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I worked as a line cook in college. The place I worked was in a HCOL city, but nowhere close to SF. Our general rule was that items should sell for about 4x the

I worked as a line cook in college. The place I worked was in a HCOL city, but nowhere close to SF. Our general rule was that items should sell for about 4x the cost of ingredients to cover all overhead. I'm a salaried employ with no expectation of overtime, so my opportunity cost to cook for myself is essentially $0/hr, but even if I factor in a fairly reasonable $15/hr for my own labor, I'm still easily under 4x raw input cost for most dishes, which makes sense since I don't have to pay (or already pay regardless) other overheads like rent, taxes and FOH staff.

nostrademons 6y ago
I think that there are a couple effects here. One is that $15/hr is a dramatic underestimate of the opportunity cost for many of the people who would otherwise be eating out. Minimum wage in Mountain View & Sunnyvale is $16.05/hour. My wife & my salaries, if converted to hourly, would be several hundred / hour. We cook at home because we're salaried and so don't actually reap that opportunity cost in cash, and because the transaction costs of finding a restaurant, driving to it, and waiting for food dwarf the food preparation time (indeed, if we're already in the car near food we're far more likely to eat out). Which brings me to... Transaction costs for meals out are really high, largely because of the automobile. Restaurants in the U.S. are spread out, with large amounts of parking that the restaurant owner needs to pay for. Because you have to hop in the car to go elsewhere, you're far more likely to wait for a table rather than find a less full restaurant. That means restaurant owners need to build in waiting space (more rent), and host staff (more labor), and carefully predict staffing needed (more labor). It means patrons waste time waiting for a table, and then ordering, and they're locked into their choice of restaurant once they show up, which means that they're more inclined to research options carefully before picking where to eat. I visited my in-laws in Taiwan last year, and the food culture & economics are dramatically different there. Restaurant meals out are the equivalent of $US4-5. Most restaurants are what we'd call fast-casual: you walk in, the menu is posted behind the counter, you order, get your food, and sit down at a small number of tables. When you're done you wipe up your area and bus your food yourself. The whole restaurant is usually family owned & operated; there might be 3-4 employees total. If the place is full, you walk next door to the equally-good restaurant there. ("Destination" restaurants like Din Tai Fung do exist, and they charge American-ish prices of $20-50/plate.) This is all within walking distance of your apartment, so when you're hungry you take the elevator down, walk outside, and find someplace, with minimal search or transportation costs. As a result, there's a big culture of eating out, and most people have just a kitchenette and don't use it for many meals.
- deleted 6y ago
  [deleted]
- lotsofpulp 6y ago
  > One is that $15/hr is a dramatic underestimate of the opportunity cost for many of the people who would otherwise be eating out. Minimum wage in Mountain View & Sunnyvale is $16.05/hour. My wife & my salaries, if converted to hourly, would be several hundred / hour. We cook at home because we're salaried and so don't actually reap that opportunity cost in cash, You can’t say that your opportunity cost is $x and then also state you did not have a choice to earn $x. They are contradictory statements. Unless you are a robot capable of working as much as you want with no downtime, this type of calculation make no sense. Not to mention the costs of eating out include unhealthy meals, among others.
  - nostrademons 6y ago
    Sure I can, because this post is not about me. I'm an example to illustrate a point. The point is actually about the economic rationality of centralized food production - whether it is more efficient for one person to cook for many, or for each person to cook for themselves, in aggregate. Economics doesn't care about individual people; it cares about incentives, efficiency, and the behavior of abstract firms in response to those. The rest of my post was about specific ways that the behavior of individual firms (using myself as an example) may diverge from what the economic model predicts, specifically because of transaction costs. That and a counterfactual (Taiwan) where these transaction costs don't exist, to illustrate how behavior then converges on what economics would predict.
    - lumost 6y ago
      taken to the extreme, I would wonder wether kitchenless apartments would become popular in SF, NYC, or LA given the opportunity. In a studio or 1-bedroom, you could offer 20-30% more space for living rooms or other activities.
- sjg007 6y ago
  Average Taiwan household income per capita is $14k USD. The US is 30k. So there is less money to spend on eating out.

nostrademons 6y ago

I think that there are a couple effects here. One is that $15/hr is a dramatic underestimate of the opportunity cost for many of the people who would otherwise be eating out. Minimum wage in Mountain View & Sunnyvale is $16.05/hour. My wife & my salaries, if converted to hourly, would be several hundred / hour. We cook at home because we're salaried and so don't actually reap that opportunity cost in cash, and because the transaction costs of finding a restaurant, driving to it, and waiting for food dwarf the food preparation time (indeed, if we're already in the car near food we're far more likely to eat out). Which brings me to... Transaction costs for meals out are really high, largely because of the automobile. Restaurants in the U.S. are spread out, with large amounts of parking that the restaurant owner needs to pay for. Because you have to hop in the car to go elsewhere, you're far more likely to wait for a table rather than find a less full restaurant. That means restaurant owners need to build in waiting space (more rent), and host staff (more labor), and carefully predict staffing needed (more labor). It means patrons waste time waiting for a table, and then ordering, and they're locked into their choice of restaurant once they show up, which means that they're more inclined to research options carefully before picking where to eat. I visited my in-laws in Taiwan last year, and the food culture & economics are dramatically different there. Restaurant meals out are the equivalent of $US4-5. Most restaurants are what we'd call fast-casual: you walk in, the menu is posted behind the counter, you order, get your food, and sit down at a small number of tables. When you're done you wipe up your area and bus your food yourself. The whole restaurant is usually family owned & operated; there might be 3-4 employees total. If the place is full, you walk next door to the equally-good restaurant there. ("Destination" restaurants like Din Tai Fung do exist, and they charge American-ish prices of $20-50/plate.) This is all within walking distance of your apartment, so when you're hungry you take the elevator down, walk outside, and find someplace, with minimal search or transportation costs. As a result, there's a big culture of eating out, and most people have just a kitchenette and don't use it for many meals.

deleted 6y ago
[deleted]
lotsofpulp 6y ago
> One is that $15/hr is a dramatic underestimate of the opportunity cost for many of the people who would otherwise be eating out. Minimum wage in Mountain View & Sunnyvale is $16.05/hour. My wife & my salaries, if converted to hourly, would be several hundred / hour. We cook at home because we're salaried and so don't actually reap that opportunity cost in cash, You can’t say that your opportunity cost is $x and then also state you did not have a choice to earn $x. They are contradictory statements. Unless you are a robot capable of working as much as you want with no downtime, this type of calculation make no sense. Not to mention the costs of eating out include unhealthy meals, among others.
- nostrademons 6y ago
  Sure I can, because this post is not about me. I'm an example to illustrate a point. The point is actually about the economic rationality of centralized food production - whether it is more efficient for one person to cook for many, or for each person to cook for themselves, in aggregate. Economics doesn't care about individual people; it cares about incentives, efficiency, and the behavior of abstract firms in response to those. The rest of my post was about specific ways that the behavior of individual firms (using myself as an example) may diverge from what the economic model predicts, specifically because of transaction costs. That and a counterfactual (Taiwan) where these transaction costs don't exist, to illustrate how behavior then converges on what economics would predict.
  - lumost 6y ago
    taken to the extreme, I would wonder wether kitchenless apartments would become popular in SF, NYC, or LA given the opportunity. In a studio or 1-bedroom, you could offer 20-30% more space for living rooms or other activities.
sjg007 6y ago
Average Taiwan household income per capita is $14k USD. The US is 30k. So there is less money to spend on eating out.