French fries, Adam Smith and restaurant mass production

Restaurant Economics: How to Make 1500 Meals a Day

Oct 22, 2013 • Behavioral Economics, Demand, Supply, and Markets, Economic Thinkers, Entertainment, Households, International Trade and Finance, Labor, Lifestyle, Thinking Economically • 312 Views    No Comments

At 2 am, converging at the delivery entrance of Balthazar in NY’s SoHo are mussels from New Zealand, russet potatoes from Idaho, steak from the Midwest and chicken breast and bacon from Prince Edward Island while some Little Skookum oysters originated in Washington State.

By 6:30 am, at one station, the potato peeler starts working his way through 600 pounds of the russets. (His best time? 6.4 seconds a potato). Moving through different stations, the potatoes are then soaked, sliced, fried, refried, salted.

On the other end, again we have specialization–even down to the runner who just brings coffee from the barista to customers, the food runners who bring plates to the tables and the busboys who return them to the dishwashers.

During 18 hours, Balthazar’s gastronomic mass production includes: 111 steak frites, 90 French onion soups, 45 sides of fries, 40 grilled dorades 51 chicken clubs, 68 omelets and 62 goat cheese tarts.

The menu also reflects some economic thinking.

Too many choices and we might select none of them. Too few and we are dissatisfied. Recent research indicates that at fast food establishments we like items to be grouped–perhaps 6 in each category (chicken dishes, pasta, starters…) while in finer restaurants like Balthazar, we prefer selecting among 10 entrées.

In its menu, Balthazar appears to be using a reference point to focus our attention on their “stars”–those dishes that are popular, pricey and profitable. Explained by economics Nobel laureate Daniel Kahneman in Thinking Fast and Slow, a reference point is a beginning that shapes your opinion of what follows. For Balthazar, that means listing a $165 seafood platter at the top right hand side of their menu next to a $110 platter. The $165 option becomes a reference point, also called an anchor. Seen next to the $165 item, the $110 option appears more reasonably priced.

Balthazar Menu

 

How to place prices? Why are hamburgers in “menu Siberia?” As the intersection of psychology and economics, behavioral economics has the answers.

Meanwhile, behind the scenes at Balthazar, observing how 200 people prepare food for 1500, we would have seen every idea that Adam Smith used to describe a market system.

Sources and resources: Including a wonderful video of assembly line steak frites, the NY Times Magazine had the Balthazar production facts while the Guardian and econlife provided some menu insights. And always, Dr. Kahneman’s Thinking Fast and Slow, is ideal for explaining our behavior.

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