This does not follow purely from the facts presented. Consider: "If a coffee shop wanted to pay their employees more, the coffee shop itself might take a smaller cut and keep prices the same."
Dynamic pricing makes some sense in the concept of trying to capture maximum demand, it just feels horrible as a customer.
1- I'll make a scene
2- I'll never come back
3- It is probably a discrimination lawsuit waiting to happen
Again, not saying the outcome is different, but socially it won't be accepted, as it removes that veil.
If you have a defense (or a response where the phrase "in practice" appears anywhere, really), then that's a separate matter, but it does not follow strictly from the matters presented that the coffee shop "will have to raise prices" in order to pay their employees more. That's, in fact, a stronger claim than the factorable defense that the author (and others who make the same argument) is depending on.
In other words, both "have to" and "can't" are doing a lot of heavy lifting.
Edit - especially puzzling to hear since software has little to no marginal costs and is almost all capital costs and labour.
First of all, typical rent for a coffee shop sized space in a major city is around $8-10k per month. So factor that in.
Second, baristas don't get paid on demand... They get paid hourly times how many hours they work. In a tight labour market, assume $20 per hour times 8 hours per day for EACH barista. 2 baristas, that's $360 per day in labour costs alone. So you need to sell around 70 lattes per day just to break even on labour, nevermind rent or recovering capital costs.
So capital costs. A typical commercial espresso machine is $20k. But let's talk about the whole buildout. Coffee shops don't need a full commercial kitchen but there's still coffee machines, oven or panini, plumbing, electrical, decor, refrigeration, etc... So let's say $200 per square foot (versus $400 for a typical restaurant). Times let's say 2000 square feet. That's $400k. That needs to be recovered over the course of the lease just to BREAK EVEN. Nevermind to actually make the business worthwhile.
When you go for a latte or go out to eat you're not paying only the marginal cost of your product, you're paying for everything that went into making it possible to produce that product.
Honestly people don't deserve restaurants. Just make your coffee at home.
Edit - this is like thinking when you buy an iPhone you pay only for the raw materials, not all the investment into factories/equipment and engineers to make it work...
Starbucks margin is 10%... And they're the biggest, most profitable and among the most sophisticated operators.
It's hilarious that you're still arguing about COGS when I plainly spelled out what the biggest actual costs are...
That's not exactly out of trend, considering how this subthread began.
You wrote:
> No, you'll pay more
... when that was not the question. The question was whether "they will have to raise prices" is accurate.
(If the author had omitted "have to" and just wrote "if a coffeeshop wants to pay their employees more then they will raise prices" (as you more or less have done here), then that would be fine. There's a reason they didn't, though. Inserting the "have to" is a rhetorical sleight of hand. It's a form of hyperbole that makes it sound like the price increase is an unavoidable consequence that follows naturally from the facts and a set of common logical axioms, even though it doesn't.)
The other commenter's choosing to argue about cost of goods, even though that isn't the issue you're prosecuting, is a lot like your choosing to argue that they will raise prices, even though that wasn't the issue I was prosecuting.
No, it isn't.
The point is that COGS is *NOT* the important cost to consider for a cafe. Starbucks' financial reports corroborate all the things I've said regardless. Amortisation and depreciation, real estate, labour, etc... are all more significant costs than ingredients.