Arnold Kling  

My Guess on Take-Out

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The Missing Take-Out... Unequal Income Distribution in...

Bryan asks


why don't people open high-end restaurants without a dine-in option? As far as I can tell, such restaurants are virtually non-existent.

I'll make my guess. In restaurants, the analogy with "follow the money" is "follow the beverages." For example, if you eliminated sodas at fast food restaurants, my guess is that the profits would disappear.

My guess is that high-end restaurants make most of their money on wine. If they could get you to take out wine at the same price that they charge for dine-in, they would do take-out. In reality, they can't force you to take out wine with your meal, but they can discourage you from bringing your own bottle. So they prefer dine-in to take-out.

Opening a high-end restaurant for take-out only would require you to charge a high mark-up on the food in order to make up for the lost profits on wine.

By the way, there is high-end take-out in Rockville, called Eatzis, and some of the fancier food stores offer what might arguably be called high-end take-out.


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CATEGORIES: Microeconomics



COMMENTS (12 to date)
Mike Lion writes:

I think it proves the old saying (at least in the restaurant business) that the REAL cost in an upscale restaurant is in providing the service, not so much the food.

Mike Lion

Phil writes:

Here in Canada, two or three casual restaurants are pushing pick-up and (in one case) delivery services. The prices, I believe, are the same.

So at least at the margin, take-out food sales must be profitable.

John Thacker writes:

My guess is that high-end restaurants make most of their money on wine. If they could get you to take out wine at the same price that they charge for dine-in, they would do take-out. In reality, they can't force you to take out wine with your meal, but they can discourage you from bringing your own bottle.

Hmm. There are corking charges at various places, but I'm still not totally convinced. It's certainly possible, but I don't know.

Carl Marks writes:

To build on Mike Lion: I normally don't find the quality of food in restaurants to be very good. My girlfirend routinely cooks for me food that would be valued around $40 a plate at a normal restaurant. I have always assumed that people buy the ambience and the feeling of being in a high class environment, not the food.

vintner writes:

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Acad Ronin writes:

Where I live licenses to serve liquor are rationed and so many restaurants are BYOB, and do not charge corkage. They could certainly do takeout. Where my parents live I know of at least one Italian restaurant in the US$20-25 per entre range that does takeout, though not at a discount from their sitdown prices. I suspect that a number of restaurants do takeout, but don't advertise it.

Heather writes:

I agree with Carl. The reason that there is not much for high end take out is that the cost reflects the ambiance of the restaurant and the food presentation. If you are buying take out food, the plating aspect of the meal is lost and the meal is less relaxing. As a consumer, I am typically unwilling to spend similar amounts of money on takeout as eating out because I will be eating at home out of takeout boxes.

Harry writes:

From my family's experience in the restaurant business, Arnold's guess is spot on but incomplete. There is also a higher margin on appetizers and desserts than entrees, which explains why they are also the ones commonly pushed by wait staff. Along with beverages, these high margin items are not usually ordered with a take-out meal.

aaron writes:

Also, important to note, and adding on the notion that you are paying for service and ambiance, is the high mark-up of alcoholic beverages is partially to offset the slowing of table turnover due to alcohol consumption (but a lot of it is taxes and licenses, a petition at my local brewery against futher increases in tax on serving alcohol suggested that 44% of beer prices are tax in michigan).

A-town writes:

Restaurants are not all about making money on the beverages. If you believe that high-end restaurants or any restaurants are virtually non-existent then why do we have a million different kinds? Restaurants are there to please the customer with food and beverage. If you took out the food then it would be a bar. There are plenty of restaurants who make money off of the quality of food, the one special appetizer that people go crazy about, the delicious burger that no one else has, the desert that is mouth watering. The food is the reason that people go out to restaurants, not the beverages. Maybe restaurants do make a profit of the beverages but with out the food they customers would not come.

lw writes:

Hasn't Eatzi's been out of business for about 6 months? You may not notice driving by because the landlord has left the sign up. The prepared food counters at Whole Foods do sell takeout food
marketed to soi-disant gourmands, though.

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