Michael Tae Sweeney: If you're sharing a clickbait post about how much fast food prices have risen based on cherry-picking a few of the largest increases off the menu, you should be aware it's part of an effort to generate public support for crushing the labor market by increasing resentment of inflation.

If you're sharing a clickbait post about how much fast food prices have risen based on cherry-picking a few of the largest increases off the menu, you should be aware it's part of an effort to generate public support for crushing the labor market by increasing resentment of inflation.

Fast food prices really are up significantly and the major reason for it is that wages for fast food workers are up significantly, and that's because we're in a historically tight labor market for low-end workers. That's a tradeoff and if you won't take it, I get it, but then you're not on the left.

Yes tho I'd say it's less "greedflation" per se than the overall excellent economy for workers making consumers of fast food less price sensitive and leading restaurants to focus less on value items and more on high-margin upgrade items bsky.app/profile/take...

But some % of price increase comes from “Why not?” right? Which implies they’re using the increasing labor costs opportunistically while prob looking to counter/criticize them behind the scenes .

Anyway, I've brought this up before but there was a similar "crisis" in the 1940s when inflation and a tight labor market meant many middle class families could no longer afford to hire domestic servants... and like, that's good. That's the economy doing the thing we want it to do.

Yes the fact that the "value" choices on fast food menus are now often hidden on loyalty apps seems like a significant change that means the effective prices aren't as high as the sticker price on menus bsky.app/profile/mitc...

I also would point out that there are many available substitutions for high-priced fast food at those fast food restaurants. For example, the McDonald’s app daily has actual inexpensive meal deals. I can spend less than $6 for 20 McNuggets every day.

Yup, margins are down for McDonalds (subject of the latest viral post), not up bsky.app/profile/pear...

Here is restaurant-level margins for McDonalds. Notably lower than pre-COVID and this is true across the industry. Menu price increases are pass-throughs of other costs, with labor by far the largest line-item.

Essentially franchisees have to eat the loses as they don't have the option to opt out of the app.

I noticed you didn't mention the extremely high profit margins they make compared to a decade ago. Nor that corporate pay is 300% higher now.

Yeah, we don’t do as much mcdonalds as my son would like but we get 30% off every time by using their mobile app. 30%!! it adds up.

I would argue that NONE of the prices in the app are ACTUAL prices I would NEVER EVER buy a Big Mac for 6€ I am not insane. 3.50€ in a pack of 2 shared with my brother yes. Otherwise no.

sometimes i get soda for really cheap prices but it requires using the grocery store app, if that's what it takes to get when was a decent price before 2020 then i'm ok with it

There's an automated pizza kiosk near where I live- on the one hand that displaces labor, but on the other it's probably a good thing on net if people don't have to take hot, traditionally low compensation jobs

I am perfectly fine paying $1.49 for my bean and cheese burrito when I need a quick bite of hot food while in a rush. The fucking thing was like $0.99 for how many years?

I also wonder how much “greedflation” versus…catch-up inflation, I guess, applies? If you’ve got an unchanged dollar menu for 10 yrs at 3% inflation and then in the 11th yr there’s 9% inflation and you bump to $1.49, that’s more than 9%, but it’s roughly the inflation for that whole period.

It just feels like fast food prices are sticky because people are super sensitive to increases like this.

Yes, similar to gas station price on sign effect

I prefer the "excuseflation" framing, like obviously owners are greedy and want to raise prices as much as possible, but they need a plausible "expectations" based reason to do it. Everyone should be aware of the work of Isabella M. Weber around "sellers' inflation" which is a concept from Lerner.

Sellers’ Inflation, Profits and Conflict: Why can Large Firms Hike Prices in an Emergency?scholarworks.umass.edu The dominant view of inflation holds that it is macroeconomic in origin and must always be tackled with macroeconomic tightening. In contrast, we argue that the US COVID-19 inflation is predominantly ...

Inflation in Times of Overlapping Emergencies: Systemically Significant Prices from an Input-output Perspectivescholarworks.umass.edu In the overlapping global emergencies of the pandemic, climate change and geopolitical confronta- tions, supply shocks have become frequent and inflation has returned. This raises the question how sec...

sorry bud, but labor only accounts for ~1/3 of fast food costs. Giving a ~1/3 raise to them does not account for a ~50% increase in menu price. Energy cost rises cover some of it, but a big fucking chunk is just plain pricing power. The same people getting that raise are hurt by that pricing power.

this feels like willful blindness in service of saying "but raises good!" Yes, raises are good, but they absolutely do not need to come with increased margins for retailers. If you think that good things for labor have to also give more to oligarchs, you aren't a leftist.

Tell me, do you think the only workers involved in making your Big Mac are the ones at McD's that got a rise, or perhaps do the recent wage rises across four of the five wage quintiles mean that each other step in the value chain also got a little more expensive?

Here is restaurant-level margins for McDonalds. Notably lower than pre-COVID and this is true across the industry. Menu price increases are pass-throughs of other costs, with labor by far the largest line-item.

why does this chart go back in time instead of forward

I really don't know, and wish it didn't.

I flipped it so time goes forwards.

I...wow. This is great lol

In any case though, it's clear that prices went up while profits were fairly steady or dropping, so it's not that you can just say that McDonald's jacked up prices and pocketed the change, the market shifted.

dear god

People who have never worked/managed food service have no idea how small the margins are. McDonald's obviously has a little more breathing room, but one or two months of bad business will shut you down. And it's even worse now.

Since the Met, the TT blockparty, and with GME/AMC in the news again, I've been wondering: small margin company, maybe a highly leveraged one, if say a cohort of angry people, like all of GenZ & Alpha for example boycotted one specific company for a month or two, how much damage could they inflict?

Yes, boycott the Metropolitan Museum of Art, that none of you were ever going to visit in the first place. This I need to see.

Wow, your reading comprehension fucking suuuuucks.

They also trimmed many options that were probably losers. I used to be able to get a salad on the go just about anywhere. No more.

1. that's a 15% margin vs a 17% margin and 2. a slightly smaller margin on a larger bill is a net increase for the business ($1*0.17 is less than $1.5*0.15) labor isn't the whole story

also I wonder how useful McDonalds (a real estate hustle with franchisees taking all the risk) is an example here

McDonalds is the popular conservative option because they can bitch that a Big Mac in a country that has healthcare costs 15 dollars, withing saying anything about the whole not dying in the street from cancer thing.

i think mcdonalds is also a popular option for the "can you believe what this shit costs?!" posts because it peaked in popularity in like 1991 so a lot of people's memories of what prices are there are *very* out of date

In Norway it actually costs about 12 dollars.

it's a net nominal increase for the business, but there's a reason we measure profitability as margin or return on capital instead of dollars vs dollars.

if we're talking return on capital, we can't be talking just about quarterly margins on burgers for a vertically integrated supply chain, we have to be talking about real estate holdings obtained during the free money era and risk taken by franchisees rather than corporate

the chart above is for non-franchised restaurants that corporate owns and operates directly. i assume franchisees are typically lower margin than O&O stores (in part because as you say real estate shenanigans are sometimes part of their overall business plan)

The whole point is to understand the specific economics of the franchise model, so the supply chain is in fact irrelevant to that purpose.

glad you shared this. intuitively i figured it was the case but forgot to look it up yesterday

notably lower around early '22, so it's likely related to general inflation/restructuring after the COVID vaccine was available it would be interesting if we could look at revenue over the same period to see if lower margins are being made up by volume

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