FAST-FOOD LINES: AN ECONOMIC PERSPECTIVE

20 Apr

I found this story very interesting:

You enter a fast-food restaurant. Do you immediately look to see which line is the shortest? What do you do when you are in the middle of a long line and a new serving station opens? Have you ever gone to a fast-food restau­rant, seen very long lines, and then left? Have you ever become annoyed when someone in front of you in line placed an order that took a long time to fill?

The economic perspective is useful in analyzing the behaviour of fast-food customers. These consumers are at the restaurant because they expect the mar­ginal benefit from the food they buy to match or exceed its mar­ginal cost. When customers enter the restaurant, they go to the shortest line, believing that it will minimize their time cost of obtaining their food. They are acting purposefully; time is lim­ited and people prefer using it in some way other than standing in line.

If one fast-food line is tem­porarily shorter than other lines, some people will move toward that line. These movers appar­ently view the time saving asso­ciated with the shorter line to exceed the cost of moving from their present line. The line switching tends to equalize line lengths. No further movement of customers between lines occurs once all lines are about equal.

Fast-food customers face an­other cost-benefit decision when a clerk opens a new station at the counter. Should they move

to the new station or stay put? Those who shift to the new line decide that the time saving from the move exceeds the extra cost of physically moving. In so de­ciding, customers must also consider just how quickly they can get to the new station com­pared with others who may be contemplating the same move. (Those who hesitate in this situ­ation are lost!)
Customers at the fast-food es­tablishment do not have perfect information when they select lines. For example, they do not first survey those in the lines to determine what they are order­ing before deciding which line to enter. There are two reasons for this. First, most customers would tell them “It’s none of your business,” and therefore no information would be forth­coming. Second, even if they could obtain the information, the amount of time necessary to get it (a cost) would most certainly exceed any time saving associ­ated with finding the best line (the benefit). Because informa­tion is costly to obtain, fast-food patrons select lines without per­fect information. Thus, not all decisions turn out as expected.
For example, you might enter a short line and find someone in front of you is ordering ham­burgers and fries for 40 people in the Greyhound bus parked out back (and the employee is a trainee)! Nevertheless, at the time you made your decision, you thought it was optimal.
Imperfect information also explains why some people who arrive at a fast-food restaurant and observe long lines decide to leave. These people conclude that the marginal cost (monetary plus time costs) of obtaining the fast food is too large relative to the marginal benefit. They would not have come to the restaurant in the first place had they known the lines would be so long. But getting that infor­mation by, say, employing an advance scout with a cellular phone would cost more than the perceived benefit.
Finally, customers must de­cide what food to order when they arrive at the counter. In making their choices they again compare marginal costs and marginal benefits in attempting to obtain the greatest personal satisfaction or well-being for their expenditure.
Economists believe that what is true for the behaviour of cus­tomers at fast-food restaurants is true for economic behaviour in general. Faced with an array of choices, consumers, workers, and businesses rationally com­pare marginal costs and marginal benefits in making decisions.
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