No Free Lunch: A Value Proposition

February 01, 2019

At one point in my career, I enjoyed the perhaps overly-lavish digs over at Google’s NYC office. While I believe much of the hype regarding the office amenities is significantly overblown, I keep mentally coming back to the free lunch as one of the best moves they could have made, and I’m continually surprised that this trend is not nearly as common as it should be. Here’s why.

One of the biggest things I’ve noticed since leaving Google has been the fact that lunch is “blocking time” — in other words, the day is effectively divided into “pre-lunch” and “post-lunch”, and certain work gets done at certain times. For example, email responding tends to get done in the morning, as well as various other time wasters like browsing the Internet and schmoozing. Don’t get me wrong, this happened at Google too (I assume it happens everywhere), but the friction to start real work wasn’t there. We’d get in for standup, check the news, and start working on something before lunch. Around lunch, we’d wander over to grab food and discuss work with our team, and continue working. What’s interesting is that there was pressure to actually have started working: since you’re going to lunch with the rest of your team, you want some problem to talk about! From the perspective of “starting work earlier in the day”, having food available in the office seems to be a big help.

According to Glassdoor, the average software engineer in New York City makes $107,197/year. Let’s round that out to $100,000 for easy math. Benefits and stock options will add quite a bit, but we’ll ignore them for purposes of easy illustration. If we consider that our workers will work about 2,000 hours a year (52 weeks - 2 weeks for vacation, 40 hours a week), that comes out to an even $50 an hour. So, an engineer is worth at least $50 an hour to the average NYC company — if they were worth less, they’d be getting paid less according to free market economics.

Now that we’ve established that an average engineer is worth at least $50/hour, we can start asking ourselves about tradeoffs. Ignoring the context-switching of leaving the office, just the time spent is a significant hit. I typically take somewhere between 30 and 60 minutes to prepare to leave, decide where to eat, leave, get my food, come back, and eat. This time is worth at least $50 of the company’s money — assuming that time for lunch is billed time. The reason I consider lunch hour to be a normal work-hour is that full-time workers tend to work a set number of hours (ie. 10-6), and lunch isn’t factored into that. In other words, full-time workers are going to work the same amount of time, regardless of billed hours. Therefore, that hour of time is inherently time on the company’s clock.

This tradeoff also should include the fact that I need to spend $10-$20 of my money for the food itself. The time I don’t spend thinking about work is money lost by the company, and the money I spend on food is money that I don’t have left in my pocket when I go home. Though that isn’t directly related to company profit, the amount of money that’s available to me at the end of the day is directly correlated with my job satisfaction (according to the Society for Human Resource Management, compensation is the #1 highest factor for job satisfaction). Given that your company spends, on average, 23% of the yearly salary of the hire to a recruiter (source), that’s $23,000 per developer just to get them in the door. Some experts suggest that the cost of an exiting worker is closer to 38% of their yearly salary — or $38,000 per developer. Given this information, job satisfaction is vitally important to keeping cost down. You’re much better off keeping your employees happy as opposed to hiring replacements. Think of it this way — you save $104 per employee, every additional day you manage to keep them at your company.

So, we come back to the question: does lunch cost more than $50, plus the negative effect on job satisfaction? I don’t see how it could be. In my research, catering tends to cost between $5 and $20; alternatively you could order delivery from local restaurants for approximately the same price.

The mental overhead of actually going out and getting food is surprisingly high. We’ve known for a long time that people only have so much that they can care about at one time, which is why many engineers have adapted consistent systems to remove unnecessary choices from their lives. For example, Mark Zuckerberg always wears the same shirt every day, and many engineers have taken to Soylent to avoid the “where should I get lunch?” debate entirely. By having the option directly there for your workers, it removes that choice from their mind, which has been proven to free their minds up to making better, faster, and more creative decisions.

From a health perspective, having food available also makes it much easier to eat healthy. Though one could go across the street for Shorty Tang noodles (which are excellent), Google’s well-stocked salad bar is both more convenient and a lot more healthy. Making the healthy choice easier means that people make that choice more often — as seen in many cases that successfully nudge customers to healthy decisions by convenience. Google also exercises this concept in their fridges, by making water and healthy drinks at eye level, and putting the unhealthy drinks at the bottom — this initiative led to a 47% increase in water consumption and a 7% decrease in soda consumption (source). A lot of companies talk a big game about caring about their employee’s health — why don’t they have a salad bar? As you might expect, the cost of salad is very low (according to Journal of College & University Foodservice, between $0.15 and $0.28 per ounce), and there’s big gains to be made. If they don’t want the overhead of managing a salad bar, how about free delivery to a local salad spot?

You’ll often hear the cliche, “there’s no free lunch”, meaning that every benefit is paid for in some way; nothing in life is actually free. The phrase likely comes from the 19th century trend of saloons that offered a free lunch with beer; while it seems like this inherently benefits the customer on the surface, it’s likely that those saloons also charged more for their drinks to make up for the profit differential. Likewise, company-provided free lunch does comes at an inherent cost — economically, the company is expecting an equivalent return on investment. I believe that return is easily made by inherent improvements to productivity and employee tenure. Ironically, free lunch for software engineers does actually seem to be “a free lunch” — both sides benefit from this agreement.

Overall, I have to conclude that a workplace that doesn’t pay for free lunch inherently undervalues its employees (although economically they must understand their value to the bottom-line). I tend to believe that this is just simple misunderstanding from a management perspective — in that the people in charge don’t understand why it would be a net-positive to the company, and thus get the impression that it’s an unnecessary amenity to attract talent, similar to a game room. I’d recommend to anyone reading in that position to kill a benefit like a game room or happy hour, and replace it with free lunch. I’m betting that you’ll see gains from such a move very quickly.

Please contact me for any thoughts, comments, or feedback.
  author: "Aaron Buxbaum",
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