I love a crab leg from a casino buffet.
Who doesn’t love a good buffet?! Apperently a lot of people!
SOURCES
https://www.mashed.com/1344919/untold-history-all-you-can-eat-buffets/
A Definite History Of All-You-Can-Eat-Buffets
https://www.cookist.com/a-palates-journey-the-rich-history-of-all-you-can-eat-buffets/
https://www.thetakeout.com/1714460/origin-buffets-history-explained/
https://www.nrn.com/fast-casual/panera-s-unlimited-sip-club-will-no-longer-be-unlimited
https://www.tastingtable.com/1943624/all-you-can-eat-buffets-city-las-vegas/
The Marketing Gateway is a weekly podcast hosted by Sean in St. Louis (Sean J. Jordan, President of https://www.researchplan.com/) and featuring guests from the St. Louis area and beyond.
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TRANSCRIPT:
Panera Bread – or as we call it here in St. Louis, the St. Louis Bread Company – has just announced that it’s making a big change to its Sip Club, a subscription service that allows customers to pay a monthly or annual fee to be able to get free self-service drinks from Panera Bread locations as often as every two hours. This includes hot and iced drinks and fountain drinks, and people who frequent Panera Bread a lot tend to love this program, even if it sounds sort of silly to those of us who don’t go to Panera Bread on a daily basis.
Paying a fee of at least $120 a year to get free drinks means you’ve got to take advantage pretty much two or three times a month to cover your costs, and even then, you’re only breaking even. But for those who have a Panera near their home or work or along their commute, this service can be valuable if they want to grab a coffee or tea and don’t want to pay Starbucks prices for it. It’s estimated that daily users might save up to $100 a month on beverages. So, there is a market for the service.
Unfortunately, it must not be a profitable market, because Panera announced this week it’s cutting back on the perks of the program starting in August.
The main change is they’re dropping the word “unlimited” from the service, restricting users to 30 self-service drinks per month, or roughly one per day.
Though Panera has not directly commented on why, users on internet forums have speculated that it’s due to people abusing the system by sharing their accounts or spending the day in the restaurants holding meetings or working on their laptops and offering free beverages to their guests while not really spending any other money there.
This problem falls in line with another restaurant business model that’s really fallen out of favor in recent years – the all you can eat buffet model.
There was a time when all-you-can-eat buffets were so commonplace that you could often find multiple choices in the same town. These days, you tend to mostly see them in more limited settings, like Asian, Indian, Italian or Mexican food restaurants.
Breakfast buffets are still a staple in hotels, though they’re growing less common over time, and lunch buffets tend to be most popular in busy areas where people don’t have a lot of time to wait for table service during their lunch breaks.
There’s also the problem that buffets are not, and never have been, a very profitable way to run a restaurant. They can enormously wasteful in terms of discarded food, they’re generally regarded as being less sanitary and lower in quality than standard restaurants, and they tend to sit lower on customer satisfaction indexes.
And yet they are still quite popular with some consumers, and so there’s a market for them, too. The question is whether or not it’s a market that should be served.
So let’s take a look at buffets, and I promise I’m going to give you a heaping helping of history and knowledge here as we explore whether or not this business model still makes any sense in 2026… or if it ought to be something we leave to casinos, hotels, resorts and college residence halls while the rest of us just order what we want.
I’m Sean in St. Louis, and this is the Marketing Gateway.
The all you can eat buffet is a pretty modern concept dating to the mid-20th century, and the idea is often credited to the Swedish concept of a brännvinsbord, or table of spirits, which was provided as a pre-dinner hospitality measure for hungry guests to give them finger foods, Brannvin-style spiced vodka and other alcoholic beverages.
This eventually evolved into a smörgåsbord, a spread of hot and cold food intended to serve as a meal rather than a warmup act to it.
Then in the 1930s, the United States was going through the Great Depression and potluck—style buffets in homes became a popular way for large groups of people to eat together during a time when food was relatively scarce.
The Chase Brass & Copper Company invented the electric coil buffet dish to help keep food warm and safer to eat, and enough people bought them that the idea of a buffet was ingrained in the American consciousness.
But even so, the idea of a commercial buffet where you paid a flat fee to get an all you can eat meal at a restaurant wasn’t anything anyone would take seriously during a time of extreme poverty and food scarcity. That idea didn’t really come around until after the Depression when World War II was over and America was in the midst of its postwar boom.
The story is that a publicist named Herb McDonald – no relation to the restaurant chain – was familiar with a traditional Swedish smorgasbord offered at the Three Crowns Restaurant in the Swedish pavilion the 1939 World’s Fair in New York.
He went to work in Las Vegas at the El Rancho Casino, and one night in 1946, when he was laying out the ingredients to make a sandwich, hungry gamblers approached to see if he was willing to share.
This became the seed of the idea behind the Buckaroo Buffet, a 24-hour all you can eat buffet where guests were encouraged to return to the serving line for more food if they wanted it. The cost? A dollar a person, a true loss leader for the casino compared to the cost of the food, but a valuable service to keep guests well-fed and gambling.
Of course, this story may be a bit too tidy to be exactly true – other Vegas casinos also began offering buffets in the post-war era of the 1940s to lure in guests – but Buckaroo Buffet is generally regarded as the model for what began to spread around the United States over the next few decades.
Even so, the buffet concept was mostly used in places with a high volume of customers and a reason for offering food using this high-cost model. Cruise ships and resorts, for example, became an eager adopter of the all you can eat buffet, as did touristy restaurants in large cities and, of course, casinos outside of Las Vegas.
But you also began to see chain restaurants gradually working their way into the buffet business, often starting by offering a salad bar for people to gather food while they waited for entrees like steak or pizza and then gradually expanding to offer a greater assortment of hot and cold foods such as rolls, fried chicken, dessert items and more.
Chains like Sizzler, Western Sizzlin, Ponderosa, Bonanza and Ryan’s became synonymous with offering these partial salad bar buffets in the 1980s, and the chain Golden Corral pretty much perfected the full buffet formula in the 1990s.
Around this time, buffets also started to become a popular way to reinvent Chinese family-run restaurants, which had fallen out of favor for offering the fine dining experiences they’d been associated with in the 1960s and 70s and which were now trying to find ways to get customers dining in.
Buffets proved to be a wonderful way to help customers who were unfamiliar with Chinese food and intimidated by the menus to be willing to be more adventurous and try things that simply looked good.
Other ethnic restaurants followed suit, though many would only offer buffets during the weekday lunch rush and returned to ordering off a menu for dinner and weekends because the cost of running the buffets was too high.
And this is where we need to pause and talk about the economics of a restaurant for a moment. The biggest variable costs to a restaurant are going to be raw materials – food, packaging and supplies – and labor.
Margins on entrees are typically pretty thin and thus restaurants either have to make up their costs in selling add-ons like appetizers, desserts and alcohol or by having such a superior experience they can charge more for it.
Buffets run counter to this logic because consumers generally expect a fairly low cost for them and a wide variety of things to eat. This has everything to do with the loss leader roots of the business model in casinos and in tourism – consumers expect buffets to be a relatively good value and they’ll put up with lower quality so long as the quantity makes up for it.
So, buffets have to be run as a volume-based business and need to try to either fill diners up with cheap food so they don’t expect the expensive stuff or need to find ways to turn a profit on customers who eat less than average to offset the costs of uneaten food.
People who overeat might seem like a threat to a buffet, but since the restaurant controls how much food is brought out and which items are more or less available, overeaters tend to sort themselves out.
It’s the food waste that kills the profitability, whether it’s a steam tray being dumped out because it’s gotten old or, more likely, a customer who piled a bunch of food on their plate and then tossed most of it in the trash.
Buffets will try strategies like upcharging on drinks or charging fees for uneaten food to offset these costs, but these are both unpopular policies that will send customers elsewhere. Often, they have to simply put up with the waste and make up for it with cheaper items, narrow seating to increase their overall capacity and limited service.
And this is why you started to see buffets disappearing even before COVID-19, because they are horribly unprofitable when they’re not running at peak capacity. They also tend to attract cheapskates who will avoid upcharges and who try to maximize the challenge of seeing how much is “all you can eat.”
In the late 1990s and early 2000s, there were a number of buffet chains owned by a company called Buffets, Inc. that operated chains like Old Country Buffet, HomeTown Buffet and Buffet and Bakery that were primarily patronized by families with children and by the elderly.
Despite being very successful in the 1990s during a growth phase, they couldn’t find a path to long-term profitability even after they acquired Ryan’s and rebranded as Ovation Brands and then later as VitaNova Brands. They went through multiple Chapter 11s before the pandemic knocked them out of business for good.
Marketing buffets is also tricky because they are pretty synonymous in consumer minds with families with kids and serving lower quality food. The market for this sort of restaurant tends to be the sorts of folks who want to go out for family meals but who are on a tighter budget. This may be one reason why the buffet chains doing the best right now are pizza places like Pizza Ranch and Cicis, both of which survived the pandemic and which have strong roots in serving families affordably and in promoting Christian values.
Buffets are also still viable options for breakfast and lunch, but primarily because they’re fast and easy when time is limited.
But as I mentioned, many hotel chains are scaling back on breakfast buffets because they find guests gravitate towards the more expensive packaged grab and go items and don’t consume enough of the perishable food, and with food costs rising, they are increasingly a cost center for hotels that can’t be easily offset by the room rates.
And lunch buffets are suffering because of the broader issue that fewer people are working fully in offices these days; remote work and hybrid schedules have hurt the business lunch sector pretty badly, and rising food prices combined with lower foot traffic have required cost-cutting and paring down menus and service options.
Which brings us back to Panera’s Sip Club, which is not a buffet itself, but designed around the same basic model of nearly unlimited consumption.
Panera will certainly lose some subscribers as they tighten their policies to keep the service profitable, but they must feel that they won’t lose enough to make a difference as they attempt to trim their costs.
Personally, I don’t see the value in cutting perks from a program that relatively few people probably actually abuse and which centers around self-service beverages, which are the highest margin products a restaurant can offer.
Treating the Sip Club as a loss leader to get people in the door all day, every day seems like a stronger strategy than telling them there’s a limit to how often you want to see them, and I’d wager that offering these invested and engaged subscribers deals on food to entice them to make purchases would generate greater profits than cutting out some free drinks.
But I’ll give Panera the benefit of the doubt here that they probably tried that and it didn’t work, so unless they’re ready to keep accepting losses on drinks, they’re stuck policing the behavior of the customers who are taking advantage by having tighter policies to cut down on abuse.
It makes sense, I guess, from a business point of view.
But I’d hate to be on the marketing team responsible for making that change, because the one thing all you can eat buffets have taught us about consumers is that when the perception of value is gone, the customers will vanish too.
And it’d really stink for Panera to see loyal customers departing over the cost of a few cups of coffee.
I’m Sean in St. Louis, and this has been The Marketing Gateway. See ya next time!
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