Saturday, April 23, 2005

Soda Fountain Economics

There is one economics question I am having trouble answering lately. Why are there no free re-fills at the Taco Bell on NCSU campus, but I can get free re-fills at the Taco Bell on Western Blvd. two minutes down the road? None of the other prices seem any different, but they have decided to raise the price of sodas on campus. Why?

The best answer I can come up with (and that ain't saying much) is this:

Off campus having free re-fills makes it more inviting to sit a spell in a Taco Bell resteraunt. Chances are that if you sit there long enough you might go back to order some more food (I ussually do). So the lower price of coke off campus is probably off set by the extra revenue from the extra food you buy.

On campus this isn't the case. Most people going to Taco Bell are doing so on a meal plan and that means you get one meal worth $5.50 and that's it for the afternoon. So rather than attracting people that will buy more food it probably just attracts college students wanting free soda, which might crowd the seating area and repel other people from going to the Campus Taco Bell.

That's what I've come up with, but I'm sure it's probably wrong somehow. If anyone would like to take a whack at it or at me, you're more than welcome.