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Fast Food and “Skimming”

Imagine a study showing that habitual KFC customers are happier than habitual Taco Bell customers. Someone might leap to the conclusion that KFC’s food is more euphoria-inducing than Taco Bell’s. But that could easily be wrong. Taste for one or the other Yum! Brands fast food chain might correlate with other demographic characteristics that themselves correlate with happiness. Religious people, for example, are happier than non-religious people. Like maybe Asian-Americans in addition to being less happy than white people are disproportionately inclined to like Taco Bell. Who knows? The point is that a happiness gap could easily be explained by some kind of demographic skimming rather than an actual difference in the food.

Checking that sort of thing is good statistical practice, and anyone who ignores it is doing sloppy work.

At the same time, it obviously wouldn’t follow from something like this that the success of KFC as a business merely reflects pernicious skimming and that we need a fast food chain that serves all of America’s greasy food lovers. On the contrary, Yum! owns both brands and seems to have decided that it makes more sense to keep them separate. Specialization helps enhance the efficiency with which they operate the restaurants, they can do more targeted marketing this way, etc. What’s more, some markets really might have more demand for one or the other and it makes sense to focus on serving the demand that exists. At other times, the best way to manage a real estate portfolio is to co-locate a KFC and a Taco Bell in the same building. Either way, the fact that KFC and Taco Bell can focus on trying to undertake a relatively narrow array of tasks as well as possible is helpful to both chains, and the fact that customers can pick the option that suits them best is helpful to all diners. A manager being asked by corporate HQ to be all things to all people could legitimately complain that it’s being given an unfair burden, but it couldn’t reasonably complain that the solution to the unfairness is to disadvantage everyone.

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