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A few years ago I was staying at an AirBnB in Carlsbad/Oceanside. I wandered down to a little coffee shack/breakfast place across the street from the beach. As

A few years ago I was staying at an AirBnB in Carlsbad/Oceanside. I wandered down to a little coffee shack/breakfast place across the street from the beach. As I sat out front, enjoying my cup of coffee, I thought, "this is exactly what I want to do with my retirement... I want to buy this shack and pay some 17 to 20 year olds to make people coffee and pancakes". While that sounded great in my vacationing mindset, the reality is far more soul-crushing. Upon returning home I started doing some back of the napkin math on what it'd actually take to run a place like that. 3 or 4 employees at $20 an hour (this is California), plus insurance, plus... well all the other stuff it takes to employ a human. That's before I even consider food and supplies. Coffee at 2 dollars a cup, pancakes at 8 dollars a plate. Could we sell enough even to make payroll? Forget any profit. I believe this is why we're seeing the sunset on the little mom-n-pop businesses. There's no way these folks can pay living wages. Now if this were Reddit I'd be angrily shouted down and told, "then they deserve to be out of business!". Fine, let's put all those evil family-run donut shops out of business. But let's not complain that we only have even more evil McDonalds-style franchises that own everything. All this to say, I wish there were some middle ground. The truth is, I'll probably have to figure out how to like Starbucks.

ghaff 4y ago
I expect that over time, we'll see: - More automation - More self-service - And more labor-intensive services and things people want that can't be delivered at the prices mainstream consumers are willing/able to pay
fulltimeloser 4y ago
2 dollar coffee is quite cheap :-)
- nobleach 4y ago
  That's fair. By the time I retire, 8 dollar coffee will probably be quite cheap.
- chongli 4y ago
  Yeah. That’s pretty unrealistic pricing these days. Maybe if you’re in Italy charging €1 for an espresso. In North America you gotta charge more. People pay $7-8 for a cup of sugar milk (with a shot of burnt espresso) from Starbucks. As a small café owner you should be comfortable charging $5-6 for a decent coffee.
  - nobleach 4y ago
    You have described my Starbucks experience perfectly. I actively seek out the mom-n-pop shops just because I believe (perhaps erroneously) that they get in the game because they're artisans (like this post mentions) and their coffee is going to be head and shoulders above Starbucks. I'd rather tip a barista 10 additional dollars for making me a pour-over or French Press.
    - mab122 4y ago
      My experience unfortunately is that in those nice, cozy places where I would expect good coffee they sometimes don't even know what coffee beans they have. Solutions to that is going to roasting company (most of them also have small coffeeshop or sth) they will gladly tell you about their coffee and also make you one while often explaining how to do it best with your setup at home. (And Starbucks is so dark and burnt I can't drink it nowdays)
    - theFletch 4y ago
      I drink black coffee, usually an Americano, drip or even cold brew, and what I've realized is that I am NOT in the majority. It's real hard to hide a bad cup without milk and sugar to cover it up. I love mom-n-pop shops, but I get some of the worst cups of coffee sometimes from these places. At least Starbucks is fairly consistent. I still avoid then when I can though.
      - JohnFen 4y ago
        Yes, one of the core things that Starbucks (and McDonald's and so forth) sells is consistency. Their products may not be great, but you can go to one anywhere and know exactly what you're going to get. Mom-and-pop places don't have that certainty. There are both great and terrible ones. If you're in an unfamiliar place and just want a coffee, Starbucks can be just the ticket. It's not a gamble. And if you enjoy coffee and want something above "adequate", you'll also be keeping an eye out for promising mom-and-pop places to switch to.
disantlor 4y ago
if it’s a nice spot and good coffe, I would happily pay $4-5 for a cup of coffee. most of the other times i’ll make it at home to offset
- nobleach 4y ago
  Darling little place... great view: https://www.google.com/maps/place/Buccaneer+Cafe/@33.1770639,-117.3677769,18.93z/data=!4m15!1m8!3m7!1s0x80dc655e605b7705:0x19ecb3f398f9f87!2sOceanside,+CA!3b1!8m2!3d33.1958696!4d-117.3794834!16zL20vMHI1NDA!3m5!1s0x80dc6e1b49afa597:0x7c4a2afef880f702!8m2!3d33.176918!4d-117.3686218!16s%2Fg%2F119w2llhb https://www.google.com/maps/place/Buccaneer+Cafe/@33.1770639...
  - brk 4y ago
    How do they survive? Zoom out less than a mile and you can spot nearly a dozen cafe's and coffee shops in the same area.
    - wpietri 4y ago
      That means there's plenty of business to be had. It'd be much more concerning if you zoomed out and they were the only cafe for a mile.
    - nobleach 4y ago
      and as I posted a pic of their menu board elsewhere in the thread, they really are/were charging under 3 dollars for drip coffee. I'll admit, the ambience was really the selling point, the coffee was just okay.
schneems 4y ago
And that’s if your employees show up. People quit last minute and need someone to cover their work. Anything you hire someone else to do as part of a labor industry you’ll need to be prepared/willing to do it too.
taneq 4y ago
The last medium flat white I bought was about $7 :S
- nobleach 4y ago
  I don't know how these folks are doing it: https://goo.gl/maps/tjbhowGy9nWa7hHKA https://goo.gl/maps/tjbhowGy9nWa7hHKA
drakonka 4y ago
The middle ground seems like business owners pricing their product appropriately to actually sustain their business. $2 for coffee seems ridiculously low. Is that normal in California? Maybe such under-pricing is part of the problem?
- brookst 4y ago
  Yes, that’s the problem. But McDonalds sells coffee for $1, and many of those customers who are deeply invested in living wages and local businesses are also not fools who can be charged 4x for the same thing they can get faster at McD’s. So yeah, pricing is the problem, but IMO mostly on the “willingness to pay” side. These businesses are squeezed between the real costs of inefficient small biz (where are you going to store 50 pallets of coffee needed to get great pricing, and it’ll go bad anyway) and consumers’ unwillingness to pay for the things they say they want. Same thing as airlines, really. Everyone hates cramped seats and coin-op toilets, but enough people will always buy the cheapest ticket that it’s not economically viable to provide a good quality product at a price that will sell.
  - genghisjahn 4y ago
    But then I’m having cheap coffee in a McDonald’s.
  - postsantum 4y ago
    McDonalds coffee costs $1, seaside specialty coffee costs $5 - the difference is negligible if you are not buying it twice a day People usually ok with having to suffer in cramped seats given that slightly less cramped seat price difference is often more than they earn in a day
    - deleted 4y ago
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  - drakonka 4y ago
    I see what you mean, but as a consumer I'd much rather pay extra for a good coffee than $1 for a crappy one and I'm fairly sure this is not an uncommon sentiment. If I opened up a coffee shop, it wouldn't be to attract the kind of crowd who get their coffee exclusively at McDonald's, so McDonald's pricing wouldn't be that relevant, right? Tangentially, I'm also curious how McDonald's in the US can charge $1 if they also have to pay a living wage. Does their size mean they get cheaper materials from suppliers and can drive costs down or that they make up that loss by selling some of their other products? I've never gotten coffee from McDonald's in my country, but I'm _pretty_ sure it's not that cheap. Even _more_ tangentially, I noticed a popular local chain driving their prices higher and higher to ridiculous amounts. It's not even great coffee--it's like Starbucks in my country (Starbucks apparently didn't get a good footing here because this other chain is just so established). Their usually mediocre coffee costs more than one at a boutique high-end roastery! I suspect it's because they're pushing people to instead sign up for their monthly subscription, that lets you get a coffee every 2 hours. I've begrudgingly signed up, because I like using their cafes as a work space and this way I do not feel guilty about sitting around there all day. When I want legit good coffee, I still go to a good place and get one. As annoyed as I was to see how much they charge for a mediocre cappuccino, I've got to hand it to them on the interesting monetization shift.
jimbob45 4y ago
But then how does McDonald’s make the economics work? Just scale?
- falcolas 4y ago
  Scale, and low profit coffee is sold alongside higher profit items. Similar to a gas station, where the gasoline losses are offset by the store purchases.
stcroixx 4y ago
The idea that all jobs should provide enough compensation to live off of is just not possible. Face it now or later, but a charade which requires financial support will eventually crumble.
- nivenkos 4y ago
  What is the alternative? They should do, or they should be automated so you don't need as many employees.
  - ghaff 4y ago
    Or, as many Silicon Valley startups have shown, there are lots of services that people want but it turns out that a critical mass of mainstream consumers aren't willing to pay the cost of providing them.
- brookst 4y ago
  Are you suggesting a massive expansion of government assistance or of homelessness? I don’t see a fourth option.
  - stcroixx 4y ago
    I’d suggest simply reminding people that if they don’t want to be homeless they need to learn a skill that pays a living wage. This is how it’s been forever.
    - bee_rider 4y ago
      So this is just a roundabout way of getting to the original post’s conclusion, right? A nice little coffeeshop may not be possible.
      - stcroixx 4y ago
        A coffee shop is absolutely possible as long as nobody is interfering in the wage agreed on between employer and employee. We’ve had coffee shops forever and they have done fine. It’s only the modern expectation that they should pay more that is threatening that model.
hprotagonist 4y ago
> All this to say, I wish there were some middle ground. You and a bunch of other weirdos :) https://en.wikipedia.org/wiki/Distributism https://en.wikipedia.org/wiki/Distributism
pigsty 4y ago
You’ll see the same thing here on HN. I remember a discussion quite a while back about how SE Asia lacks a vibrant startup culture and people were going back and forth about how companies should just bring in Silicon Valley tech workers to get the industry going. Upon mention that Cambodian and Vietnamese simply can’t pay the wages SV techies would want, commenters seemed confused as to why—these struggling countries should just do it and quit making excuses. It’s simply obvious that a country where people are getting maybe $2000 a year should have companies with enough free cash to bring in thousands of Americans who want at least 300k but would settle for 250k if they can get a luxury condo thrown in. Bizarre to witness these statements sometimes—frustrating when it’s crowds. It’s good when people do, at the very least, a passing glance at the data and consider troubles that could occur. That said, mom and pops run by just mom and pops do exist. If you’ve got savings and just want to socialize and mitigate some of the costs with a little side income, running a tiny cafe next to your home on weekends is something that isn’t unreasonable if you’re very comfortably settled.
- hinkley 4y ago
  If you want to know a man’s character, give him a little power. Let’s say Vietnam found the money to do it anyway. Now you’ve got a bunch of people making minor warlord money compared to the locals. They can now afford to do just about anything their little hearts desire. Silicon Valley may be many things, but a paragon of ethics is not one of them. When you can bribe people half a year’s salary that changes the dynamic quite a bit, and for the worse. And you didn’t bring these people over to run everything, you brought them over to mentor the people you want to run everything. What great role models you’ve provided for them. What could possibly go wrong?
  - grog454 4y ago
    > Now you’ve got a bunch of people making minor warlord money compared to the locals. They can now afford to do just about anything their little hearts desire. Isn't this already happening when an SV company pays an eastern European developer 1/2 a typical SV salary which is 10x the employee's average local salary?
SECProto 4y ago
If you're thinking about this, then you have to consider how those business you mention make money with a similar model. Starbucks: they don't charge $2 a coffee. I would only ever get a drip coffee and I think it's around $3, most people who are going there get drinks in the >$5 range. Plus they have a lot of traffic - more customers = less wages required for each drink McDonalds: They charge less than $2/coffee. They charge less than $8 for a breakfast. They make their money on super high volume. Your vision: you're enjoying lingering, enjoying the sun. You're enjoying the floor (patio) space, which means you can't have high volume unless you have a huge space, which wouldn't work with your "little shack" concept. Unless there's a nearby park or beach with free barely limited space, while also still having enough traffic to stay busy. Very limited spots that can work. (so as with most issues regarding our urban spaces in north america, what we need to make them better is more density. :)
- brvsft 4y ago
  > (so as with most issues regarding our spaces in north america, what we need to make them better is more density. :) Then we raise the problem that this is not longer some simple, happy little shack where I get my coffee and relax. Higher density, higher volume means I wait in a potentially long line, have my personal space violated both considerately and inconsiderately by total strangers, feel the anxiety of being in a potential fire hazard area, etc. Arguably, none of this is better. I am more willing to pay a premium on the coffee than to deal with all of that.
  - ryukafalz 4y ago
    The longest lines I've ever been in for coffee have been at suburban Starbucks drive-thrus, which are far from dense. My experience is small coffee shops in cities don't really get that crowded. There's plenty of room for those small coffee shops where you can get your coffee and relax in a nice little lounge spot. (I've seen more of them by far in cities than outside, honestly.)
  - ethbr0 4y ago
    > Higher density, higher volume means I wait in a potentially long line The better bargain is to decrease shop area and worker count, and increase number of shops. Tokyo seems to do just fine with 5-seat places...
AnIdiotOnTheNet 4y ago
> Fine, let's put all those evil family-run donut shops out of business. They are not entitled to be in business and if the alternative is keeping society in a condition where people are forced to work for non-livable wages then fuck them. Now if we had a UBI, non-livable wages become reasonable.
wnolens 4y ago
I did a very similar thing. I love the experience of coffee shops and neighborhood-style bars. I really want to produce a particular experience for others to enjoy. So I started modeling the business and.. holy shit. At BEST I'm clearing 40-60k/y with a single shop. But that ain't no 40h work week with health insurance.. probably it will fail and I'm out 200k.
dazc 4y ago
There was a time in the UK where many small grocery shops were owned and run by Asian families. They would typically be open everyday 'till late. The economics were simple, everyone in the family worked for free and there were no benefits, sick pay or everyday rules to worry about. Eventually the big grocery chains took over because it was easy to open up a prime local site and run it at a loss for as long as it took. Any stubborn competition remaining could easily be brought to the attention of the authorities. Some of those Asian shopkeepers became quite successful though which, I think, goes to show that every kind of business has its golden era where anything is possible but nothing lasts forever.
JohnFen 4y ago
In my part of the US, there are more mom-and-pop coffee shops than chain shops, and they're thriving. I think that one of the reasons they're thriving is that they charge a lot more than $2 for coffee and $8 for pancakes.
- sammalloy 4y ago
  > I think that one of the reasons they're thriving is that they charge a lot more than $2 for coffee and $8 for pancakes. Yeppers. Here is the price of coffee and pancakes at my local mom and pop in 2023: Coffee: $4; Pancakes: $13
draw_down 4y ago
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SomeBoolshit 4y ago
If wages had risen appropriately then people wouldn't have trouble paying the kinds of prices necessary to keep small places like the ones you're talking about running.
- zdragnar 4y ago
  This is simply called inflation, and the end result of the long chain of effects is that nobody is better off for it.
kleinsch 4y ago
The main way you make the math work is that it’s a family run business where you and your spouse are owners and workers. That takes two FTE off the table, paying you out in profits instead. But as the article describes, you’ve signed yourself up for a full-time job mopping at a high-risk low-margin business.
shagie 4y ago
> Now if this were Reddit I'd be angrily shouted down and told, "then they deserve to be out of business!". You'll get very much the same response if you are to suggest that some companies aren't able to get $200k/year of value out of a software developer. If there's a company that can only get $100k/year of revenue out of a developer and pays them $70k in a low cost of living area (forget about remote work for someone in California) you'll get laughed at for "poverty wages" and that the skills that they have are worth more while at the same time complaining about how hard it is to find a job that pays "what they are worth" (which is the top 10th percentile).
DrewADesign 4y ago
I worked in the restaurant and bar business for a long time as an employee. Not losing your shirt in a food business takes a LOT of experience. According to the National Restaurant Association, 60% of restaurants fail within the first year and 80% fail within five. Most people realize they don't know enough to open a small lab or IT consulting firm, but drastically overestimate their knowledge of the food business. It makes sense-- these businesses must hide the mountains of back-breaking low-pay manual labor from customers lest they become uncomfortable and patronize somewhere that makes it all feel calm, relaxed and easy. And for all that, particularly successful restaurant owners get a margin of maybe 5% after a few years when you really nail down your expenses and processes, though the numbers for coffee shops are a bit different. This successful restaurateur's businesses in Boston yield 2% (though she takes a paycheck not included in that 2%.) https://www.eater.com/2020/3/9/21166993/how-much-to-run-a-restaurant-cost-mei-mei-boston-finances https://www.eater.com/2020/3/9/21166993/how-much-to-run-a-re... Particularly, white collar people who pride themselves on knowing about their local restaurant scenes are prone to this hubris. I bristle at their misguided confidence when discussing the business but will take the time to empathically but forcefully discourage any considering it professionally. A few years ago, an old friend contacted me in a panic because she'd invested her entire retirement in her brother's dream brew pub which was failing before it opened. I couldn't help them. Anybody with experience could immediately see how hare brained their ideas were, but they were just in too deep. Months later, they opened and quickly closed, and she'd lost everything. Tragic.
- tayo42 4y ago
  I read kitchen confidential and it did a good job of convincing me to never work in a restaurant. I still day dream about cooking somehow, since I enjoy it as a hobby. I snap back to reality kind of quick.
  - shagie 4y ago
    A company I worked back in the dot com boom days... one of the sysadmins was a bit on the grumpy side. He had been there from the start and had some nice options to be able to cash out on and try something. So he cashed out and pursued his dream of being a chef - finished up some certificates and such... and became a chef. About a year later, he came back to working as a sysadmin no where near as grumpy. He got a job as a chef... and realized that as much fun as the cooking is he really didn't like being a chef. A submission of mine from a few years ago - Find The Hard Work You're Willing To Do - https://news.ycombinator.com/item?id=26209541 https://news.ycombinator.com/item?id=26209541
andrei_says_ 4y ago
I am a bit confused - is this an argument against paying a living wage? Are you saying that Starbucks will be the only remaining business able to pay a living wage? Or that society simply cannot bear the price of paying it? That the livable wages make business impossible? Or that the coffee must stay at $2?
- PKop 4y ago
  Do you think there are easy answers to all these questions? The point is there are various intractable problems, the outcome of which is less mom and pop shops.
- marcosdumay 4y ago
  Why do you assume the GP is making an argument towards any kind of action? It looks very clearly a statement of fact to me.
badpun 4y ago
How can McDonalds make the payroll then? Whatever they do to succeed/survive, can't it be copied?
- shagie 4y ago
  Volume of customers, volume discount on materials, decades of experience working on optimizations of the workflow ( https://youtu.be/BPf22nRVy2I https://youtu.be/BPf22nRVy2I ).
axiomdata316 4y ago
I'm in Riverside California and I think your retail prices are a bit too low. There recently have been quite a few mom and pop coffee shops opening up and the prices are higher than Starbucks but they're also packed because each place has a unique take on coffee shops. Maybe this trend will change in a near future recession but right now it seems people pay more for a unique "authentic" experience.
- surprisetalk 4y ago
  Hey, I live pretty close to Riverside! Shoot me an email at hello@taylor.town and maybe we can grab coffee sometime
Nifty3929 4y ago
There would be a lot more room to pay people a living wage if we didn’t ALSO have to pay the government a living wage. I wonder, when you look at the cost of all the various required benefits, would employees rather not just get that in cash instead? Genuine question: when you looked at the costs of “plus... well all the other stuff it takes to employ a human,” what did that add up to in CA?
- Tagbert 4y ago
  In the US, even in CA, the government taxes are quite modest compared to other developed countries. Healthcare on the other hand is ruinous unless you can afford the almost equally ruinous health insurance.
tayo42 4y ago
Other countries around the world have this figured out somehow? Singapore, portugual, thailand, spain all have local food places, amazing food culture and somehow it seems sustainable. I dont think theyre being propped up by rich tourists
2-718-281-828 4y ago
you need 3 or 4 people to run a _little_ coffee shack? I'd say 2 are sufficient with proper organization and expectation management. and why 17 to 20 year olds? that's so oddly specific. I don't like being served by teenagers. also you write that's what _you_ want to _do_ with your retirement? what are you doing there? the dishes? the book keeping? sit around sipping coffee feeling very important?
browningstreet 4y ago
I was scootering through Venice CA and there was a small storefront. Very small. Less than 100 sq ft. I called and rent was $8500/mo. I was watching a YouTube video on UpFlip about a guy with three coffee shops. Monthly revenues are around $80K for his main shop. His margin is less than 4%.
xtiansimon 4y ago
You forgot rent for that store by the breach. You can sustain if your rent is low (low revenue, and low expense) or your location gets you heavy traffic or you serve a community that really wants your product—like a bar near a university. You don’t need the most ideal real estate next to the university, just within the community—(high revenue, high expense). So, to make money you need something that lowers your cost or increases your revenue. That’s where survivorship bias clouds the picture and you drink your coffee, and not realize they guy owns the building. Haha
schwartzworld 4y ago
> "then they deserve to be out of business!" If you can't afford the things that a business needs, you go out of business. If you can't afford coffee, cups, electricity, water, rent or taxes, you don't get to keep your coffee shop long. I want a gardener and house keeper, but I don't get to have them because I don't want to pay for those things. If someone can't pay three employees what their time is worth, why are they entitled to have those employees? Replace a person with a computer if you can't afford a person, or scale back in other ways. Don't punish employees for lack of business acumen, maybe unless you plan to compensate them extra when times are less lean.

ghaff 4y ago

I expect that over time, we'll see: - More automation - More self-service - And more labor-intensive services and things people want that can't be delivered at the prices mainstream consumers are willing/able to pay

fulltimeloser 4y ago

2 dollar coffee is quite cheap :-)

nobleach 4y ago
That's fair. By the time I retire, 8 dollar coffee will probably be quite cheap.
chongli 4y ago
Yeah. That’s pretty unrealistic pricing these days. Maybe if you’re in Italy charging €1 for an espresso. In North America you gotta charge more. People pay $7-8 for a cup of sugar milk (with a shot of burnt espresso) from Starbucks. As a small café owner you should be comfortable charging $5-6 for a decent coffee.
- nobleach 4y ago
  You have described my Starbucks experience perfectly. I actively seek out the mom-n-pop shops just because I believe (perhaps erroneously) that they get in the game because they're artisans (like this post mentions) and their coffee is going to be head and shoulders above Starbucks. I'd rather tip a barista 10 additional dollars for making me a pour-over or French Press.
  - mab122 4y ago
    My experience unfortunately is that in those nice, cozy places where I would expect good coffee they sometimes don't even know what coffee beans they have. Solutions to that is going to roasting company (most of them also have small coffeeshop or sth) they will gladly tell you about their coffee and also make you one while often explaining how to do it best with your setup at home. (And Starbucks is so dark and burnt I can't drink it nowdays)
  - theFletch 4y ago
    I drink black coffee, usually an Americano, drip or even cold brew, and what I've realized is that I am NOT in the majority. It's real hard to hide a bad cup without milk and sugar to cover it up. I love mom-n-pop shops, but I get some of the worst cups of coffee sometimes from these places. At least Starbucks is fairly consistent. I still avoid then when I can though.
    - JohnFen 4y ago
      Yes, one of the core things that Starbucks (and McDonald's and so forth) sells is consistency. Their products may not be great, but you can go to one anywhere and know exactly what you're going to get. Mom-and-pop places don't have that certainty. There are both great and terrible ones. If you're in an unfamiliar place and just want a coffee, Starbucks can be just the ticket. It's not a gamble. And if you enjoy coffee and want something above "adequate", you'll also be keeping an eye out for promising mom-and-pop places to switch to.

disantlor 4y ago

if it’s a nice spot and good coffe, I would happily pay $4-5 for a cup of coffee. most of the other times i’ll make it at home to offset

nobleach 4y ago
Darling little place... great view: https://www.google.com/maps/place/Buccaneer+Cafe/@33.1770639,-117.3677769,18.93z/data=!4m15!1m8!3m7!1s0x80dc655e605b7705:0x19ecb3f398f9f87!2sOceanside,+CA!3b1!8m2!3d33.1958696!4d-117.3794834!16zL20vMHI1NDA!3m5!1s0x80dc6e1b49afa597:0x7c4a2afef880f702!8m2!3d33.176918!4d-117.3686218!16s%2Fg%2F119w2llhb https://www.google.com/maps/place/Buccaneer+Cafe/@33.1770639...
- brk 4y ago
  How do they survive? Zoom out less than a mile and you can spot nearly a dozen cafe's and coffee shops in the same area.
  - wpietri 4y ago
    That means there's plenty of business to be had. It'd be much more concerning if you zoomed out and they were the only cafe for a mile.
  - nobleach 4y ago
    and as I posted a pic of their menu board elsewhere in the thread, they really are/were charging under 3 dollars for drip coffee. I'll admit, the ambience was really the selling point, the coffee was just okay.

schneems 4y ago

And that’s if your employees show up. People quit last minute and need someone to cover their work. Anything you hire someone else to do as part of a labor industry you’ll need to be prepared/willing to do it too.

taneq 4y ago

The last medium flat white I bought was about $7 :S

nobleach 4y ago
I don't know how these folks are doing it: https://goo.gl/maps/tjbhowGy9nWa7hHKA https://goo.gl/maps/tjbhowGy9nWa7hHKA

drakonka 4y ago

The middle ground seems like business owners pricing their product appropriately to actually sustain their business. $2 for coffee seems ridiculously low. Is that normal in California? Maybe such under-pricing is part of the problem?

brookst 4y ago
Yes, that’s the problem. But McDonalds sells coffee for $1, and many of those customers who are deeply invested in living wages and local businesses are also not fools who can be charged 4x for the same thing they can get faster at McD’s. So yeah, pricing is the problem, but IMO mostly on the “willingness to pay” side. These businesses are squeezed between the real costs of inefficient small biz (where are you going to store 50 pallets of coffee needed to get great pricing, and it’ll go bad anyway) and consumers’ unwillingness to pay for the things they say they want. Same thing as airlines, really. Everyone hates cramped seats and coin-op toilets, but enough people will always buy the cheapest ticket that it’s not economically viable to provide a good quality product at a price that will sell.
- genghisjahn 4y ago
  But then I’m having cheap coffee in a McDonald’s.
- postsantum 4y ago
  McDonalds coffee costs $1, seaside specialty coffee costs $5 - the difference is negligible if you are not buying it twice a day People usually ok with having to suffer in cramped seats given that slightly less cramped seat price difference is often more than they earn in a day
  - deleted 4y ago
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- drakonka 4y ago
  I see what you mean, but as a consumer I'd much rather pay extra for a good coffee than $1 for a crappy one and I'm fairly sure this is not an uncommon sentiment. If I opened up a coffee shop, it wouldn't be to attract the kind of crowd who get their coffee exclusively at McDonald's, so McDonald's pricing wouldn't be that relevant, right? Tangentially, I'm also curious how McDonald's in the US can charge $1 if they also have to pay a living wage. Does their size mean they get cheaper materials from suppliers and can drive costs down or that they make up that loss by selling some of their other products? I've never gotten coffee from McDonald's in my country, but I'm _pretty_ sure it's not that cheap. Even _more_ tangentially, I noticed a popular local chain driving their prices higher and higher to ridiculous amounts. It's not even great coffee--it's like Starbucks in my country (Starbucks apparently didn't get a good footing here because this other chain is just so established). Their usually mediocre coffee costs more than one at a boutique high-end roastery! I suspect it's because they're pushing people to instead sign up for their monthly subscription, that lets you get a coffee every 2 hours. I've begrudgingly signed up, because I like using their cafes as a work space and this way I do not feel guilty about sitting around there all day. When I want legit good coffee, I still go to a good place and get one. As annoyed as I was to see how much they charge for a mediocre cappuccino, I've got to hand it to them on the interesting monetization shift.

jimbob45 4y ago

But then how does McDonald’s make the economics work? Just scale?

falcolas 4y ago
Scale, and low profit coffee is sold alongside higher profit items. Similar to a gas station, where the gasoline losses are offset by the store purchases.

stcroixx 4y ago

The idea that all jobs should provide enough compensation to live off of is just not possible. Face it now or later, but a charade which requires financial support will eventually crumble.

nivenkos 4y ago
What is the alternative? They should do, or they should be automated so you don't need as many employees.
- ghaff 4y ago
  Or, as many Silicon Valley startups have shown, there are lots of services that people want but it turns out that a critical mass of mainstream consumers aren't willing to pay the cost of providing them.
brookst 4y ago
Are you suggesting a massive expansion of government assistance or of homelessness? I don’t see a fourth option.
- stcroixx 4y ago
  I’d suggest simply reminding people that if they don’t want to be homeless they need to learn a skill that pays a living wage. This is how it’s been forever.
  - bee_rider 4y ago
    So this is just a roundabout way of getting to the original post’s conclusion, right? A nice little coffeeshop may not be possible.
    - stcroixx 4y ago
      A coffee shop is absolutely possible as long as nobody is interfering in the wage agreed on between employer and employee. We’ve had coffee shops forever and they have done fine. It’s only the modern expectation that they should pay more that is threatening that model.

hprotagonist 4y ago

> All this to say, I wish there were some middle ground. You and a bunch of other weirdos :) https://en.wikipedia.org/wiki/Distributism https://en.wikipedia.org/wiki/Distributism

pigsty 4y ago

You’ll see the same thing here on HN. I remember a discussion quite a while back about how SE Asia lacks a vibrant startup culture and people were going back and forth about how companies should just bring in Silicon Valley tech workers to get the industry going. Upon mention that Cambodian and Vietnamese simply can’t pay the wages SV techies would want, commenters seemed confused as to why—these struggling countries should just do it and quit making excuses. It’s simply obvious that a country where people are getting maybe $2000 a year should have companies with enough free cash to bring in thousands of Americans who want at least 300k but would settle for 250k if they can get a luxury condo thrown in. Bizarre to witness these statements sometimes—frustrating when it’s crowds. It’s good when people do, at the very least, a passing glance at the data and consider troubles that could occur. That said, mom and pops run by just mom and pops do exist. If you’ve got savings and just want to socialize and mitigate some of the costs with a little side income, running a tiny cafe next to your home on weekends is something that isn’t unreasonable if you’re very comfortably settled.

hinkley 4y ago
If you want to know a man’s character, give him a little power. Let’s say Vietnam found the money to do it anyway. Now you’ve got a bunch of people making minor warlord money compared to the locals. They can now afford to do just about anything their little hearts desire. Silicon Valley may be many things, but a paragon of ethics is not one of them. When you can bribe people half a year’s salary that changes the dynamic quite a bit, and for the worse. And you didn’t bring these people over to run everything, you brought them over to mentor the people you want to run everything. What great role models you’ve provided for them. What could possibly go wrong?
- grog454 4y ago
  > Now you’ve got a bunch of people making minor warlord money compared to the locals. They can now afford to do just about anything their little hearts desire. Isn't this already happening when an SV company pays an eastern European developer 1/2 a typical SV salary which is 10x the employee's average local salary?

SECProto 4y ago

If you're thinking about this, then you have to consider how those business you mention make money with a similar model. Starbucks: they don't charge $2 a coffee. I would only ever get a drip coffee and I think it's around $3, most people who are going there get drinks in the >$5 range. Plus they have a lot of traffic - more customers = less wages required for each drink McDonalds: They charge less than $2/coffee. They charge less than $8 for a breakfast. They make their money on super high volume. Your vision: you're enjoying lingering, enjoying the sun. You're enjoying the floor (patio) space, which means you can't have high volume unless you have a huge space, which wouldn't work with your "little shack" concept. Unless there's a nearby park or beach with free barely limited space, while also still having enough traffic to stay busy. Very limited spots that can work. (so as with most issues regarding our urban spaces in north america, what we need to make them better is more density. :)

brvsft 4y ago
> (so as with most issues regarding our spaces in north america, what we need to make them better is more density. :) Then we raise the problem that this is not longer some simple, happy little shack where I get my coffee and relax. Higher density, higher volume means I wait in a potentially long line, have my personal space violated both considerately and inconsiderately by total strangers, feel the anxiety of being in a potential fire hazard area, etc. Arguably, none of this is better. I am more willing to pay a premium on the coffee than to deal with all of that.
- ryukafalz 4y ago
  The longest lines I've ever been in for coffee have been at suburban Starbucks drive-thrus, which are far from dense. My experience is small coffee shops in cities don't really get that crowded. There's plenty of room for those small coffee shops where you can get your coffee and relax in a nice little lounge spot. (I've seen more of them by far in cities than outside, honestly.)
- ethbr0 4y ago
  > Higher density, higher volume means I wait in a potentially long line The better bargain is to decrease shop area and worker count, and increase number of shops. Tokyo seems to do just fine with 5-seat places...

AnIdiotOnTheNet 4y ago

> Fine, let's put all those evil family-run donut shops out of business. They are not entitled to be in business and if the alternative is keeping society in a condition where people are forced to work for non-livable wages then fuck them. Now if we had a UBI, non-livable wages become reasonable.

wnolens 4y ago

I did a very similar thing. I love the experience of coffee shops and neighborhood-style bars. I really want to produce a particular experience for others to enjoy. So I started modeling the business and.. holy shit. At BEST I'm clearing 40-60k/y with a single shop. But that ain't no 40h work week with health insurance.. probably it will fail and I'm out 200k.

dazc 4y ago

There was a time in the UK where many small grocery shops were owned and run by Asian families. They would typically be open everyday 'till late. The economics were simple, everyone in the family worked for free and there were no benefits, sick pay or everyday rules to worry about. Eventually the big grocery chains took over because it was easy to open up a prime local site and run it at a loss for as long as it took. Any stubborn competition remaining could easily be brought to the attention of the authorities. Some of those Asian shopkeepers became quite successful though which, I think, goes to show that every kind of business has its golden era where anything is possible but nothing lasts forever.

JohnFen 4y ago

In my part of the US, there are more mom-and-pop coffee shops than chain shops, and they're thriving. I think that one of the reasons they're thriving is that they charge a lot more than $2 for coffee and $8 for pancakes.

sammalloy 4y ago
> I think that one of the reasons they're thriving is that they charge a lot more than $2 for coffee and $8 for pancakes. Yeppers. Here is the price of coffee and pancakes at my local mom and pop in 2023: Coffee: $4; Pancakes: $13

draw_down 4y ago

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SomeBoolshit 4y ago

If wages had risen appropriately then people wouldn't have trouble paying the kinds of prices necessary to keep small places like the ones you're talking about running.

zdragnar 4y ago
This is simply called inflation, and the end result of the long chain of effects is that nobody is better off for it.

kleinsch 4y ago

The main way you make the math work is that it’s a family run business where you and your spouse are owners and workers. That takes two FTE off the table, paying you out in profits instead. But as the article describes, you’ve signed yourself up for a full-time job mopping at a high-risk low-margin business.

shagie 4y ago

> Now if this were Reddit I'd be angrily shouted down and told, "then they deserve to be out of business!". You'll get very much the same response if you are to suggest that some companies aren't able to get $200k/year of value out of a software developer. If there's a company that can only get $100k/year of revenue out of a developer and pays them $70k in a low cost of living area (forget about remote work for someone in California) you'll get laughed at for "poverty wages" and that the skills that they have are worth more while at the same time complaining about how hard it is to find a job that pays "what they are worth" (which is the top 10th percentile).

DrewADesign 4y ago

I worked in the restaurant and bar business for a long time as an employee. Not losing your shirt in a food business takes a LOT of experience. According to the National Restaurant Association, 60% of restaurants fail within the first year and 80% fail within five. Most people realize they don't know enough to open a small lab or IT consulting firm, but drastically overestimate their knowledge of the food business. It makes sense-- these businesses must hide the mountains of back-breaking low-pay manual labor from customers lest they become uncomfortable and patronize somewhere that makes it all feel calm, relaxed and easy. And for all that, particularly successful restaurant owners get a margin of maybe 5% after a few years when you really nail down your expenses and processes, though the numbers for coffee shops are a bit different. This successful restaurateur's businesses in Boston yield 2% (though she takes a paycheck not included in that 2%.) https://www.eater.com/2020/3/9/21166993/how-much-to-run-a-restaurant-cost-mei-mei-boston-finances https://www.eater.com/2020/3/9/21166993/how-much-to-run-a-re... Particularly, white collar people who pride themselves on knowing about their local restaurant scenes are prone to this hubris. I bristle at their misguided confidence when discussing the business but will take the time to empathically but forcefully discourage any considering it professionally. A few years ago, an old friend contacted me in a panic because she'd invested her entire retirement in her brother's dream brew pub which was failing before it opened. I couldn't help them. Anybody with experience could immediately see how hare brained their ideas were, but they were just in too deep. Months later, they opened and quickly closed, and she'd lost everything. Tragic.

tayo42 4y ago
I read kitchen confidential and it did a good job of convincing me to never work in a restaurant. I still day dream about cooking somehow, since I enjoy it as a hobby. I snap back to reality kind of quick.
- shagie 4y ago
  A company I worked back in the dot com boom days... one of the sysadmins was a bit on the grumpy side. He had been there from the start and had some nice options to be able to cash out on and try something. So he cashed out and pursued his dream of being a chef - finished up some certificates and such... and became a chef. About a year later, he came back to working as a sysadmin no where near as grumpy. He got a job as a chef... and realized that as much fun as the cooking is he really didn't like being a chef. A submission of mine from a few years ago - Find The Hard Work You're Willing To Do - https://news.ycombinator.com/item?id=26209541 https://news.ycombinator.com/item?id=26209541

andrei_says_ 4y ago

I am a bit confused - is this an argument against paying a living wage? Are you saying that Starbucks will be the only remaining business able to pay a living wage? Or that society simply cannot bear the price of paying it? That the livable wages make business impossible? Or that the coffee must stay at $2?

PKop 4y ago
Do you think there are easy answers to all these questions? The point is there are various intractable problems, the outcome of which is less mom and pop shops.
marcosdumay 4y ago
Why do you assume the GP is making an argument towards any kind of action? It looks very clearly a statement of fact to me.

badpun 4y ago

How can McDonalds make the payroll then? Whatever they do to succeed/survive, can't it be copied?

shagie 4y ago
Volume of customers, volume discount on materials, decades of experience working on optimizations of the workflow ( https://youtu.be/BPf22nRVy2I https://youtu.be/BPf22nRVy2I ).

axiomdata316 4y ago

I'm in Riverside California and I think your retail prices are a bit too low. There recently have been quite a few mom and pop coffee shops opening up and the prices are higher than Starbucks but they're also packed because each place has a unique take on coffee shops. Maybe this trend will change in a near future recession but right now it seems people pay more for a unique "authentic" experience.

surprisetalk 4y ago
Hey, I live pretty close to Riverside! Shoot me an email at hello@taylor.town and maybe we can grab coffee sometime

Nifty3929 4y ago

There would be a lot more room to pay people a living wage if we didn’t ALSO have to pay the government a living wage. I wonder, when you look at the cost of all the various required benefits, would employees rather not just get that in cash instead? Genuine question: when you looked at the costs of “plus... well all the other stuff it takes to employ a human,” what did that add up to in CA?

Tagbert 4y ago
In the US, even in CA, the government taxes are quite modest compared to other developed countries. Healthcare on the other hand is ruinous unless you can afford the almost equally ruinous health insurance.

tayo42 4y ago

Other countries around the world have this figured out somehow? Singapore, portugual, thailand, spain all have local food places, amazing food culture and somehow it seems sustainable. I dont think theyre being propped up by rich tourists

2-718-281-828 4y ago

you need 3 or 4 people to run a _little_ coffee shack? I'd say 2 are sufficient with proper organization and expectation management. and why 17 to 20 year olds? that's so oddly specific. I don't like being served by teenagers. also you write that's what _you_ want to _do_ with your retirement? what are you doing there? the dishes? the book keeping? sit around sipping coffee feeling very important?

browningstreet 4y ago

I was scootering through Venice CA and there was a small storefront. Very small. Less than 100 sq ft. I called and rent was $8500/mo. I was watching a YouTube video on UpFlip about a guy with three coffee shops. Monthly revenues are around $80K for his main shop. His margin is less than 4%.

xtiansimon 4y ago

You forgot rent for that store by the breach. You can sustain if your rent is low (low revenue, and low expense) or your location gets you heavy traffic or you serve a community that really wants your product—like a bar near a university. You don’t need the most ideal real estate next to the university, just within the community—(high revenue, high expense). So, to make money you need something that lowers your cost or increases your revenue. That’s where survivorship bias clouds the picture and you drink your coffee, and not realize they guy owns the building. Haha

schwartzworld 4y ago

> "then they deserve to be out of business!" If you can't afford the things that a business needs, you go out of business. If you can't afford coffee, cups, electricity, water, rent or taxes, you don't get to keep your coffee shop long. I want a gardener and house keeper, but I don't get to have them because I don't want to pay for those things. If someone can't pay three employees what their time is worth, why are they entitled to have those employees? Replace a person with a computer if you can't afford a person, or scale back in other ways. Don't punish employees for lack of business acumen, maybe unless you plan to compensate them extra when times are less lean.