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Comment by darth_avocado | Hacker News Reader

I’ve said it before and I’ll say it again. The problem of low wages isn’t that your margins are low and you’ll have to increase price of a sandwich to pay people enough.

The real problem is restaurants artificially lowering prices of a sandwich by paying people less for decades to the point people don’t realize that eating out used to be expensive. All the full service restaurants in my small town still do well. The ones that don’t are the sandwich shops where you pay $14 for a cold sandwich. Eating out is expensive and should be expensive if you want businesses to sustain themselves when there’s turmoil in the industry.

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> Eating out is expensive and should be expensive if you want businesses to sustain themselves when there’s turmoil in the industry.

Eating out shouldn't have to be more expensive than eating in. And in many countries it isn't.

Restaurants benefit from scale that your kitchen doesn't.

If you were feeding a family of 150, your per-meal price would crater.

Of course a restaurant has to pay staff, so the numbers have to add up, but conceptually, there's no particular reason why a chicken sandwich at a restaurant should cost more than a chicken sandwich at home, as long as that restaurant is serving chicken sandwiches, chicken tacos, and chicken pasta all afternoon/evening.

Granted during covid and shipping shortages all bets are off.

And obviously even during non-covid times, restaurants can set their own prices, charge a 100x multiple for exclusivity, ambiance, etc.

But fundamentally there's no obvious reason why getting food at a restaurant needs to cost more than getting food at home, while still making the restaurant a profit that lets them pay salaries and sustain their business.

In which countries is it not cheaper to cook your own food than to buy it out? The only things I can think of are: - truly street food in areas like sinagpore or india which is not a sustainable every meal option for most digestive systems - island nations where you're comparing fresh produce to a prepared meal

It should be and is cheaper to cook your own food. Purchases are limited to need, meals are usually a tiny percentage of the overall purchase, cost does not include: rent, talent, fixed costs such as kitchens/tables/plates/etc, healthcare, marketing, etc.

Mexico for one. It's typically cheaper to eat at a Taco restaurant then to buy your own at a grocery store. There are a lot of reasons for this, but the biggest is more limited selection, more efficient service and cheaper real estate. The real estate issue is not one that is easy to address, but the other issues are adjustable. It's silly to expect the government to bail out restaurants when they admit they can't even pay their employees a living wage. Regardless of what you think the government should do about helping poor people, it most certainly should not be guaranteeing small business owners a 6+ figure income. They can innovate like every other business. The ones that succeed will get rich, and the ones that fail will at least have access to a living wage working for a more successful business.

I can get two double cheeseburgers from Mcdonalds for $2.25 here in the USA, could do so all year. There's no way i could come close to that at home.

Also, what one doesn't factor in is the cost of waste of food at home. You (the consumer) generally don't waste food when buying out.

Restaurants waste tons and tons of food every year. Literally. I, on the other hand, waste very little food at home. I buy fresh, i freeze and i plan ahead.

Also, good luck with your mcdonalds only diet. I'll stick with a balanced, healthy, home cooked diet myself.

I wasn't comparing what a restaurant wastes compared to what a consumer wastes. I'm comparing what a consumer wastes eating out, vs eating at home.

Luckily for you, you can live without waste. You are the grand minority.

I bet you could, or at least get close.

How much does a 100 pack of the cheapest thin patties cost? A 100 pack of american cheese? A 100 pack of terrible buns? The only challenge is that most grocery stores aren't even stocking food so crappy, not that the food costs are considerably higher.

I'd have to buy a six pack of rolls, that's going to be around $4.

My budget is already shot.

The rolls I get at the store for that price are way better than the ones act McDonalds. And if you really want rolls for cheap, you can make them yourself from a couple cents of flour.

People working two jobs, having to juggle a family, don't have time for all of these luxury processes. Kudos to you that you are affluent. But this conversation isn't obviously about people at your level.

This is a false argument. You're switching the goal posts from cost of ingredients to cost of time in a society that literally purposefully ensures that you dont have time so you spend money.

We can discuss the system but its not a given. What is a given is the ingredients you use for your one meal at home should be cheaper than what it takes to make it at a restaurant. The inclusion of other humans to hire, manage, train, and then process, create, and discard the remainders of your order and clean alone should be indicative of that.

> there's no particular reason why a chicken sandwich at a restaurant should cost more than a chicken sandwich at home

There are many reasons! You're the one making the sandwich at home and bringing it to your table, so you absorb the labor costs. And you're already paying for space, heat, light at your place whether you eat there or not, whereas the restaurant has to pay for these. Not to mention profits (why would they run a place if not to earn money?)

The only things that your place and a restaurant have in common are the ingredients; and while restaurants can maybe pay less because they buy in bulk, they also have to abide by health codes that don't apply to you; you can eat yesterday's meat if you want, but restaurants usually can't serve it to you.

So it's really unclear how restaurant food could ever approach the cost of meal made at home.

Scale! It really depends on how many customers you have.

To give you an idea...it costs Papa John's less than $2 to make a large pizza.

You'll spend twice that at home just on the cheese. At supermarket prices, you'll easily spend 15 dollars recreating it at home.

Sort of. Papa Johns' food costs is about 30%. The margin on a store is 10-20%. Papa Johns is a takeout pizza chain, one of the few consistently profitable restaurant models. Most do not have these margins.

Also, the hard part about making a Papa John's pizza from grocery store ingredients is finding ingredients that are crummy enough and in small enough quantities. ): It's easier to make a a big pizza with good cheese and fresh ingredients at home for $20-30 of ingredients. You would pay more than that for the equivalent at a restaurant when dining or delivery tax and tip are factored, especially.

Economies of scale do help restaurants, but only to the extent that they can pack their labor and other operating costs into the price and not lose money. Many restaurants have not survived because they couldn't attract a high enough percentage of customers to the higher margin items on the menu. So when someone orders out they are going to end up paying for the labor they're not spending, outside of unusual circumstances or the few money-printing carryout formats (like mass market carryout pizza.)

> fundamentally there's no obvious reason why getting food at a restaurant needs to cost more than getting food at home

You're assuming the only thing that contributes to costs is the raw material. In reality, there's raw materials, labor, rent/mortgage on the space, taxes, and other costs including your initial investment and constant upkeep. Combine all of these and making a Sandwich at home is almost 100% cheaper (even if you shop at Whole Foods and only eat organic).

And comparing it with other countries is not exactly Apples to Apples comparison. In India or Singapore, almost all businesses cheat on taxes, labor is overexploited (more than the US), there's limited licensing or health oversight, and ingredients can get downright questionable. Those help a lot with lowering costs, but not feasible in US. (Or rather only McDonalds can achieve to some degree)

> But fundamentally there's no obvious reason why getting food at a restaurant needs to cost more than getting food at home, while still making the restaurant a profit that lets them pay salaries and sustain their business.

Food is not that expensive. The restaurant is not getting their materials much cheaper than people are at Costco.

What is expensive is good labor. Labor that wants to work a laborious, strenuous job, at very inconvenient hours. How are you going to convince someone to work at times when everyone else is out and having fun or having meals together at home as a family? Or getting ready for weekend trips? You have to pay them more to sacrifice.

The only reason this has not been a problem until now is there has been a big supply of labor willing to do that undesirable job at undesirable hours, so they had no negotiating power for higher wages.

> And in many countries it isn't

Name a single country where eating out is relatively (ie. Compared to wages) cheaper than the US...

Pretty sure that applies to Japan with the caveat of disregarding food options that wouldn‘t sustain a reasonably healthy life in the long run. A decent & healthy meal is possible there incl. drinks for about 6 USD. Trying that with home cooking doesn‘t seem feasible at that price point and quality.

What kind of meal?

Looking at McDonald's prices for Japan vs. USA, it's roughly the same, but the US has 20% higher wages making it relatively cheaper.

Not sure why you would go to McDonald's in Japan (or Thailand or Vietnam etc), but I do know that they are seen in some of those as somewhat special because they are not local food so maybe they can get away with different pricing. In a lot of countries I frequent you would see (much) higher prices at McDonald's than in small local places. And japan was an example of that (been 3.5 years since I been). At my local in Portugal my wife and myself eat 2 lovely (and too large, we usually take half of one home), 2 coffees and a local sweet for less than E2/person. And that is not pre packaged stuff. The menu of the day costs less than E5/person and that includes wine, coffee, dessert, soup and a main; again, that is cooked that day and not fastfood or pre packaged. McDonald's is more expensive than that and it is a matter of taste if you go there or not of course. I have seen the same thing in many countries; especially Thailand and such, it is so much cheaper (and nicer, but that is taste again) to eat at a small local. I think those prices would probably make some countries cheaper even accounting for the wages.

It is hard to compare apples to apples though; I don't like the typical American fast food and probably many don't like the food here. So even though it would be cheaper, if you would never go there...

Ah, was just more curious about an apple to apples comparison. Lots of countries have cheap fast/street food options, but restaurants are quite expensive for locals.

The US has, in my experience, by far the cheapest restaurant experience in the world, relative to the average worker's wage. Of course I haven't been everywhere. Currently in Czech Republic and it's cheap by most standards but relative to wages on point with most western countries.

Just to counter the McDonalds idea, if you want some meat in Japan on the cheap it‘s much better and healthier to get a set of gyudon and miso-soup [1]. McDonalds there is a fun once-in-a-while place to go if you have at least a small amount of disposable income, it‘s by far not the lowest budget option available.

[1] https://japanhubdotcom.wordpress.com/2013/08/05/japan-eat-ba...

McD is considered to mainly for kids/teenages in Japan. Gyudon is budget choice for worker.

The problem is that a lot of people are used to eating out being cheap. Kitchens have dwindled in size, as have the basic skills of grocery shopping and preparing meals.

It might be longterm good for eating out to be expensive again (especially for waistlines) but it will come as a big shock and do short term harm.

> Kitchens have dwindled in size

Is that true? In a lot of new homes where I live the kitchens are one of the places the builders spend money. It's pretty common to see multiple ovens, a high end stove top, big dishwasher, gigantic refrigerator, etc...

> In a lot of new homes where I live the kitchens are one of the places the builders spend money.

Regular people generally can't afford new homes. Working class professionals usually get shoved into apartments (usually small ones) with small kitchens in 5+1 buildings or renovated industrial buildings.

Stuff like this is pretty common - https://images1.apartments.com/i2/5Wguguo1YZBzaUo30bfX2jUIY6... or this one https://images1.apartments.com/i2/PuDTEuad8QYuGVJfUJAbGHCZIS...

It's not impossible to cook here, of course. But it's designed around the idea that most of your big meals will be "out" somewhere else.

Were small apartments of yesteryear more generous with their kitchen sizes?

The parent comment said kitchens are getting smaller and smaller but I'm not sure if that's actually true. I lived in quite a few houses (middle / lower-middle class) growing up and it seemed like the older homes all had much smaller kitchens than the ones that weren't as old.

Maybe that is happening for apartments for singles and DINKs living in urban areas where your lifestyle may be shifting towards eating at restaurants more than at home, but especially for families with kids, the trend definitely seems to be larger kitchens and kitchens that are more integrated into the home.

I live in a very old studio apartment (built in 1909) and it has a separate kitchen that is the size of the kitchen in most of my friends' single family homes. It is probably ~1/3rd the square footage of the entire apartment. Obviously that's just anecdotal but I do think that the kitchen used to be prioritized much more, at least in apartments.

Is that true?

Certainly seems to be true here in Sweden. All new houses and apartments I've seen recently have tiny open plan kitchen with terrible layouts. It's clear that they layed out the rest of the house first and then just crammed in a kitchen in whatever space was left over.

In the neighborhood where I live, most of the houses were build between the late 1920s and the late 1940s. Generally they had galley kitchens, for people who could afford the houses could afford cooks, and why use up space on the cook's area. Kitchen renovation probably came in on the second turnover, about 2000, when boomers etc. moved in.

This. Can’t afford a 10% increase in a restaurant meal? Make it yourself. If that means changes in the market so be it. The world will be a better place with less fast food.

Yeah, a cheap joint is usually paying cash without proper rates and benefits (the staff being complicit and not declaring income/violating visa work restrictions if not local).

In these places the credit card machine is often ‘broken’ or there is a 5% discount for paying cash. I’ve even seen a place that was ‘cash only’ and had built an ATM right next to the cash register in the middle of the restaurant so you couldn’t complain.

In Australia it isn’t helped by a labor law system so complicated that even large firms with HR and finance departments the size of a small army can’t pay people properly.

Why should everyone be paid a lot? Is everyone's labor really worth the same? Should not people be paid according to the value of their input? I am super fine with people charging me little for their services as long as they deem that it makes sense for them and the quality is acceptable. I want people that can provide great value for a fair price to outcompete others, because I want to promote them and hopefully they will develop and make economy a little bit better a little bit more efficient.

Everyone should be paid enough to eat reasonable food. If you think this is already the case you live in a bubble.

> Eating out is expensive and should be expensive if you want businesses to sustain themselves when there’s turmoil in the industry.

Why is it only expensive because there can be turmoil? Isn't it primarily expensive IFF labor is expensive?

What this means in practice is that restaurants will become a luxury again.

Is that a net good or bad?

Th people who complained the loudest about restaurant closures are the ones that get off the hardest on being served. They will most certainly NOT pay more for their meals.

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