Labor is a fixed cost at the stand. They have a person there for x amount of hours regardless of the amount of transactions that take place. If they aren't efficient enough at moving the line, then the line grows. Costs don't increase.
Then you have the trade off of people in line at the stand. They can choose not to get into line if they think it is too long and water does not slow that line down. In fact, a water refill takes about half as long as a paid transaction because there is no money transaction to factor in.