Chipotle Stock Craters: Young People Without Jobs Cannot Afford Their Food

The McDonalds burger went from $12 to $18, but it's still the same terrible product. The hipster burger joint price went from $20 to $22, and that is a dramatically better burger.

The difference is that the local burger place doesn't have to show a 7% increase in profit year after year in perpetuity. Their price was set for "I can live a modest life off the profit and pay my employees a wage competitive enough to actually staff my restaurant, and therefore also end up with people more competent than your average fast food worker". That gives you more value per dollar, because more of your dollar is being spent on actual product and service rather than paying absurd and unjustifiable salaries to an entire building full of overpaid "management" and administration in the highest cost of living part of the country. Fewer shareholders to pay too.

So instead of the price delta between absolute trash and quality being $8, now it's $4.

I am told inflation is a bad thing, but it is making lots of small business that we desperately want and need much more competitive. A smaller business has far less pricing power and therefore less ability to pass on a cost increase.

In N out double double meal is $11, but McDonalds app has free fries so a Double Quarter (with 2x meat), fries, and drink is $9…

Here in Maine, fresh lobster has frequently in a retail store been cheaper than ground beef per pound. Sometimes by as much as half the price. Our industry was catching far too much, and had frequent price problems until we started selling it to China.

You can buy lobster on EBT. Remember that a significant portion of the goal of Food Stamps is to be a subsidy to food producers. Maine's lobster industry benefits from that subsidy.

In a similar way, Susan Collins once made the US federal government buy tons of Maine blueberries for school lunch programs to improve pricing during a high yield year.

Lobster is a rare luxury in Colorado for sure, but in some coastal states it is downright abundant. If you live near a fishing community, lobster is like $2 per giant bucket, not pound. Its luxury is mostly artificial and marketing.

Food deserts are a huge problem, but they are not caused by Food Stamps. Food deserts are caused by the same thing as nearly every bad thing that affects poor people in the USA: that we allowed businesses to M&A themselves into massive conglomerates that get more rights than god and more influence and power than most countries.

Places that used to have local grocers or IGAs lost them because the wealthier members of the poor community could drive an hour away to the Walmart. The IGA didn't lose all its business, but enough to make it nonviable.

Oh that's just free market competition! Walmart was able to lower prices and collect more business by being efficient!

Are we actually better off driving an hour away to grocery shop at Walmart? Doesn't matter, Americans lost so much purchasing power that they almost didn't have a choice. Nearly all extra dollars our economy has generated since 1970ish have gone to a tiny group of connected people. Nobody could afford the local IGA anymore, because America stopped letting normal people make money. Whats worse, there are now companies like Dollar General and their entire business strategy is dropping into those communities that no longer have a local grocery store and extracting what little remaining wealth that community has to some corporate headquarters and CEO that lives 2000 miles away.

It's impossible for rural towns and small communities to exist when every dollar they spend goes out of that economy. You need to provide room in the economy for small players who don't have such """efficient""" operations because they hire locally, buy locally, work locally, etc. But it doesn't matter that they are "less efficient" because that money will cycle through that local economy and enable multiple people to actually live.

None of this is new. America has had successful businesses try to own the entire market its whole existence. Each and every time we had to break them up, and we eventually decided to police the process of Mergers entirely to just stop the problem before it hurt people. But then Reagan insisted we should just.... not do that?

So of course, now we have the expected problem and a stupidly inefficient market. Letting a company like Google or Facebook buy everyone and anyone who might choose to compete with them later is a market failure.

"Big business is better for consumers because economy of scale" has just always been a lie.

No business will pass on a cost decrease if it doesn't have to. A big business will always have more pricing power than a small business. A big business will therefore pass on fewer cost savings to consumers.

Also, making food the way Chipotle does just does not have any economy of scale. The workers making burritos don't get cheaper if you hire 100k of them.

"Economy of scale" is not some magic spell that you get when you pass 10k employees. Economy of scale is a lie that covers up that if you make huge investments, you can do enough engineering and machine work to replace humans in some parts of some processes. It is not intrinsic.

It is the norm that a business will spend a lot of money on cost reduction or process improvement and then just.... happily absorb that improved profit margin.

Why wouldn't they?