Wage Deflation

[Sandybestdog]

Quote from morganist:

i noticed about a year ago that the cost of fast food rose one item in particular a mcflurry rose by about 20p about 20 per cent over night. it seemed weird at the time normally inflation is slower but a 20 per cent hike almost over night.

also i used to go to an italian place when i finished work i got friendly with the owners and asked if they were being affected by the credit crunch. they were selling pizzas much cheaper than the competition but just as good quality if not better. they said that they were doing better because the custom went from the competitors to them, but the cost rose for supplies. fortunately the value added tax was dropped so they combated the cost of supplies through tax reductions rather than passing it on to the customers. this also meant they did not have to send out new menus. anyway the point being the cost of food is rising fast and has been for about the last two years.

I have worked awhile in a restaurant, so I’m a little familiar with food costs, but I didn’t really look at it that closely. I’ d say that between 2003-2008 there was a large increase in many food costs, especially milk, cheese, and wheat. This has stabalized over the past year, but don’t expect prices to go down. I think some restaurants have been absorbing the food costs and now they are trying to maximize profits with the lower commodity costs to make up for it. I guess as long as people are willing to pay a certain price, they know they can keep their prices high. Labor costs are going down so in the end the owners still make more money and the customer still pays higher prices and a bunch of employees are getting their hours cut.

It does seem however that places are offerring more deals. Most places have $5 medium pizza’s now. Sub places all have $5 deals now. I guess they’re hoping you buy a drink with 95% profit margin to make up for it.