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> This is like saying that if all other things are equal, a restaurant that pays more for its ingredients will lose business to competitors that pay less. Well
by baddox 8y ago
> This is like saying that if all other things are equal, a restaurant that pays more for its ingredients will lose business to competitors that pay less.
Well, isn’t that one also true? There are limits and exceptions, obviously, but yeah, I’m pretty sure there is a strong correlation between the cost (cheapness) of ingredients and total sales.
- braythwayt 8y agoActually, there is not a simple correlation between just one of your costs and total sales. In retail, for example, location cannot be ignored. Likewise, there is an awful lot of work that has to go into being the low-cost leader. Amazon and WalMart are good examples of this. They don't just cut one cost and wait for the money to flow in. They build their entire business around leveraging low-cost, in ways that are extraordinarily difficult to copy. It's not as simple as, "Pay less wages, cut prices by a few cents, but keep doing everything else the same," any more than running a fast food restaurant is about buying cheaper ingredients and "passing the savings along to diners."