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Comment by mdgrech23 | Hacker News Reader

I'm not sure if you're American but take a look at the food situation here. Eating out practically anywhere is total garbage food. If you want high quality stuff made by people who know what they're doing be prepared to pay big bucks. A little pastry shop opened by me with a professionally trained French chef. The croissants are out this work but are like 8 bucks a piece whereas the Costco ones are maybe a dollar a piece and taste good. The market obviously incentivizes consumers to purchase the Costco variety but that's b/c the Costco variety is being more heavily subsidized than people realize.

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Seems weird to be writing about croissants here but the Costco croissants are no where near the quality of a croissant made by a skilled baker, to the degree it is hard to call them a croissant in anything but form. The ingredients, flavor, flakiness, number of layers, etc. are all inferior when compared to what is possible from an artisan. I've bought the Costco croissants a few times in the past to make sandwiches out of as that's about all they are good for.

Your $8 croissants are subsided just as much as the $1 ones at Costco. They are cheaper because they don't have to pay that professionally trained french chef.

I think it is unlikely the high-end bakery is using the same e.g. milk and butter as Costco.

Is there a subsidy for cheap milk and butter that doesn't apply to the expensive stuff?

If the subsidy is like 1 buck/gallon of milk, the expensive milk will stay expensive even after subsidies, while the cheap one will come up almost free.

What does your food analogy show?

We already have a market for books, we can observe the market for books, why do we need a food analogy?

Mass production is cheaper than mass customization is cheaper than artisanal or full custom production.

That’s true in the absence of subsidies and I’d wager that the relative or differential effect of subsidies is minor in terms of explaining why $1 croissants sell well at Costco.

> I'm not sure if you're American but take a look at the food situation here. Eating out practically anywhere is total garbage food.

I'm not sure how old you are but when I was growing up in America in the 70's, eating out meant either high-end/pricey restaurants or MacDonalds, Burger King, Pizza Hut, or Taco Bell. Now you can get Thai, Sushi, Indian, Sichuan, and more.

> I'm not sure how old you are but when I was growing up in America in the 70's, eating out meant either high-end/pricey restaurants or MacDonalds, Burger King, Pizza Hut, or Taco Bell.

I grew up in US flyover country and I remember the 70s and that's not the case.

There were diners. There were mom- and pop-owned holes in the wall. There were more respectable "family restaurants" that didn't serve what was called "ethnic food" at the time but were certainly not fast food and were also reasonably priced. I remember my 15k-ish population town's one Italian restaurant and its one Chinese restaurant and the short-lived Greek place, none of them chains but all highly Americanized. Half an hour away in a nearby small city there were many more options.

> Now you can get Thai, Sushi, Indian, Sichuan, and more.

Those are all things we can find in the present-day equivalent of a 70s food court. They're part of the new fast food - mostly garbage.

> subsidized

By what and how? Don't left us hanging like this.

Don't think the word 'subsidized' is being used correctly here.

Nobody is paying Costco a 'subsidy' to produce cheap croissants.

The big box stores incentivize the supply chain to do things faster/cheaper. Cheaper ingredients, shorter baking times (hence maybe some other additives needed), etc...

So, cheaper butter, oil additives, cheaper flour, additives to streamline short cooking times, easy movement, texture for packaging, etc..

It all adds ups to "it's ok, but meh".

Wheat and dairy are both subsidized in the US, so it’s not incorrect to say that Costco’s croissants benefit from subsidies.

I think it is incorrect/misleading to suggest that they benefit substantially from subsidies that are not available to the $8 croissant maker. (Costco benefits more from highway subsidies, for example, but not by enough to move the needle between $8 and $1…)

Agree. But it is difficult to tease out how the huge Agriculture Subsidy impacts each product.

I'm 'assuming', that if it is something like 1 cent, or 5 cents. Then it is a larger impact on the 1$ Costco Croissant), versus the 8$ bespoke croissant.

Then we'd also have to look at quantity sold.

Crouasant Sold Price Per Unit Total Revenue Cost Of Goods per unit Subsidy Total Cost of Good Total Subsidy Profit Subsidy / Profit Costco 100000 1 100000 0.2 0.1 10000 10000 90000 0.111111111 Bespoke 100 8 800 0.5 0.1 40 10 760 0.013157895

So, it is true, Costco makes a larger percentage of profit from subsidies than the bespoke.

11% versus 1.3%.

The Quantity is much bigger factor.

So guess, on balance, Costco is more subsidized than the small baker. Man, we should include labor too. Basically small bakers are at huge disadvantage.

Edit

My spreadsheet didn't look good here. Is there a way to format HN to show a table?

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