Saturday, January 25, 2014

Why did serving sizes get big?

Conventional wisdom is that food serving sizes are bigger than they used to be, particularly in restaurants, and that this is a leading cause of obesity. You can google up all kinds of articles and graphics and such giving examples.

What I don't understand is why restaurants and other food sellers would have started increasing their serving sizes in the first place.  You're running a business selling people food.  Your customers are accustomed to getting a certain amount of food for the money they pay.  If you increase the amount of food in a serving, you're shrinking your profit margins for no reason.

A quick google turns up explanations of how large sizes at fast food restaurants came to be - they worked out that people aren't going to order two servings of fries even if they could eat more, but they'd feel that a large is good value because it costs less than two standard sizes, and the additional mark-up in retail price was significantly more than what the restaurant paid for the ingredients.

But that doesn't explain why serving sizes also increased in non-fast-food restaurants that don't have multiple size choices, or why restaurants with multiple serving sizes keep phasing out the smaller size (which was once upon a time the "regular").

4 comments:

M@ said...

It's the interplay between food cost and perceived value.

Restaurants typically run at a food cost of 20-30%. (My father's restaurant targeted 25%.) That is the ratio of all purchases of food to the total revenue of the restaurant.

So let's say you're serving a steak, french fries, and a scoop of cooked carrots for $15. The steak is the most expensive part of the meal at $3, the fries cost $0.40, and the carrots cost $0.20. Total cost, $3.60, just under our target food cost. (You want to be under, too, because of waste.)

But it sometimes looks a little small on the plate. Let's up the portion of fries to 150% of the original size, really overload the plate. Now the fries cost $0.60. We'll up the price of the meal to $16, because we've increased the perceived value of the plate.

Our food cost has risen, our price has risen more, and the customers are actually more satisfied. That satisfaction isn't because they were hungry after the load of fries we used to serve; it's because when the plate arrives, the fries are literally hanging off the side, and the steak is on top of them, sitting a little higher, seeming even bigger than it did before. $15 was a decent price, but $16 -- look at the size of it! You can't argue with that kind of value!

What's more, if your customers perceive value in one place, you can actually decrease value in another place. Great deal on a steak -- charge an extra quarter for soft drinks, which is almost all profit (the cost of the syrup is tiny compared to the cost of the drink). They decided it's a great value well before the bill arrived.

It doesn't work for restaurants that compete on exceptional quality. Barberian's and Ruth's Chris don't care that a Kelsey's steak is $35 cheaper than theirs. But for everyone in the big middle ground of family-style restaurants -- Swiss Chalet, Pickle Barrel, Applebee's, etc. -- this is an effective strategy.

impudent strumpet said...

I wonder if that's why some restaurants I've been too have really weird and interesting and unique shapes of dishes. Maybe they're specially designed to look fuller?

But some also have these disproportionately large plates that aren't full, but still contain a unnecessarily large amount of food. Not sure what's going on there.

laura k said...

So glad M@ was able to explain that. I kind of knew the answer, but not well enough to articulate it.

Dish shapes are part of upscale restaurant culture. An oversized bowl with what appears to be a very small amount of soup in it, with an artfully placed garnish, distinguishes that restaurant from Big Box family-style restaurants. It says "You're not here for value or bargains, you're here for beautiful, delicious food and decor".

impudent strumpet said...

I guess that means some of the restaurants I've been to are upscalish. I didn't realize that at the time.