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It's misleading to talk about profits purely in absolute terms. The profit margin could stay the same while the absolute number doubles. If you make $10 profit

by imgabe 4y ago

It's misleading to talk about profits purely in absolute terms. The profit margin could stay the same while the absolute number doubles. If you make $10 profit on $100 revenue one year (a 10% margin) and $20 profit on $200 revenue the next year (still a 10% margin), profits "doubled" but the profit margin stayed the same. When you add in the inflation and the fact that the $20 this year is not worth as much as $20 was last year, it's not even a real doubling in absolute terms. Inflation will produce "record highs" in terms of absolute number of dollars in all sorts of things, but if you don't account for the fact that the dollars are not worth the same amount as before it's disingenuous.

InefficientRed 4y ago
Sure, but someone loses, and in this case the loser is the local restaurant that doesn't appear to have much pricing power.
- imgabe 4y ago
  It sounds like the restaurant was a side project that was barely solvent to begin with. They could try raising prices, but if the customers leave then people simply aren't willing to pay what it costs to keep that place open and the demand to support that restaurant in that place just isn't there.
  - richbell 4y ago
    > It sounds like the restaurant was a side project that was barely solvent to begin with This is an incredibly bad take. Restaurants are a grueling business and many have low margins — 80% fail within 5 years. Since the beginning of the pandemic many incredible and beloved restaurants in my city have been forced to close due to lock downs, landlords raising rents, rising costs, etc. > They could try raising prices, but if the customers leave then people simply aren't willing to pay what it costs to keep that place open and the demand to support that restaurant in that place just isn't there. If customers are sensitive to higher prices, it's probably because of record inflation and economic downturn limiting their disposable income. Nowadays the only establishments with stability are chains: McDonalds, Starbucks, Burger King... places that for the most part only care about profit and neither pay or treat their employees well, or have good quality food. A city without diverse locally-owned restaurants is a bleak prospect.
    - imgabe 4y ago
      > Throughout most of R-BBQ’s existence, Rodriguez has worked other jobs as well, first at the health clinic in town, then at the school district. His heart was in the restaurant, but he was cognizant of his father’s railroad pension and the stability it provided. It says right in TFA article that the owner works other jobs to support himself. No doubt restaurants are a tough business. Lots of businesses fail. Should we subsidize every business in existence that can't make the economics work on its own merits? I'm sorry people will lose the restaurant they love so much, but apparently not enough to pay the higher prices it would take to keep it open. Times change, economic conditions change, businesses come and go. That's a natural part of the economy and life. Things don't last forever, especially if you're unwilling to face reality and do the things that are necessary to make them last. > Since the beginning of the pandemic many incredible and beloved restaurants in my city have been forced to close due to lock downs, landlords raising rents, rising costs, etc. Yes, I've heard of many of these. It's always a person who went to the place once 2 years ago and is sad now that it's closing. Guess what you can do to keep local restaurants open? Go to them and buy food!
      - richbell 4y ago
        > It says right in TFA article that the owner works other jobs to support himself. Both bee_rider and InefficientRed's comments were clearly about the general effect and not the specific restaurant mentioned in the article. Regardless, the fact that Rodriguez has to work another job to support himself doesn't make it a 'side project'. > Yes, I've heard of many of these. It's always a person who went to the place once 2 years ago and is sad now that it's closing. Guess what you can do to keep local restaurants open? Go to them and buy food Are you really disregarding the content of my post because of a made up scenario that you're attributing to me? In 2020 a beloved Syrian cheese and dessert shop, owned by a refugee, was forcibly evicted because their land lord tripled their rent. The lot remains vacant to this day. Was this personally my fault for not buying enough cheese?
        imgabe 4y ago
        > In 2020 a beloved Syrian cheese and dessert shop, owned by a refugee, was forcibly evicted because their land lord tripled their rent. The lot remains vacant to this day. Was this personally my fault for not buying enough cheese? Obviously every single instance of a restaurant closing is not going to be the same. Maybe the landlord hates Syrians. Maybe they're negotiating a deal where Starbucks will pay triple the rent for a 10 year NNN lease that will make more money even with the vacancy, maybe it's a money laundering front for the Russian mob, who knows? I'm sorry your favorite cheese shop closed and it was probably not personally your fault for not buying enough cheese. Maybe you just live in a town that does not have enough cheese loving people to support a cheese shop, or there are uniquely evil landlords who have a vendetta against immigrant hard-luck stories. Sometimes businesses we like close. It happens.
  - gruez 4y ago
    >It sounds like the restaurant was a side project that was barely solvent to begin with. It's actually hilarious how downvoted this comment is, considering how close it is to another sentiment that's actually popular (ie. make the same point, but make it about labor costs rather than evil corporations raising prices. Both are based on the claim that if a business isn't profitable enough, it shouldn't exist in the first place.
    - imajoredinecon 4y ago
      Tone matters. The comment people don’t like comes across as really callous.
    - richbell 4y ago
      > Both are based on the claim that if a business isn't profitable enough, it shouldn't exist in the first place. I think a little bit of empathy goes a long way. The past few years have wreaked havoc; many people and businesses are struggling to stay afloat. Coldly repeating the mantra that small businesses failing (many for reasons outside their control) is just 'the economy' is rubbing salt in the wound. Even in the best of times, many great businesses weren't profitable for several years.
- ceeplusplus 4y ago
  Just means the restaurant wasn't very good to begin with. Chipotle, McD's, etc. have all raised prices nationally, and they operate in what has to be the most price sensitive market possible. I know the good restaurants in my area have doubled prices and people keep coming because they're the best. Rising prices differentiate the good businesses from the bad.
  - leereeves 4y ago
    > Just means the restaurant wasn't very good to begin with. Or that the local market won't support higher prices. Some communities just don't have the disposable income to spare. And even McDonalds is closing stores: https://www.statista.com/statistics/256040/mcdonalds-restaurants-in-north-america/ https://www.statista.com/statistics/256040/mcdonalds-restaur...
  - catchnear4321 4y ago
    You are talking about a fundamentally different situation than the article, and than a lot of areas face. “The good restaurants in my area.” That implies a much larger selection than the typical small town, where there’s likely a McD’s but not a chipotle. And as was already stated, the buying power in these towns tends to also be lower, maybe fluctuating due to tourists but nowhere near a city’s average. Your “people keep coming” and “doubled prices”comment suggests a much higher level of disposable income. And throwing out corporate chains as part of this? The franchises are just tiny pieces of the whole. There’s a whole massive machine watching each limb, supplying it, and sometimes amputating it. Which, yet again, compare that to a mom and pop, it is nowhere near the same. If you haven’t been to a small town, you should visit a few. Your disposable income would be welcome in a lot of great restaurants that are still struggling. A lot of not so great ones as well.
Swizec 4y ago
I believe the implication is that if everyone collectively agreed to eat the inflation – go from 10% margin to 5% margin for the same $10 – there would be a lot less inflation because purchasing power would be the same regardless of what some number on a computer says. But if everyone raises prices “because inflation”, well that’s exactly what inflation is – things getting pricier. I know this sort of coordination can’t happen. Point is inflation is a trailing measure of price changes. Without price changes there is no inflation. People set those prices.
- junofan 4y ago
  It’s just cost-plus pricing. Tyson needs to tie up money in inputs, production, and distribution—money that could be put to work elsewhere.
PenguinCoder 4y ago
Now apply that to workers wages. Can guarantee those haven't 'doubled' regardless of the method used to calculate it.
bee_rider 4y ago
Your hypothetical is of course possible and good to keep in mind, but in this case: https://www.meatpoultry.com/articles/26162-tyson-foods-reports-higher-profit-net-income-despite-market-headwinds https://www.meatpoultry.com/articles/26162-tyson-foods-repor... Compared to 2021: It looks like they increased the price of beef by 31.7%, sales decreased by 6.2%. For chicken, they increased the price by 19.9%, and sales increased 3.6%. It is possible I'm misreading things though, I'm definitely no economist. > Adjusted net income for the fiscal first quarter was $1.12 billion, a 140% increase from $467 million, reported in Q1 of fiscal 2021 > Operating income more than doubled from $705 million for the first quarter of 2021 to $1.45 billion in fiscal 2022. > Sales for the quarter were $12.93 billion versus $10.46 billion during the same period in 2021, an increase of nearly 24%. In any case, if people have decided to replace beef consumption by chicken consumption -- economically I guess it is probably a little worrying that people feel the need to switch to the cheaper meat, but health-wise it is probably a win. So, silver lining!
- spywaregorilla 4y ago
  The missing piece here is how much did costs increase? Are the costs maybe slower to catch up due to locked in prices and they raised to consumers earlier? We'll see. I wouldn't expect these record profits to hold.
pottertheotter 4y ago
It's a public company so no need to say it's misleading and hypothesize. Q1 sales up 23.6% (volume +0.3%, so all price), NI up 140.0%, and net margin up 94.1%.
- lotsofpulp 4y ago
  Source for the numbers? The only relevant one is profit margin, which is up 0.43%, which is not material. https://www.macrotrends.net/stocks/charts/TSN/tyson-foods/profit-margins https://www.macrotrends.net/stocks/charts/TSN/tyson-foods/pr... Dec 2021 profit margin - 7.47% Mar 2022 profit margin - 7.90% Dec 2021 net income (profit)- $1.121B Mar 2022 net income (profit) - $829B

by imgabe 4y ago

InefficientRed 4y ago

Sure, but someone loses, and in this case the loser is the local restaurant that doesn't appear to have much pricing power.

imgabe 4y ago
It sounds like the restaurant was a side project that was barely solvent to begin with. They could try raising prices, but if the customers leave then people simply aren't willing to pay what it costs to keep that place open and the demand to support that restaurant in that place just isn't there.
- richbell 4y ago
  > It sounds like the restaurant was a side project that was barely solvent to begin with This is an incredibly bad take. Restaurants are a grueling business and many have low margins — 80% fail within 5 years. Since the beginning of the pandemic many incredible and beloved restaurants in my city have been forced to close due to lock downs, landlords raising rents, rising costs, etc. > They could try raising prices, but if the customers leave then people simply aren't willing to pay what it costs to keep that place open and the demand to support that restaurant in that place just isn't there. If customers are sensitive to higher prices, it's probably because of record inflation and economic downturn limiting their disposable income. Nowadays the only establishments with stability are chains: McDonalds, Starbucks, Burger King... places that for the most part only care about profit and neither pay or treat their employees well, or have good quality food. A city without diverse locally-owned restaurants is a bleak prospect.
  - imgabe 4y ago
    > Throughout most of R-BBQ’s existence, Rodriguez has worked other jobs as well, first at the health clinic in town, then at the school district. His heart was in the restaurant, but he was cognizant of his father’s railroad pension and the stability it provided. It says right in TFA article that the owner works other jobs to support himself. No doubt restaurants are a tough business. Lots of businesses fail. Should we subsidize every business in existence that can't make the economics work on its own merits? I'm sorry people will lose the restaurant they love so much, but apparently not enough to pay the higher prices it would take to keep it open. Times change, economic conditions change, businesses come and go. That's a natural part of the economy and life. Things don't last forever, especially if you're unwilling to face reality and do the things that are necessary to make them last. > Since the beginning of the pandemic many incredible and beloved restaurants in my city have been forced to close due to lock downs, landlords raising rents, rising costs, etc. Yes, I've heard of many of these. It's always a person who went to the place once 2 years ago and is sad now that it's closing. Guess what you can do to keep local restaurants open? Go to them and buy food!
    - richbell 4y ago
      > It says right in TFA article that the owner works other jobs to support himself. Both bee_rider and InefficientRed's comments were clearly about the general effect and not the specific restaurant mentioned in the article. Regardless, the fact that Rodriguez has to work another job to support himself doesn't make it a 'side project'. > Yes, I've heard of many of these. It's always a person who went to the place once 2 years ago and is sad now that it's closing. Guess what you can do to keep local restaurants open? Go to them and buy food Are you really disregarding the content of my post because of a made up scenario that you're attributing to me? In 2020 a beloved Syrian cheese and dessert shop, owned by a refugee, was forcibly evicted because their land lord tripled their rent. The lot remains vacant to this day. Was this personally my fault for not buying enough cheese?
      - imgabe 4y ago
        > In 2020 a beloved Syrian cheese and dessert shop, owned by a refugee, was forcibly evicted because their land lord tripled their rent. The lot remains vacant to this day. Was this personally my fault for not buying enough cheese? Obviously every single instance of a restaurant closing is not going to be the same. Maybe the landlord hates Syrians. Maybe they're negotiating a deal where Starbucks will pay triple the rent for a 10 year NNN lease that will make more money even with the vacancy, maybe it's a money laundering front for the Russian mob, who knows? I'm sorry your favorite cheese shop closed and it was probably not personally your fault for not buying enough cheese. Maybe you just live in a town that does not have enough cheese loving people to support a cheese shop, or there are uniquely evil landlords who have a vendetta against immigrant hard-luck stories. Sometimes businesses we like close. It happens.
- gruez 4y ago
  >It sounds like the restaurant was a side project that was barely solvent to begin with. It's actually hilarious how downvoted this comment is, considering how close it is to another sentiment that's actually popular (ie. make the same point, but make it about labor costs rather than evil corporations raising prices. Both are based on the claim that if a business isn't profitable enough, it shouldn't exist in the first place.
  - imajoredinecon 4y ago
    Tone matters. The comment people don’t like comes across as really callous.
  - richbell 4y ago
    > Both are based on the claim that if a business isn't profitable enough, it shouldn't exist in the first place. I think a little bit of empathy goes a long way. The past few years have wreaked havoc; many people and businesses are struggling to stay afloat. Coldly repeating the mantra that small businesses failing (many for reasons outside their control) is just 'the economy' is rubbing salt in the wound. Even in the best of times, many great businesses weren't profitable for several years.
ceeplusplus 4y ago
Just means the restaurant wasn't very good to begin with. Chipotle, McD's, etc. have all raised prices nationally, and they operate in what has to be the most price sensitive market possible. I know the good restaurants in my area have doubled prices and people keep coming because they're the best. Rising prices differentiate the good businesses from the bad.
- leereeves 4y ago
  > Just means the restaurant wasn't very good to begin with. Or that the local market won't support higher prices. Some communities just don't have the disposable income to spare. And even McDonalds is closing stores: https://www.statista.com/statistics/256040/mcdonalds-restaurants-in-north-america/ https://www.statista.com/statistics/256040/mcdonalds-restaur...
- catchnear4321 4y ago
  You are talking about a fundamentally different situation than the article, and than a lot of areas face. “The good restaurants in my area.” That implies a much larger selection than the typical small town, where there’s likely a McD’s but not a chipotle. And as was already stated, the buying power in these towns tends to also be lower, maybe fluctuating due to tourists but nowhere near a city’s average. Your “people keep coming” and “doubled prices”comment suggests a much higher level of disposable income. And throwing out corporate chains as part of this? The franchises are just tiny pieces of the whole. There’s a whole massive machine watching each limb, supplying it, and sometimes amputating it. Which, yet again, compare that to a mom and pop, it is nowhere near the same. If you haven’t been to a small town, you should visit a few. Your disposable income would be welcome in a lot of great restaurants that are still struggling. A lot of not so great ones as well.

Swizec 4y ago

I believe the implication is that if everyone collectively agreed to eat the inflation – go from 10% margin to 5% margin for the same $10 – there would be a lot less inflation because purchasing power would be the same regardless of what some number on a computer says. But if everyone raises prices “because inflation”, well that’s exactly what inflation is – things getting pricier. I know this sort of coordination can’t happen. Point is inflation is a trailing measure of price changes. Without price changes there is no inflation. People set those prices.

junofan 4y ago
It’s just cost-plus pricing. Tyson needs to tie up money in inputs, production, and distribution—money that could be put to work elsewhere.

PenguinCoder 4y ago

Now apply that to workers wages. Can guarantee those haven't 'doubled' regardless of the method used to calculate it.

bee_rider 4y ago

Your hypothetical is of course possible and good to keep in mind, but in this case: https://www.meatpoultry.com/articles/26162-tyson-foods-reports-higher-profit-net-income-despite-market-headwinds https://www.meatpoultry.com/articles/26162-tyson-foods-repor... Compared to 2021: It looks like they increased the price of beef by 31.7%, sales decreased by 6.2%. For chicken, they increased the price by 19.9%, and sales increased 3.6%. It is possible I'm misreading things though, I'm definitely no economist. > Adjusted net income for the fiscal first quarter was $1.12 billion, a 140% increase from $467 million, reported in Q1 of fiscal 2021 > Operating income more than doubled from $705 million for the first quarter of 2021 to $1.45 billion in fiscal 2022. > Sales for the quarter were $12.93 billion versus $10.46 billion during the same period in 2021, an increase of nearly 24%. In any case, if people have decided to replace beef consumption by chicken consumption -- economically I guess it is probably a little worrying that people feel the need to switch to the cheaper meat, but health-wise it is probably a win. So, silver lining!

spywaregorilla 4y ago
The missing piece here is how much did costs increase? Are the costs maybe slower to catch up due to locked in prices and they raised to consumers earlier? We'll see. I wouldn't expect these record profits to hold.

pottertheotter 4y ago

It's a public company so no need to say it's misleading and hypothesize. Q1 sales up 23.6% (volume +0.3%, so all price), NI up 140.0%, and net margin up 94.1%.

lotsofpulp 4y ago
Source for the numbers? The only relevant one is profit margin, which is up 0.43%, which is not material. https://www.macrotrends.net/stocks/charts/TSN/tyson-foods/profit-margins https://www.macrotrends.net/stocks/charts/TSN/tyson-foods/pr... Dec 2021 profit margin - 7.47% Mar 2022 profit margin - 7.90% Dec 2021 net income (profit)- $1.121B Mar 2022 net income (profit) - $829B