What I have seen in our canteen here, it had the option to do both: Boil the water, so it condenses back on the colder pans and so transfers the heat quickly (when fast reheating something), as well as just keep it hot, so to maintain the dew point high without actually boiling off the water (to keep the food in the pans just "serving warm"), with a selector switch.
But if there is no mode switch, it will more likely not be supposed to boil the water, so either bad or misaligned thermostat.
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