A guy gets locked in a bathroom and gets compensated with free Whoppers for life. Or until Burger King's regional office decides to stop honoring their agreement.
Well, that's the gist of it, anyway. I won't repeat all the details in this blogpost, but you can read about it
here.
The upshot? The guy, Curtis Brooner, is suing BK for $9,026.16, which is his estimate of the cost of Whopper meals*($7.89 a pop) for life. He's basing that on the assumption that he lives to age 72. He's 50 now. I saw that and wondered how the figure lines up to reality.
My first thought is that $9,000 seems like a bargain and BK should probably pay him off. Actually, they should simply honor the deal they made with him. But maybe they don't want to set a precedent and run the risk of people purposely jamming themselves into restrooms in order to get free Whoppers. But that's neither here nor there. I'm thinking in terms of his calculation.
Some quick analysis shows what he did. One meal a week, 52 weeks a year, for 22 years comes out to 1,144 meals. At $7.89 each, that's exactly 9,026.16. That's naive.
Now, I don't have much experience with this kind of thing, so I'm not sure of how to handle all the assumptions involved. For example, there's discount. $7.89 in 22 years is worth less than $7.89 today. On the other hand there's inflation. Whopper prices are likely to go up, so a Whopper that costs $7.89 today is likely to cost more than that in the future. I don't know what are appropriate assumptions for the discount rate and the rate of Whopper inflation. Since the two rates have opposite effects on the value of the Whopper stream, they serve to mitigate each other. I doubt they're the same, but maybe the net effect of the two can be ignored.
But a bigger issue is life expectancy. I'm not sure exactly where Brooner came up with 72 as his expected date of death, but I assume he heard somewhere that life expectancy is 72. Problem is, that's life expectancy at birth. And it's outdated, but let's pretend it isn't. As a fifty-year-old, his expected age at death is higher (assuming he is in reasonable health. According to the Social Security Administration (or at least according to their
2015 period life table), a 50-year-old male has a future life expectancy of 29.6 years. Making that change alone raises the amount he should be going after. Now it's $12,144.29. And, while we're at it, there are actually more than 52 weeks in a year. Adding another 4 weeks or so (over the course of the nearly 30 years brings the total up to $12,175.85. Here's where it really helps to assume the discount rate is the same as the rate of Whopperflation -- assuming they exactly offset each other, we can simply look at expected number of Whoppers and multiply by the present cost of each.
And, speaking of the number of Whoppers, I think Brooner is being quite reasonable in only assuming he'd have one Whopper a week. According to the article, he had been getting at least one free Whopper a day. So if he claims a Whopper a day instead of one a week, the value goes up to $85,230.94. But it should be higher. Here's the relevant passage from the article:
For the next two weeks, Brooner capitalized on the offer. He tells WW he ate at the Burger King location at least once a day—until Dec. 26, when the restaurant's district office allegedly told employees to stop giving him free meals.
So, in two weeks, he had a free Whopper at least once a day. That doesn't say exactly how many Whoppers he got, but I figure it has to be at least 15 in 14 days -- if it were just one a day, then he wouldn't have said "at least once a day." So multiplying my last figure by 15/14, we get to $91,318.86.
On the other hand, the foregoing has been written with the assumption that the Burger King in question will be around as long as Brooner. His deal was with that particular BK -- not with the chain as a whole. If that BK fails, his stream of Whoppers ends. And fast food franchises fail all the time. The BK near my subway station just shut down a few months ago. Which really sucks because now Blair can't pick me up there. I couldn't find any really good data on the failure rate of fast food restaurants. The best I found in the three minutes I spent looking was this
online article which says that, 0ver a five year period, 5% of franchises fail. I'll take that to assume a 0% failure rate, since Brooner would be better-served by ignoring the possibility of his BK closing. And BK itself would be better off not arguing that they should pay very little because their franchise is likely to fail.
I wonder what Burger King has to say about all this? Once this is posted, I'll email them and ask for comment. I'll be sure to share anything they have to say on the matter.
Anyway, Brooner should ask for $91,318.86. And when he gets it, he should pay me a consulting fee of $27,430.90. Yeah...I'm not holding my breath...
Disclaimer: While I am an actuary, this is intended to be whimsical. It is not a complete analysis of the value of being locked in a Burger King bathroom, and should not be used as such.
*According to the article, we're talking Whopper meals which, I believe, come with fries or onion rings and a drink. For the sake of brevity, I'll just talk about it as if he was getting Whoppers. That doesn't really change the analysis.
**I should trademark that