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Don't think the word 'subsidized' is being used correctly here. Nobody is paying Costco a 'subsidy' to produce cheap croissants. The big box stores incentiviz

Don't think the word 'subsidized' is being used correctly here. Nobody is paying Costco a 'subsidy' to produce cheap croissants. The big box stores incentivize the supply chain to do things faster/cheaper. Cheaper ingredients, shorter baking times (hence maybe some other additives needed), etc... So, cheaper butter, oil additives, cheaper flour, additives to streamline short cooking times, easy movement, texture for packaging, etc.. It all adds ups to "it's ok, but meh".

sokoloff 3y ago
Wheat and dairy are both subsidized in the US, so it’s not incorrect to say that Costco’s croissants benefit from subsidies. I think it is incorrect/misleading to suggest that they benefit substantially from subsidies that are not available to the $8 croissant maker. (Costco benefits more from highway subsidies, for example, but not by enough to move the needle between $8 and $1…)
- FrustratedMonky 3y ago
  Agree. But it is difficult to tease out how the huge Agriculture Subsidy impacts each product. I'm 'assuming', that if it is something like 1 cent, or 5 cents. Then it is a larger impact on the 1$ Costco Croissant), versus the 8$ bespoke croissant. Then we'd also have to look at quantity sold. Crouasant Sold Price Per Unit Total Revenue Cost Of Goods per unit Subsidy Total Cost of Good Total Subsidy Profit Subsidy / Profit Costco 100000 1 100000 0.2 0.1 10000 10000 90000 0.111111111 Bespoke 100 8 800 0.5 0.1 40 10 760 0.013157895 So, it is true, Costco makes a larger percentage of profit from subsidies than the bespoke. 11% versus 1.3%. The Quantity is much bigger factor. So guess, on balance, Costco is more subsidized than the small baker. Man, we should include labor too. Basically small bakers are at huge disadvantage. Edit My spreadsheet didn't look good here. Is there a way to format HN to show a table?

sokoloff 3y ago

Wheat and dairy are both subsidized in the US, so it’s not incorrect to say that Costco’s croissants benefit from subsidies. I think it is incorrect/misleading to suggest that they benefit substantially from subsidies that are not available to the $8 croissant maker. (Costco benefits more from highway subsidies, for example, but not by enough to move the needle between $8 and $1…)

FrustratedMonky 3y ago
Agree. But it is difficult to tease out how the huge Agriculture Subsidy impacts each product. I'm 'assuming', that if it is something like 1 cent, or 5 cents. Then it is a larger impact on the 1$ Costco Croissant), versus the 8$ bespoke croissant. Then we'd also have to look at quantity sold. Crouasant Sold Price Per Unit Total Revenue Cost Of Goods per unit Subsidy Total Cost of Good Total Subsidy Profit Subsidy / Profit Costco 100000 1 100000 0.2 0.1 10000 10000 90000 0.111111111 Bespoke 100 8 800 0.5 0.1 40 10 760 0.013157895 So, it is true, Costco makes a larger percentage of profit from subsidies than the bespoke. 11% versus 1.3%. The Quantity is much bigger factor. So guess, on balance, Costco is more subsidized than the small baker. Man, we should include labor too. Basically small bakers are at huge disadvantage. Edit My spreadsheet didn't look good here. Is there a way to format HN to show a table?