are able to accomplish the same goal as any other restaurant.

Get people in the door..

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