There’s No Such Thing as a Free Appetizer (Ep. 171)

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(Photo: Alexander Baxevanis)

(Photo: Alexander Baxevanis)

This week’s episode of Freakonomics Radio is called “There’s No Such Thing As A Free Appetizer.” (You can subscribe to the podcast at iTunes, get the RSS feed, or listen via the media player above. You can also read the transcript, which includes credits for the music you’ll hear in the episode.)

It was inspired by an e-mail from a listener named Larry Tingen, a college math instructor:

My fiancee and I are avid listeners and lovers of Freakonomics. We were at a Mexican restaurant this weekend and the first thing that happens is we are given chips and salsa — even before drink orders. Kelli asked me why I thought so many restaurants serve you free food (e.g. chips and salsa, bread, etc.) prior to taking your order? I couldn’t come up with a good reason. To me, it seems to go against the restaurant’s financial interest because most people will “fill up” on the free food, then order a smaller/cheaper meal. … Does the free food make customers more likely to order meals that have a better profit margin? What’s going on here?

Good question, Larry! We spend this podcast trying to answer it. Are we successful? Hard to say. We discuss a number of theories, but perhaps the most persuasive answer is — well, we’ll get to that in a little while.

Helping us sort out the question are:

Among the theories we entertain:

  • Free food at the start of the meal may actually encourage people to eat more, by priming the pump.
  • Free food (especially bread and chips) encourages diners to order more drinks, which have a high profit margin.
  • Free food gives servers and the kitchen time to deliver the meal without the customer getting cranky (or, as one person calls it, “hangry”: i.e., “hungry” + “angry”).
  • Free food might make diners less likely to order dessert, which may be in the restaurant’s best interest if they are trying to turn tables quickly. (This point, we should note, is disputed by those who feel that turning tables is overrated, and that dessert can be perfectly profitable.)
  • Free food might make diners feel warm and fuzzy toward the restaurant, and think that they should reciprocate by not being cheapskates.
  • The “free” food we’re talking about here isn’t really free at all, but rather is baked into the menu prices. In other words, there’s no such thing as a free appetizer.

Finally, Andrew Haley suggests that free appetizers in restaurants may in fact be little more than a historical artifact:

HALEY: Before there were restaurants, there were taverns. Taverns served a set dinner at a set time for a set price. And the accounts we have of these tavern meals suggest that bread … was part of the meal. And this made sense after all. When you went to one of these taverns, you were paying for the meal with a single charge. And it was in the interest of the tavern owner that you filled yourself up with bread so that you would eat less of the expensive fishes and meats.

One last note: there’s no such thing as a free podcast either. We are, after all, a public-radio project — which means  we are supported by your contributions. So please visit our donation page and help us keep doing what we do. Depending on the size of your donation, you can take home a signed copy of Think Like a Freak or Freakonomics; a Freakonomics Radio t-shirt or mug; AND — this is new — you’ll automatically be entered to win a 13″ Macbook Air, donated by our friends at Tekserve in New York.


Daniel

I don't think I've ever had the problem of a free appetizer here in Australia, sadly.

Charles

Don't high-glycemic foods like bread cause food cravings? Also, bread is full of sodium, so it may lead to more drinking. Plus, bread isn't that expensive.

Jihan J.

Had I known that you were going to devote an episode on free food, I would have directed your attention to Korean restaurants. In a Korean dining experience, you typically have your bowl of rice and a main dish, be it a strew, barbecued meat, a fish, etc. And surrounding your main dishes are your "banchan," which are small side dishes ranging anywhere from 2 or 3 dishes to more than a dozen in total. Your kimchi, your pickled cucumbers, your fried black beans, your dried seeweed, etc. will come in the form of banchan. And when you go to a Korean restaurant, the server will bring out not just one, not just two, not just three, but easily over six or seven of these banchan side dishes all before you even take a look at your menu. As far as I know, EVERY Korean restaurant does this without an exception and they never charge you for banchan. You get free refills too for any of those small dishes. And yes, the cost for the banchan is probably already baked into the menu.

This, however, is in stark contrast to how the small dishes are served in typical restaurants in Japan. In Japan, my understanding is that you have to order individual side dishes and you generally get no free refills.

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Jihan J.

The Korean restaurants (especially the ones that are in Korea) take this "free food" thing to the next level. Free food on steroid if you will. It would be unthinkable for a restaurant to charge money for the banchan because everyone else offers it for free. Also, the disparity between how they do things in Korea and Japan seems to suggest that the difference is more of an accident of history and inertia (similar to your tavern example) than a calculated strategy to lure customers.

Matt Taylor

Here is my take on the “free” food – based on personal experience:

Let’s say I am going to a fine dining restaurant. My mindset going into it is that I will most likely get a cocktail, split an appetizer, and have an entrée. I am a big eater and don’t mind spending a bit for good food – but cost is still going to be important. To consider it a good dining experience I will have to taste delicious food, not spend more than I am comfortable with, a leave feeling full. In my mind I expect it to cost something like this:

1 drink - $10
½ appetizer - $5
1 Entrée - $30

The reality is that this will probably not be enough food for me. The food at fine dining restaurants is typically expensive to make and I do not expect huge portions. If they bring out the amount of food I would expect for this price I would leave hungry. If it costs more than I thought or I have to order more I will feel like I spent too much. If the restaurant gives me large dishes for this price they will not be profitable. This is the problem that “free” bread solves.

Nobody is happy when they leave a restaurant hungry. The “free” bread allows the restaurant to serve smaller portions while providing cheap insurance that more people will leave satisfied.

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Seth

I noticed in a recent visit to Olive Garden that they don't give breadsticks and salad until you order a meal and the waiter mentioned that to us, though we noticed other tables were getting breadsticks and salad before ordering.

That told me a few things. People filling up on breadsticks and salad and then leaving must be a problem. Servers must have some discretion in applying the policy. We must've fit the stereotype of people who didn't order food. Or, our server, in particular, has experienced that problem.

I liked all the possible explanations for free appetizers. I don't believe it's just any one of them. Like most things that are custom, it has just survived the evolutionary forces of customer service in some cultures probably for lots of reasons -- mostly it offers several win-win's for customers and restaurant owners.

Lee

The reason smart restaurant owners give "free" items that are included in the price is simple. People don't go to eat they go to be served. They go to eat food they can not have at home they are going for the experience. They go for the fantasy of being in power feeling like royalty and looking down on servants .They take pleasure in making them jump through hoops for there oh so important tip and patronage. Much like the Geisha of Japan you stroke the customers ego you keep their glass full smile at give them bread have a pretty waitress and take all the money you can. I find this to be particularly true with black customers. They really want you to grovel before them and to make it worse they never tip. Think of the ancient holiday of Saturnalia where the peasants were served by the masters .

Catherine

I didn't mean to like this post, I meant to "thumbs down" this post. I can't believe you loaded all that ego garbage and racist comments over going out to eat at a restaurant.

Catherine

I haven't listened to the podcast, just had some thoughts on the bullet points above and wanted to add some additional thoughts:

1. Give us this day our daily bread. Bread (and this is the role tortilla chips play too) is part of human existence going back thousands of years. The Romans were giving out free bread (Decline and Fall of the Roman Empire), "Let Them Eat Cake" this connection between bread, humans (especially European western civilization goes way back). I think Mexican restaurants need something to offer in lieu of bread and hence tortilla chips. I don't think or at least I don't know for sure -- but I'm guessing this wasn't done by South American people until the tourist trade from the USA began.

2. Have you ever made your own bread and tortilla chips? Super easy, super cheap. Much better when you make it yourself, try "My Bread" by Jim Lahey. I think most big restaurant chains can buy bread in bulk for very little, it's probably loaded with preservatives which gives it a long shelf life (helpful in the food business), and again, "Give Us This Day Our Daily Bread" its expected.

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Sunnymay

Free appetizers tend to be salty and make you want to drink something to quench the thirst. So, because you'll be eating more, the restaurant makes money and you glow in the warmth of getting something "free". The free appetizers butter you up for a good experience at the restaurant/bar and some people time their entertainment needs according to Happy Hour and Early Bird Meals.

Rambling Al

I would say the answer is three fold...partially to keep people happy while waiting for possibly slow, made to order meal service, partially because chips and salsa is very inexpensive. However, to me the best reason is one I did not see...the restaurant can make their entree smaller (and by definition, cheaper) because folks have already eaten...and if a heavy eater is still hungry after said smaller entree, they still can't really complain...they can just have more chips and salsa. The money they save by making a steak quesadilla or chimichanga smaller more than makes up for some wholesale chips and salsa made in bulk.

lee

That is a good point but Mexican places tend to have large portions Heck so do italian places. They are probably missing out on your good advice.

Dsniel

That's no mexican music. that's colombian or venezuelan "llanera" music. also lnown as Horopo. love the show!

JHKL

I saw this story in Fortune today and thought of your podcast:

"Investor tells Olive Garden: Fewer breadsticks, sell more booze"

Perhaps the team Starboard Value have been listening too.

Dustin

I think this phenomenon may be explained by two, non-related mechanisms. First, tradition. Restaurateurs will do what they've seen others do. Second, perceived value. The chips & salsa or breadsticks are relatively cheap compared to other items on the menu. But, to the consumer, value is added to what they ordering. If you go to a restaurant with free appetizers, you may be more likely to spend more on a single dish afterward. This gives the patron a higher perceived value. I believe this works along the same lines as Costco.

ZackMpls

In Mexican restaurants, the chips are made from old tortillas left over from the previous day. In other words, they'd just be throwing them away as waste if they weren't cut into triangles and served alongside salsa, which can be made cheaply in huge batches. Realistically, it costs the restaurant very little and offers lots of upside to the guest. Likewise, bars will usually have "free" popcorn machines. But no one would ever purposely order (pay for) popcorn and this is probably not cutting into hungry guests' real food orders

Mary Ethridge

I am a lot less likely to order wine before a meal if there is no food on the table. And once the meal comes I often no longer care about having wine.

Erik

I would say this XKCD-strip sums it up perfectly.

http://xkcd.com/1499/

Jane Fox

What an interesting question! You've got some good theories, I think. It's important that you don't overlook the importance of a good wholesale supplier, especially when it comes to something like bread. They can make "free" bread a much more affordable option than it would otherwise be, which in turn makes your suggestions (warm and fuzzy feelings, encouraging people to eat more, etc) more profitable. Thanks for the great answers!

http://www.klostermanbakery.com

Emanuel Figueroa

Great podcast. So what about this, how do you get people to start paying for things they are used to get them for "free." Like how to get people to start paying for the bread or the fortune cookies at a restaurant?