Restaurant Buffet Profitability – Do Buffets Make Money?

Restaurant Buffet Profitability is critical for a restaurant business.

Do you offer a buffet breakfast, lunch or dinner at any of your restaurants?

Have you ever wondered whether your buffet meals are profitable?

Even if you did not offer them, are buffets worthwhile?

How would you know?

In this article, I will lay out a case for buffet offerings vs the traditional a la carte menus.

Let’s jump right in.

This Blog Post will cover:

Traditional Restaurant Offerings

The most common offering of restaurants is the menu based one.

What is known in the industry as a la carte menu items.

These are individual menu items listed with a price for each.

Menu items could be food or beverage types.

Or a combination thereof.

More granularly, they could be based on meal periods.

What are meal periods?

Commonly they are:

• Breakfast
• Lunch
• Dinner

Lunch and Dinner might further have multiple courses (with menu items) like:

• Salad
• Soup
• Entree (Main Course) and
• Dessert

A customer can order any single or combination of menu items in any meal period.

So, what then is a buffet all about?

Let me introduce you to an example of the concept you may be more familiar with.

The Combo Meal

Ever been to a McDonald’s or Burger King?

If you have, you know if you order Chicken Nuggets, you will be asked if you want the Nugget Combo.

What is this Combo?

Well, it is more than one menu item bundled together.

For example:

• Chicken Nuggets
• French Fries and
• Soft Drink

What’s the big deal with this bundling concept?

It is a big deal.

More importantly, the buffet is a restaurant’s version of the Combo meal example above.

Let me explain.

The Bundle Concept

A buffet spread is a bundle offering just like the Nugget Meal Combo.

It brings together the following generic menu items which are also available a la carte:

• salad
• soup
• entree
• dessert

The above is a generic buffet composition for lunch or dinner.

There can be more items added to the above depending upon what the selling strategy is.

But these can be considered basic.

We now come back to an earlier question.

What’s the big deal with a buffet?

Rationale for buffet

Why are buffet spreads offered?

There are many reasons.

Let’s take first the obvious ones:

• ease of access to the customer or guest
• quick turnaround,
• visual attraction,
• more choices,
• unlimited quantity,

These are reasons which are a huge win for the customer.

I will, through an example later, prove how that is so.

How about the restaurant?

Do they benefit from a buffet offering?

Or, does the buffet make money for them?

Yes, they do.

And indeed it does.

A powerful principle is at work relating to bundles.

The Buffet Revenue Bundle Concept

A buffet which is well conceived of and priced attractively is a major contributor of revenue.

How so?

Let me give you an example of what this means.

Illustration

Let us assume a Lunch Buffet in a 24 hour Dining Restaurant (Coffee Shop).

Items included are: salad, soup, entree, dessert, individual prices of a la carte items included in buffet:

• Salad $3.50
• Soup $4.50
• Entree $11.75
• Dessert $4.75
• Total of a la carte items (without taxes): $24.50

Now, assume that the buffet spread is priced at $20 (without taxes).

Advantages of the Bundle Strategy

Let us list the advantages of this strategy:

• Most critical one is for the guest:
  • saving of $4.50 with unlimited choice of menu items in buffet.
  • this amounts to 18% discount based on a la carte total.
• This is for the restaurant:
  • It need not sell salad, soup, entree, dessert individually;
  • in one shot, all items have been sold through a buffet offering.
  • This has powerful implications for revenue.
• Not all guests who choose buffet spreads consume every part of the meal.
  • Some may just have the entree and dessert or the soup, entree and dessert and
  • similar combinations which do not include all the items.
  • This has implications too.
• Revenue contribution is higher when a buffet is sold than when individual a la carte items are sold.
• Simply put, revenue is higher with buffets sold.
• This is because of the combination (bundle) of menu items sold at one time.
• Apart from this increased revenue, there is a strong impact on margins and profitability. [See section later on Buffet Profitability].
• With a buffet laid out, restaurant outlet operates with less service employees.
  • This reduces labor costs and
  • boosts restaurant profitability.
• With a buffet laid out, there is less movement in and out of the operating equipment.
• For example, plates, dishes, chinaware, glassware and so forth) between restaurant and the kitchen.
  • This brings down breakages thereby boosting profitability of the restaurant.

Revenue that consists only of individual a la carte items sold is less effective than a buffet sold.

As said before, the buffet is like a bundle.

The Buffet Revenue Contribution

The increased revenue contribution from:

• a buffet compared to individual a la carte items
• is clear from the above illustrations.

But that is not the only benefit.

There is a huge factor that boosts margins and profitability when a buffet is sold as a bundle:

• the additional variable costs for the revenue achieved are lower
• this increases profitability.

The Buffet Bundle Profitability

Finally, the most powerful implication of the buffet spread offering is this:

• more buffets sold in a particular meal period result in higher profitability,
• due to better contribution margins compared to individual a la carte items.

This article was first published by the author for www.4Hoteliers.com and is reproduced here with their permission.

Menu Engineering Analysis for Highest Restaurant Profitability

Want to Learn about restaurant profitability through menu engineering analysis?

WATCH below video (< 5 mins) of a flow chart based menu engineering analysis for highest restaurant profitability.

Related Posts You Should Read