Update: Apparently, Google’s planned cutback was a hot topic of discussion on CNBC.  In fact, it was such big news that Google was forced to do damage control.

The free food has long been a part of Google’s recruiting strategy, although, it is losing its novelty and is not sustainable in the long-term.  However, once you provide this benefit and promote it like Google did, it is extremely difficult to take it away.  For instance, Cisco tried unsuccessfully to cut back on the free sodas in the late 90s and met stiff resistance from angered employees.

Many Google employees mentioned they would gladly give up the free food and be paid on par with employees at other Bay Area companies. “We are working for food not money“, said an employee who did not want to be identified for fear of losing their job.

What is behind the decision to make cuts in its food program? On July 17th, Google shares were down by as much as 12% as their earnings growth reported was below analysts’ expectations. The company might not be as immune as previously suggested to the economic downturn that other companies have been experiencing. If it did not incur the food cost, it could have reduced its operational expenses (OpEx).

Until the smoke clears from this fiasco, the food cuts have been put on hold. Google is in a no-win situation. It has to make up for the revenue shortfall due to the bad economy and appease shareholders not happy with having to pick up the tab for gourmet meals. However, if they cut the food costs, they will have to start paying employees market wages or they will leave. If employees walk out, it will eventually hurt the company. However, if Google starts paying market wages, it will take a big hit to its operational costs.

Suggestion: The company can always test out a new menu. I heard the frozen TV dinner is due for a comeback!

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