"Food is the most important thing for the people", and no one can do without food, so it is impossible for any restaurant to monopolize the whole catering industry. In order to win in the fierce competition, restaurant owners have to rack their brains to think of countermeasures to ensure more profits while surviving. Restaurants offering free refills is a strategy made by restaurant decision makers in the increasingly fierce market competition. So, who is the biggest winner in this strategy?

In general, the cost and price of iced tea and soda water in restaurants are quite different from the market price. If customers are provided with free refills of iced tea and soda water, operators will not lose anything, but in the eyes of consumers, they have already taken advantage.

Restaurants offering free refills also involve the value of goods, the elasticity of demand of goods and the marginal cost of goods among consumers. For example, the value of a sprite consists of raw materials, services and brands. If the price ratio of raw materials is less than the service and brand, then the possibility of restaurant replenishment is great; If the elasticity of customers' demand for Sprite is small, that is to say, Sprite has dropped from 5 yuan to 3 yuan, and the selling price has not changed much, then the possibility of refilling glasses is even greater. In this way, customers can also understand the marginal cost of Sprite and set a satisfactory standard for customers. If the standard of satisfaction is set as one cup, that is to say, customers are basically satisfied with one cup; If the standard is set to double, then the restaurant is likely to make up the order.

With the continuous improvement of people's living standards, the number of dining customers is gradually increasing, and the average cost of providing services to customers in restaurants will decrease, and the fees charged by restaurants for customers per meal will be much higher than the marginal cost of this meal. In economics, marginal costs increase at any sales level, just like the variable costs such as employees' wages, raw materials and fuel that a unit needs to increase in sales. Therefore, as long as it can attract additional customers, the profit of the restaurant will increase. Offering free refills attracts many customers, so the restaurant is the final winner from any angle.

In fact, commodities such as beverages not only have high demand elasticity, but also have high marginal utility, so many restaurants will provide customers with free refills to earn more profits while winning customers.

Economics reminds you:

As a businessman, the pursuit is to maximize profits, and providing "free lunch" must be to obtain greater profits from other aspects.

Everyone is an economic man, pursuing the maximization of his own interests. However, the rationality of a rational person is limited, and it is easy to lose rationality in the face of the benefits that can be easily obtained. So clearly remind yourself that "there is no such thing as a free lunch".

Source: Why do restaurants offer free refills?

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