3 ms·

How much would a cheeseburger and a shake cost?

glitchc 6y ago
Labour is anywhere from 25% to 34% of the food cost. So, anywhere from 1/3 to 1/4. It's not the lion's share as envisioned. https://totalfood.com/busting-restaurant-labor-cost-myth/ https://totalfood.com/busting-restaurant-labor-cost-myth/
- pnw_hazor 6y ago
  There would be increased costs up the whole supply chain -- all passed up to restaurants.
- alextheparrot 6y ago
  Isn't this only first-order labor? If the butcher needs to pay more for labor as well, you're still experiencing an increase in price that's labor-related, just hidden.
  - stormbrew 6y ago
    Once you get away from point of service, I think two things kick in that make it really unlikely that any stage before it would substantially increase the % that goes to labour costs: 1) economies of scale, factory farming employs very few people per pound of meat produced, having been subject to a lot of automation. Likewise, supply chain areas like storage and shipping move a lot of product per employee. 2) 'butchers' and similar jobs are relatively high skill and likely pay above minimum wage anyways. They also have better economies of scale. But at any rate, it's unlikely professional butchers are particularly involved in producing meat for fast food burgers and likely 1 or 2 low wage employees in a factory are doing all the manual labour involved in producing meat for hundreds of burgers. At any rate, I don't think the null hypothesis can really be that every level of the supply chain has the same level of labour costs.
    - alextheparrot 6y ago
      I think this is natural, as you're always sub-dividing the remaining 66-75% of the pie. Even if you assume exponential decay of labor as a percentage of the remaining cost, it can still add 5-10%, which is a meaningful fraction. I don't strictly disagree with the original post regarding labor not being the lion-share of many businesses. As a nit to my original post, butchers was more meant to be representative of a class of service that is relied on by consumer-level providers. I think we can agree that it is fair to assume there are more than just first-order workers who make less than $24 a hour in most supply chains these days.
orblivion 6y ago
This points to what I was going to say. The whole point of efficiency gains in a company is to pay less for your resources (in this case labor) for a given amount of output. Ideally what we would see, however, is a reduction in prices as a result that more than compensates for the reduction in pay. Thus, across the economy, the general theme would be more output for a given amount of work. I have no idea how that metric tracks, though, but the cheeseburger and shake I guess is one way of asking that question.
dpix 6y ago
As much as it costs for employees to be paid sufficiently. It seems awfully dangerous to think that we should pay people less because otherwise things would be expensive. This is exactly why/how wealth is moving up and up to a smaller proportion of people at the top
- comeonseriously 6y ago
  > It seems awfully dangerous to think that we should pay people less because otherwise things would be expensive. You're assuming that's why I was asking.
  - dpix 6y ago
    Am I agreeing with you then? You didn't make your position very clear. I'm just stating what I think about wage inequality and class gaps. If you're asking for an actual number of the price of a Cheeseburger and a Shake? I don't know, but it may be a number that's ultimately better for society?
    - comeonseriously 6y ago
      I was asking a simple question. There are people here who know economics better than I, so I wanted to know what would happen. People just assumed I don't want others to have a good life when that's so far from the truth.
mrguyorama 6y ago
In denmark, with significant benefits and high wage and all sorts of wonderful pro worker and pro average person systems, a big mac costs $0.35 more than the average big mac. https://www.businessinsider.com/denmark-mcdonalds-pays-20-an-hour-2014-9 https://www.businessinsider.com/denmark-mcdonalds-pays-20-an...

Labour is anywhere from 25% to 34% of the food cost. So, anywhere from 1/3 to 1/4. It's not the lion's share as envisioned. https://totalfood.com/busting-restaurant-labor-cost-myth/ https://totalfood.com/busting-restaurant-labor-cost-myth/

pnw_hazor 6y ago
There would be increased costs up the whole supply chain -- all passed up to restaurants.
alextheparrot 6y ago
Isn't this only first-order labor? If the butcher needs to pay more for labor as well, you're still experiencing an increase in price that's labor-related, just hidden.
- stormbrew 6y ago
  Once you get away from point of service, I think two things kick in that make it really unlikely that any stage before it would substantially increase the % that goes to labour costs: 1) economies of scale, factory farming employs very few people per pound of meat produced, having been subject to a lot of automation. Likewise, supply chain areas like storage and shipping move a lot of product per employee. 2) 'butchers' and similar jobs are relatively high skill and likely pay above minimum wage anyways. They also have better economies of scale. But at any rate, it's unlikely professional butchers are particularly involved in producing meat for fast food burgers and likely 1 or 2 low wage employees in a factory are doing all the manual labour involved in producing meat for hundreds of burgers. At any rate, I don't think the null hypothesis can really be that every level of the supply chain has the same level of labour costs.
  - alextheparrot 6y ago
    I think this is natural, as you're always sub-dividing the remaining 66-75% of the pie. Even if you assume exponential decay of labor as a percentage of the remaining cost, it can still add 5-10%, which is a meaningful fraction. I don't strictly disagree with the original post regarding labor not being the lion-share of many businesses. As a nit to my original post, butchers was more meant to be representative of a class of service that is relied on by consumer-level providers. I think we can agree that it is fair to assume there are more than just first-order workers who make less than $24 a hour in most supply chains these days.

orblivion 6y ago

This points to what I was going to say. The whole point of efficiency gains in a company is to pay less for your resources (in this case labor) for a given amount of output. Ideally what we would see, however, is a reduction in prices as a result that more than compensates for the reduction in pay. Thus, across the economy, the general theme would be more output for a given amount of work. I have no idea how that metric tracks, though, but the cheeseburger and shake I guess is one way of asking that question.

dpix 6y ago

As much as it costs for employees to be paid sufficiently. It seems awfully dangerous to think that we should pay people less because otherwise things would be expensive. This is exactly why/how wealth is moving up and up to a smaller proportion of people at the top

comeonseriously 6y ago
> It seems awfully dangerous to think that we should pay people less because otherwise things would be expensive. You're assuming that's why I was asking.
- dpix 6y ago
  Am I agreeing with you then? You didn't make your position very clear. I'm just stating what I think about wage inequality and class gaps. If you're asking for an actual number of the price of a Cheeseburger and a Shake? I don't know, but it may be a number that's ultimately better for society?
  - comeonseriously 6y ago
    I was asking a simple question. There are people here who know economics better than I, so I wanted to know what would happen. People just assumed I don't want others to have a good life when that's so far from the truth.

mrguyorama 6y ago

In denmark, with significant benefits and high wage and all sorts of wonderful pro worker and pro average person systems, a big mac costs $0.35 more than the average big mac. https://www.businessinsider.com/denmark-mcdonalds-pays-20-an-hour-2014-9 https://www.businessinsider.com/denmark-mcdonalds-pays-20-an...