Question of the Day - 07 May 2018

We’ll assume that you’re referring to the cost of breakfast in the Strip megaresorts. For example, your basic ham-and-cheese omelet at the Terrace Pointe Café at the Wynn is $18, while at the Copper Whisk Café at the Orleans it’s $10.99, and a build-your-own omelet with three items at the Sterling Spoon Café at the Silver Sevens is $8.99, right around your diner price.

We can think of several reasons off the top of our head why this is so.

First and perhaps most obvious, the megaresorts charge more than double in some cases simply because they can. They have something of a captive audience; many if not most hotel guests prefer not to have to schlep through the casino and parking garage, get in the car, and drive to another restaurant, if they even know of one, just to save a few bucks. They can also charge meals to their room, which is a convenience that lets them pay one price for their entire stay.

The second reason has to do with comps. The higher the food charges in the coffee shop (and all the other hotel-casino restaurants), the more gamblers can feel like they're getting extra for their action when they’re comped. Of course, food is a soft comp, not a hard comp like airfare reimbursement or a rebate on losses. The casino isn't actually shelling out anywhere near the, say, $50 in a breakfast comp for two that the gambler and his wife think they’re getting. So it works doubly in their favor to jack up the restaurant-food prices.

Also, the couple paying cold cash for that same breakfast for two is subsidizing the gamblers' comped meal via the high prices.

We don’t know this for sure, but $18 omelets in the coffee shops might also subsidize the six-figure licensing contracts, multi-million-dollar build-outs, big-money development fees, and $1-per-year rents commanded by celebrity chefs up and down the Strip.

They might also subsidize the room-service departments, which are notoriously unprofitable, and the buffets, which also tend to lose money, even the most expensive ones, and any food-and-beverage promotions and/or loss leaders the hotel-casinos are running.

Another reason probably has to do with collective bargaining. We've seen estimates that at unionized restaurants, labor can account for a full 50% of total food and beverage revenue, compared to 20% at the non-unionized ones. 

Finally, the casinos charge what the market will bear. You might accuse them of greed and we’re not arguing against, but they’ve simply determined what people will pay and that’s where they set their prices.

As we admitted up front, these reasons are off the cuff. If we've missed anything or got something wrong, please let us know.