[I want the USA back]

Free refills are prepaid refills. You pay for all in the price of the first filling.

[SamAdams76]

Correct. The majority of the people who take just 1 or 2 cups are paying for the relatively few that order multiple cups.

Profit margin is high. Or they wouldn't do it in the first place.

The all-you-can-eat buffet is based on the same business model.

Never go to an all-you-can-eat buffet.

That is subject matter for another thread entirely.

[Stirner]

“Free refills are prepaid refills. You pay for all in the price of the first filling.”

Given the obvious, that the restaurant is making money, the customers who have fewer servings than average are “paying” for the drinks of those who have more servings than the average. A form of quasi-socialism that encourages overconsumption by those who want to “win” or “get a good deal”.