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Low margins are indication of saturated supply. If _everyone_ raise their prices, consumers would likely eat that, in my opinion, because people who really coun
by deepsun 5y ago
Low margins are indication of saturated supply. If _everyone_ raise their prices, consumers would likely eat that, in my opinion, because people who really count food money usually don't go to restaurants anyway.
- ineedasername 5y agoFast food was what I knew off the top of my head, but this applies to all businesses with low margins and moderate customer-facing labor costs. They can't all just raise their prices to pay higher labor costs, because then the people getting paid more just have to pay more for everything as well, at least partially if not fully cancelling out the benefits. Then there's the fact that raising prices will still lose fast food places customers: For every person not buying it because it doesn't fit their budget, there's someone who just barely fits it into their budget that will stop buying it when prices rise. This isn't theoretical: Companies analyze the price elasticity of their customers and understand roughly how raising prices X% will lose them Y% customers, and the amount of revenue Y customers represent, and whether that is higher or lower than the revenue generated by X. I don't work in the food industry or retail, but I have run that analysis myself in my own field. I'm all for a living wage, but simply paying low paid workers more & raising prices to cover it is by no means a complete solution. Raising minimum wages is a bandaid solution. (And I'm not saying we shouldn't do that-- only that it's short term, and we need more comprehensive answers)