5 ms·

Well presumably all restaurants would have similar issues hiring cooks so prices should rise everywhere. I would wager that demand for restaurant food as a cate

by kozd 5y ago

Well presumably all restaurants would have similar issues hiring cooks so prices should rise everywhere. I would wager that demand for restaurant food as a category is less elastic than demand for any one particular Mexican restaurant's food.

anonuser123456 5y ago
At the margin consumers are sensitive to price. A family of 4 might skip out on getting drinks with their order if the price goes from 36->40$. Drinks are where the entire profit for many restaurants comes from. In terms of total market, the effects are well studied in the field of labor economics. Big producers can easily absorb the added labor costs. They outsource some elements of their labor (prep work). They simplify menus for better economies of scale. They cut back hours on marginal employees and add hours for high productivity ones. Small shops without economies of scale struggle and go out of business. A restaurant owner that owns 1 restaurant is likely working full time to keep it afloat. The added time to respond to the current labor market can break the camels back. vs. McMegacorp that has people that sit around and optimize cost all day long. So the trade off is more McDonalds and Chipotle and less Albertos burrito stands.
- Sylamore 5y ago
  This is one of the reasons why companies like Sysco and US Foods have been pushing more and more pre-prepped packaged menu items that restaurants can just heat up and serve. USF calls these Scoop items: https://www.usfoods.com/great-food/scoop-.html https://www.usfoods.com/great-food/scoop-.html You may have noticed how lots of places, including mom and pop shops seem to suddenly have nearly identical menu items and it's partially because of this trend in the foodservice industry. They are basically taking the economy of scale that a large chain previously exclusively had and bringing it to the market to street sales (e.g. mom & pop joints). They simply took what they were doing for institutional food service and expanded it because it's substantially more profitable for them than selling the raw ingredients.

by kozd 5y ago

anonuser123456 5y ago

At the margin consumers are sensitive to price. A family of 4 might skip out on getting drinks with their order if the price goes from 36->40$. Drinks are where the entire profit for many restaurants comes from. In terms of total market, the effects are well studied in the field of labor economics. Big producers can easily absorb the added labor costs. They outsource some elements of their labor (prep work). They simplify menus for better economies of scale. They cut back hours on marginal employees and add hours for high productivity ones. Small shops without economies of scale struggle and go out of business. A restaurant owner that owns 1 restaurant is likely working full time to keep it afloat. The added time to respond to the current labor market can break the camels back. vs. McMegacorp that has people that sit around and optimize cost all day long. So the trade off is more McDonalds and Chipotle and less Albertos burrito stands.

Sylamore 5y ago
This is one of the reasons why companies like Sysco and US Foods have been pushing more and more pre-prepped packaged menu items that restaurants can just heat up and serve. USF calls these Scoop items: https://www.usfoods.com/great-food/scoop-.html https://www.usfoods.com/great-food/scoop-.html You may have noticed how lots of places, including mom and pop shops seem to suddenly have nearly identical menu items and it's partially because of this trend in the foodservice industry. They are basically taking the economy of scale that a large chain previously exclusively had and bringing it to the market to street sales (e.g. mom & pop joints). They simply took what they were doing for institutional food service and expanded it because it's substantially more profitable for them than selling the raw ingredients.