Tyler Cowen writes:
Ben Daniels writes to me:
Seen at Johnny Rocket’s near LACMA:
Pancakes. Delicious buttermilk pancakes, served with bacon or sausage & warm syrup.
Two pancakes 4.99
Three pancakes 4.99
Error aside, how might we account for this? One option is that the company wants to give the "three pancake consumers" the sense they are receiving a bargain. I suspect, by the way, that the marginal supply cost of an extra pancake is quite small. The extra pancake may also increase your demand for high-margin beverages. What else might be the explanation?
Having been a cook in a breakfast restaurant I’d argue that the marginal cost of pancakes is indeed essentially zero. At least, off-peak. On-peak perhaps not.
Pancake batter is made all at once and the squirted onto the griddle with a machine. The difference between two squirts and three is negligible as is the attention difference associated with monitoring the extra pancake. They will all be flipped at the same time and served at the same time.
So the major cost difference is the batter and even then its only stochastic since you always make more batter than you need. I suppose giving away a free third pancake raises marginally the probability of having to whip up a new batch of mix before the shift is over, but only by the tinniest of amounts.
My guess is that the same list price is to be cute. It costs essentially nothing and it has already produced free publicity.