Basically all good engineers I've talked to at places with free food onsite value it at at least cost, and often at >>1x cost. Encouraging people to go be social at lunch itself (and not to eat at their desks, at least not every day) is a win for retention. Check the zillion times this has come up on HN.
Not offering free food will hurt in recruiting a lot more than the cost, even if you moved $1 in food costs directly into salary.
I mean, if even Yahoo! eventually figures it out, it is probably true.
